• ‘We must push back’ on idea that world can do without oil
• Transition will be slower, more costly than forecasts: CEO
A growing body of research is painting a bearish picture for oil beyond the next 20 years as more environmentally friendly vehicles hit roads across the globe. Rapid adoption of electric vehicles could mean oil demand peaks by the 2030s, according to Bank of America and BP Plc, a prospect that’s likely to worry institutional investors in the energy industry.
But Nasser criticized “irrational hopes of rapid switching” and said electric vehicles won’t deliver quick and cheap reductions in carbon emissions until the power that fuels them is clean. Future transportation will not be a matter of “either/or” between internal combustion engines or electric vehicles, he said, pointing to alternatives that include hydrogen-fueled cars and plug-in hybrids.
The challenges for large-scale use of transportation alternatives are affordability and infrastructure, he said. Observers are glossing over the difficulty governments will have subsidizing huge fleets of electric vehicles, according to Nasser.
He called on the industry to expand exploration, push to offset natural declines in producing fields and spend more than $20 trillion dollars in the next 25 years to meet rising demand.
“Battery electric vehicles will grow and have a welcome role to play in global mobility. But given the competition and complexity of the transition, their impact on the 20 percent oil demand should not be exaggerated.”
He also pointed to the increased demand for oil outside of transportation, which makes up 20 percent of consumption, including its use in petrochemicals and air transport.
Nasser also said:
- Despite rising shale production forecasts, “we remain confident that market fundamentals are healthy.”
- Major oil producers are showing “exceptional” restraint on output and “there are multiple downside geopolitical risks to supply.”
- Even with recent financial market volatility, “the broad-based recovery in the global economy remains on track.”