According to Bloomberg New Energy Finance (BNEF) a shift is under way that will lead to widespread adoption of Electric Vehicles (EVs) in the next decade.
This may lead to a similar type of oversupply/production or oil glut of up to 2 million barrels a day that led to the collapse in prices in 2014.
The problem this time though is that as EV adoption hits a critical mass, it will gradually begin to make oil worthless, just as the rise of Ford’s mass produced cars in the early 1900’s led to the demise of the horse and carriage.
Last year EV sales grew by about 60 percent worldwide, according to BNEF. The effect of continued 60 percent growth would be that electric vehicles could displace oil demand of 2 million barrels a day as early as 2023, according to BNEF.
BNEF concludes with: “Whenever the oil crash comes, it will be only the beginning. Every year that follows will bring more electric cars to the road, and less demand for oil.”
Eight years may seem far away, however we have been warned about what the near future holds for our oil dependent economy.
It’s probably time for all subsidies (FX and fuel) to go and we begin to critically change the structure of this economy, else we will wake up in 2023 to the same economic nightmare we are having today, with no hopes of oil prices ever recovering.
The economic dislocation from that would be better imagined than experienced, especially if no lessons are learnt from today’s oil price collapse.