As wonderful and popular as electric vehicles are, the sudden boom of them could have such an impact on the oil industry that another crash is quite possible. 2014 saw an oil crash that brought prices to an all-time low, and it’s at risk of happening again. However, this time, it will be due to the rise in electric vehicle usage rather than a sudden surge of supply.
Carbon Tracker is a think tank that’s warned everyone constantly that fossil fuels will soon become stranded and left behind in exchange for new and more efficient renewable energy sources. One scenario that’s emerged from Carbon Tracker envisions 2 million barrels of oil per day demand being wiped out by 2025 to make way for electric vehicles, which is essentially the same amount of supply overhang that caused the 2014 oil price meltdown to begin.
It’s inevitable there will be another massive dip in the price of oil, but when it is is the real question. Carbon Tracker suggests that by 2020 EV’s will have reached a high enough threshold and that by 2025, they will make up around 20 percent of the whole vehicle market. Bloomberg New Energy Finance has also issued some rather dire predictions for oil prices, depicting a situation where EV’s take over the supply of a 13 million barrels of oil per day by 2040, forcing prices to a permanently low price.
Strangely enough, the oil industry has some rather different predictions that aren’t quite as harsh. Their predictions suggest that oil demand will drop by around 1.2 million barrels of oil per day by 2035 due to the emergence of EV’s. The International Energy Agency (IEA) has similar predictions to this also, suggesting that around 1.3 million of barrels of oil per day will decline. But, Carbon Tracker is sticking with their figures and says that the industry will almost certainly peak by 2020 then plateau for another ten years after that. EV’s don’t have to take over the whole market to make a huge financial impact on the oil industry, and with the rise of EV’s an eventuality, so is the damage that will be caused to the oil industry as a result.
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