A rise in the number of electric cars is predicted to be the trigger for a massive drop in oil demand.
Another global oil glut could occur as early as 2023, but it will have nothing to do with overzealous Organization of the Petroleum Exporting Countries production; instead, it will be triggered by the next generation of electric cars.
The argument put forth by BloombergBusiness corroborates those made by peak-oil theorists, who favour scrutinizing demand instead of supply and have long held that consumers will ultimately abandon oil for alternate forms of energy, including electric cars.
Despite OPEC in a recent report noting that electric vehicles presently account for only 1/10 of 1 percent of the world's one billion cars and will only account for 1 percent in 2040, automobile manufacturers are aggressively pushing development, to the point where Tesla and Chevrolet plan to release electric cars that can travel over 200 miles on a single charge and sell in the affordable $30,000 range.
Tom Randall, BloombergBusiness
Every year that follows will bring more electric cars to the road, and less demand for oil
BloombergBusiness writer Tom Randall states, "Even amid low gasoline prices last year, electric car sales jumped 60 percent worldwide; if that level of growth continues, the crash-triggering benchmark of 2 million barrels [per day] of reduced demand could come as early as 2023."
He adds that by 2040, long-range electric cars will cost less than $22,000 and 35 percent of new cars worldwide will have a plug: "This isn't something oil markets are planning for."
However, Randall concedes that "Rising oil demand from developing countries could outweigh the impact of electric cars, especially if crude prices fall to $20 a barrel and stay there."
Still, he believes the oil crash will come, and "it will be only the beginning: every year that follows will bring more electric cars to the road, and less demand for oil."
For its part, OPEC in its World Oil Outlook for last December didn't seem worried about alternative energy usurping oil's dominance: it predicted that oil and gas will supply around 53 percent of the global energy mix by 2040, while gains in renewable alternative energy - mainly wind, solar, and geothermal - will amount to only a 4.3 percent share.