Electrification of Transport
The electrification of transport is a macro trend with a long-term impact on the oil demand.
As gasoline cars age and consumers are incentivised to buy EVs, peak oil consumption could be insight.
How is the electrification of transport disrupting oil and gas?
The sales of EVs increased exponentially throughout 2021.
Around 2 million EVs were sold, in Q1 2022 — an increase of 75% compared to Q1 2021.
But that growth trend has slowed down with the removal of subsidies and a downturn in the economic cycle.
The transport sector accounts for nearly 60% of global gasoline and petroleum demand, so the mass electrification of transport is a disruption to the oil and gas sector.
In 2021, consumption of gasoline stood at 8.8 million b/d, which was about 44% of the total US petroleum consumption.
Global sales of electric cars were approximately 16.5 million, according to IEA data, an increase of 43.5% from 2018.
China is the global leader in EVs and accounted for 7.5 million sales, followed by Europe with 5.5 million sales, while the US accounted for 2.5 million sales during the same period.
In light of the exponential growth in the electrification of transport

Norwegian petroleum refiner Equinor ASA forecasts a significant drop of 47% in oil demand in the global market between 2018 and 2050
A standard combustion engine passenger vehicle in the US consumes about 10 barrels of oil equivalent (BOE) per year. A motorcycle uses 1, a Class 8 truck about 244, and a bus uses more than 276 BOEs per year.
So the electrification of transport means that demand for that oil is substituted for alternative energy sources.
Since 2015, two and three-wheeled vehicles, mopeds, scooters, and motorcycles, have resulted in most of the oil saved from EVs, on a global scale. Asia has been quick to adopt EVs, which displaced the demand for almost 675,000 barrels of oil per day in 2015. By 2021, that number soon exceeded 1 million barrels per day.
Passenger vehicles have been the quickest to adapt to the mass electrification of transport, and the market is expected to grow exponentially with global sales exceeding 10 million last year, 2022.
EV passenger sales trend is expected to continue, which could save 886,700 barrels of oil per day in 2025.
Meanwhile, work continues to increase the number of large electric trucks on the road by 2025.
The next phase will be to successfully automate electric delivery trucks by 2025.
Will the electrification of transport lead to an oil price drop?
Oil producers are already responding to falling demand by cutting supply output.
So while investments in new supply capacity decrease more rapidly than demand, oil prices could remain unstable and high.
The shift toward electrification of transport’s main benefit is low air pollution and respiratory diseases.
The shift toward electrification provides an investment opportunity to meet the growing demand for electricity with clean energy sources, such as wind, solar and nuclear power.
Infrastructure investments to support the electrification of transport, EV charging stations, and battery storage capacity could also provide investment opportunities.
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