ANI
18 Nov 2023, 18:03 GMT+10
New Delhi [India], November 18 (ANI): The global appetite for oil is set to reach an all-time high this year, with purchases growing by nearly 40 per cent. Battery electric vehicle (BEV) adoption, expected to make up over 10 per cent of global auto sales, has not curbed oil consumption.
According to a report by Morgan Stanley, the dichotomy between the rise in electric vehicle purchases and increased oil demand challenges conventional expectations.
Norway, boasting the highest EV penetration globally, serves as a compelling case study. Despite EVs constituting 80 per cent of new auto sales, the country's oil usage has not collapsed.
Similar trends are observed in China, the largest EV market, where oil demand surged by 50 per cent alongside EV penetration reaching over 20 per cent. The critical factor overlooked by many is that road transport comprises less than half of global oil consumption.
Contrary to popular belief, road transport represents only part of the oil consumption picture. Sectors like jet fuel, petrochemicals, and industrial/residential heating contribute significantly to global oil demand.
The International Energy Agency (IEA) projects the petrochemical sector to be the primary driver of future oil demand. Jet fuel demand is also expected to grow as airline travel returns to pre-pandemic levels.
Energy transitions unfold over decades, and a historical review reveals that new technologies take time to achieve dominance.
Currently, fossil fuels account for over 80 per cent of primary energy consumption, while solar and wind make up just over 5 per cent.
Government policies promoting a shift toward net-zero emissions and the adoption of cost-efficient renewables will alter this balance gradually.
While oil's share of the energy mix has diminished from 40 per cent in 1965 to less than a third today, overall energy consumption has more than tripled.
Predictions of a collapse in oil demand are considered too pessimistic. Global oil demand is on track to hit record levels by the end of the year, driven by stronger-than-expected global GDP growth and improved jet fuel demand.
Major oil producers, including OPEC and Russia, have responded cautiously to increased demand. Underinvestment in oil production poses a serious concern, as the global capital expenditure for exploration has halved from its 2014 peak to less than USD 400 billion in 2022.
The International Energy Agency (IEA) warns of potential global oil supply shortfalls by 2030 if investment levels do not increase.
Historically, oil prices oscillate between the marginal cost of new supply and the cost of demand destruction. Energy equities, although attractively valued, face scepticism from investors, with their share in global equity market capitalization declining.
The industry's shift toward a more investor-friendly capital allocation approach, coupled with high normalized free cash-flow yields, suggests substantial potential gains, particularly if companies maintain capital discipline in a high oil price environment.
While energy transition is underway, a rapid decline in oil demand appears distant. The current levels of investment fall short of meeting potential oil demand growth, pointing toward a compelling outlook for energy equities amid a period of "tighter for longer" oil market conditions. (ANI)
Get a daily dose of Beijing Bulletin news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Beijing Bulletin.
More InformationOttawa, Ontario - The potential threat posed by the rapid development of artificial intelligence (AI) means safeguards need to be ...
Tel Aviv [Israel], November 27 (ANI): In a live chat on social media platform X (formerly Twitter) with Israel's Prime ...
Washington DC [US], November 27 (ANI): A spokesperson for US tech conglomerate Meta, which owns Facebook and Instagram, has been ...
Russia has added the spokesperson of U.S. tech giant Meta, which owns Facebook and Instagram, to a wanted list, according ...
GENEVA - As he sits in Geneva, Michel Dreifuss does not feel all that far away from the Hamas attack ...
BEIJING, Nov. 26 (Xinhua) -- China's software and information technology service industry reported double-digit growth in revenue and profits in ...
NEW DELHI, India: On November 24, the Economic Times (ET) reported that Tesla is ready to invest up to $2 ...
NEW YORK, New York - U.S. stocks closed in positive territory despite a volatile day Tuesday. Spending much time in ...
WASHINGTON D.C.: On November 24, the U.S. Food and Drug Administration (FDA) recalled three more brands of whole and pre-cut ...
DETROIT, Michigan: US electric vehicle (EV) sales are expected to reach a record of 9% of all passenger vehicles this ...
NEW YORK, New York - U.S. stocks closed marginally lower as traders returned to their desks Monday following the Thanksgiving ...
OMAHA, Nebraska: On November 21, Warren Buffett announced a donation of Berkshire Hathaway stocks worth some US$866 million to four ...