Those who control a large portion of the world’s oil aren’t concerned about EVs.
We’re half a decade into an era of having EVs on the road in significant numbers, and more EV models are planned for the near future, but the Organization of the Petroleum Exporting Countries, better known as OPEC, doesn’t seem too worried, according to The Financial Times.
OPEC has already predicted that just 6 percent of cars on the road in 2040 won’t be running on gasoline or diesel, while oil company ExxonMobil said EVs would account for less than 10 percent of new-car sales in the same year.
This despite the fact that small decreases in oil demand can cause prices to drop sharply. That’s been evident over the past two years, as prices have dropped from $114 a barrel for crude oil to under $30 per barrel earlier in 2016. EV growth and increasing fuel economy in gasoline- and diesel-powered models are part of the reason for reduced demand. And more EVs, as well as more fuel-efficient gasoline-powered vehicles, are on the horizon. Vehicles like the Chevrolet Bolt and Tesla Model 3.
Saudi Arabia, one of the key members of OPEC, may be seeing the writing on the wall, as the country is planning to shift its economic focus more towards investing over time. Of course, even this plan depends on an initial public offering involving its Aramco state-owned oil company.
Oil revenues are unlikely to fully disappear, especially as crude oil is use to make more than just gasoline and diesel fuel. But they could face a permanent reduction as less and less gasoline and diesel is used to power the world’s vehicle fleets. OPEC is showing no concern for now, but Saudi Arabia may be showing the rest of the group a new way forward should revenues permanently drop.