Global oil demand will keep growing into the 2040s due to higher consumption of plastic goods even as the electric vehicle fleet expands rapidly and technology revolutionises transport, BP said in its annual Energy Outlook on Wednesday.
The forecast of sustained demand growth for the fossil fuel comes as other oil companies such as Royal Dutch Shell brace for demand to plateau by the early 2030s while countries gradually shift to less-polluting energy.
In its industry benchmark report, the British oil and gas company also said current recoverable global oil supplies of around 2.6 trillion barrels are sufficient to meet demand out to 2050 twice over.
The abundance of oil could set the stage for a long-term struggle between low-cost producers such as US shale companies, Opec members in the Middle East as well as Russia and more expensive offshore production in areas such as Brazil, the North Sea and Asia, said the BP chief economist Spencer Dale.
“Low-cost producers will use their competitive advantage to increase their share relative to higher-cost producers,” he said.
He did not provide a forecast for oil prices.
According to BP forecasts, oil demand from cars will rise from around 19 million barrels per day in 2015 to 23 million bpd in 2035. That will come amid rapid growth in the car fleet and despite improvements in engine efficiencies and an expected 100-fold expansion in the number of electric vehicles to 100 million over the period.
Under this scenario, electric vehicles would constitute 5 to 6 per cent of the global car fleet.
BP increased its forecast for the rise in electric vehicles by 2035 from the 70 million predicted last year due to lower battery costs and higher efficiency standards, Dale said.
Technological shifts such as car sharing and self-driving vehicles that increase car usage but reduce the number of cars needed are likely to play a critical role in limiting oil demand.
“If you get a combination of a very rapid increase in electric vehicles with a very rapid increase in these new technologies the numbers involved could get bigger and more significant,” Mr Dale said.
The rapid growth of developing economies in Asia, Africa and the Middle East means consumption of plastics and fabrics manufactured using oil-based feedstock, will sustain demand growth, BP said.
“Key growth isn’t to power transportation … rather oil as an input into other products, particularly into petrochemicals and fabrics,” Mr Dale said.
BP revised down its forecast for total energy demand into 2035 by almost 1 per cent relative to last year, primarily due to a revision of China’s coal demand due to slower growth prospects.
The company said renewable sources of energy such as wind and solar power are expected to quadruple, with non-fossil fuels providing half of the increase in energy consumption. Gas, seen as a less polluting fossil fuel in the transition to cleaner energy, will grow faster than oil and coal at an annual rate of 1.6 per cent.
* AP
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