Do you remember Peak Oil? The theory maintained that oil production was about to reach a plateau followed by a permanent state of decline, with spiralling barrel prices and frightening shortages at the pump. The idea had geological and statistical foundations, yet failed to take technological evolution into account, as oil companies managed to tap into shale oil, tar sands and ultra-deepwater oil fields. Now, there is some evidence that the world may be heading in the opposite direction, towards a ‘reverse Peak Oil’. Not a plateauing in supply, but rather a tapering off in demand. ‘Demand for oil in the early 2020s,’ Statoil’s CEO Eldar Sætre said a few weeks ago, ‘can reach a peak and start to slow down. After that we will see a shrinking oil industry.’ Why? Because the electric car revolution is about to take off.
With 1.2 million electric vehicles roaming the planet’s roads, being just 0.1 per cent of the world’s fleet and displacing a mere 0.01 per cent of oil consumption, the forecast may seem a tad bold. Yet, something is happening. According to the International Energy Agency, an impressive 153 gigawatts of clean electricity was installed in 2015, with 500,000 solar panels deployed every day and two wind turbines coming online every hour.
“The journey from a scary supply-side Peak Oil to a greener demand-driven Peak Oil has begun”
In the same year, regardless of the low price of oil, electric car sales rose by a solid 60 per cent. Assuming such a growth rate goes on unabated for another eight years, at that point it could displace two million barrels of oil per day. The latest oil glut, with prices falling as low as $30, was triggered by a two million barrel surplus. Only time could prove Mr Sætre right. In the next two years Tesla, Chevrolet and Nissan are all expected to debut $30,000 electric cars. Many others will follow.
This is not to say the planet is about to stop relying on oil; our desperate need for energy will make hydrocarbons crucial for decades to come. Worth $1,720billion, the crude market is bigger than all raw metal markets combined. Oil makes the world go round (and the atmosphere hot), yet its geopolitical entanglements, and its dependency on the speculative futures markets’ gyrations, make room for plenty of surprises. The journey from a scary supply-side Peak Oil to a greener demand-driven Peak Oil, has begun.
This was published in the December 2016 edition of Geographical magazine.