Readers may have noticed a big media uproar last week over a pronouncement from the U.N.’s International Energy Agency (IEA) that “Electric vehicles (EVs) are expected to displace 2.5 million bpd of oil demand by 2030.”
This was hailed in much of the news media as some sort of huge intrusion by EVs into the gasoline powered automobile market. It isn’t.
Here are some reasons why it isn’t:
- Current global demand for crude oil is more than 99 million barrels of oil per day (bopd) according to the U.S. Energy Information Administration (EIA);
- That level of demand represents roughly an 18 percent increase in the past 9 years;
- Projected out over the next 12 years (through 2030, the IEA’s projection model), the same rate of annual increase would mean about a 25 percent increase in global demand over that period of time;
- This would create a global demand of 125 million bopd;
- The 2.5 million bopd lost to EVs projected by the IEA through 2030 represents just 10 percent of the likely increase in global demand for crude oil during that same time, not exactly an earth-shattering intrusion into the oil markets.
Here’s a dose of reality: the world’s population of human beings is going to continue to grow, and second-and third-world economies are going to continue to expand for the foreseeable future. Expanding populations and economies have a thirst for affordable and abundant energy, because that is the only way out of never-ending poverty.
Until some new, truly commercial, scalable, sustainable and affordable battery storage technology is developed, wind, solar and other renewables simply cannot satisfy that energy-based need.
So, when you see stories like the one generated last week by the IEA announcement, it’s always very important to try to place them into proper context. Because when you do that, you often see that they aren’t really much of a story at all.
This concludes our Shale ‘Splainer for June 4, 2018.