Despite a recent surge in electric vehicle purchases in major markets such as Europe, the United States and China, data shows that global oil production is still rising. Replacing fossil fuel cars with EVs represents a core component of worldwide efforts to combat climate change because electric vehicles do not use fossil fuels or produce tailpipe emissions.
Factors such as high purchase prices and range anxiety have consistently hampered EV adoption, but a recent drop in the prices of major electric vehicle brands such as Tesla has spurred an increase in EV purchases. However, even though EV adoption is on the rise and most automakers have pledged to electrify their vehicle lineups over the next few decades, U.S. and international officials project a rise in demand for oil.
The International Energy Agency’s Faith Birol said in a recent Financial Times report that the intergovernmental agency was projecting demand for oil, coal and natural gas to peak by 2030. Previous projections had predicted global oil demand would peak well into the 2030s with natural gas demand peaking even later.
According to Birol, advances in energy policies coupled with an unexpectedly fast rise in renewable technologies such as battery electric cars were partly responsible for the adjustment in fossil fuel demand projections. The ongoing Russia-Ukraine war and the repercussions it had on the European energy industry have also contributed to Europe’s transition from fossil fuels.
Conditions were ripe for the oil sector to keep flourishing through the 2020s, but experts now say the industry will peak toward the end of the decade. This is in line with electric vehicle adoption projections, which predict that EVs will account for a majority of global automobile sales by 2030.
Rocky Mountain Institute analysts say growth in the Chinese EV market will play a major role in boosting global EV sales numbers. A recent report from the institute noted that worldwide demand for oil could drop by nearly a quarter if nations keep upgrading their electric grids and public-charging infrastructure.
In the meantime, however, oil will maintain a steady demand due to its application in energy generation. Some regions have even begun lobbying to prevent the expansion of renewable electricity into their territories because the technology still isn’t as stable or reliable as fossil-fuel-generated electricity.
Utility companies such as TotalEnergies and BP, which have invested in renewable energy, still rely on much larger fossil-fuel exploration investments to offset their clean-energy efforts while BP and Shell went back on their promises to hold off on fossil-fuel exploration. Some experts say oil companies may be scrambling to extract as much profit as they can from oil while prices and demand are still high.
In the mean time, electric vehicle manufacturers such as Kandi Technologies Group Inc. (NASDAQ: KNDI) are hard at work coming up with ways to reduce the cost of EVs so that more people can afford these greener forms of vehicular transportation.
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