Canadian fossils are beginning to acknowledge a risk that their public statements have previously dismissed: that the rise of electric cars will undercut the long-term oil demand on which their expensive, long-term capital projects depend.
“The rising relevance of electric vehicles, along with drastically reduced costs for wind- and solar-powered sources of energy, has caused some to ponder whether oil demand could begin to shrivel in the next 10 to 15 years,” the Financial Post reports, citing industry executives attending an event in Calgary last week.
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“I think it’s a real risk that we have to look at,” said Eurasia Group CEO Robert Johnston. “‘Peak demand’ is not the right term,” but “the implications of demand plateauing would be very significant for high-cost producers.”
While Cenovus Energy CEO Brian Ferguson maintained that oil—including Canada’s tar sands/oil sands—“can absolutely be a part of a low-carbon economy,” the Post notes that “market observers are torn over the direction of oil demand in coming years. Many see demand continuing to grow despite a rapid shift toward renewable energy sources, as rising populations in countries like India, Nigeria and Ethiopia offset carbon reduction efforts in the Western world.”
But the rise of EVs “has created a divergence of opinions on the future of transportation, which accounts for roughly half of the world’s oil consumption.”
The International Energy Agency has stuck to its projection that oil demand will hold steady through 2040, but announced last week that it would review that position in light of EV incentives introduced by India and China.
