Oil Demand by Sector
At the sectoral level, growth in oil demand comes mainly from the road transportation, petrochemicals and aviation sectors
At a global level, oil demand is expected to increase in every sector except electricity generation. However, it is the road transportation sector, together with the petrochemicals and aviation sectors, which will contribute most to the additional demand. In fact, the road transportation sector accounts for one-third of global demand growth between 2014 and 2040. The petrochemicals and aviation sectors together account for another third. The remaining growth comes mainly from the marine bunkers, residential/commercial/agriculture and other industry sectors.
While oil demand in the OECD region declines in every sector except aviation and petrochemicals, demand growth is expected in every sector except power generation in developing countries. In the case of Eurasia, a noteworthy demand increase is only expected in the road transportation sector and, to a lesser extent, in the aviation sector.
Demand in the road transportation sector: two-way traffic
In the period up to 2040, developing countries’ oil demand in the road transportation sector will increase by 12.6 mboe/d. In contrast, in the OECD region it will shrink by 6.7 mboe/d. While a downward trend in oil use per vehicle is expected in both regions, on the back of better efficiency, the penetration of alternative fuel vehicles and a decline in miles travelled per vehicle, the vehicle stock trend will be markedly different.
Between 2014 and 2040, the total number of passenger cars will only increase by 125 million in the OECD, whereas almost 1 billion vehicles will be added in developing countries. Similarly, 47 million new commercial vehicles are expected in the OECD and 229 million in developing countries.
Penetration of alternative fuel vehicles will increase in the next decades but will remain at low levels
By 2040, only 6% of the passenger car stock and 5.3% of commercial vehicles will be running on non-oil fuels. Without a technology breakthrough, battery electric vehicles are not expected to gain significant market share in the foreseeable future. Besides the high purchase price, there are serious challenges in terms of convenience, such as range limitations and poor battery performance during very hot or cold weather conditions.
Similarly, anticipated high purchase costs, the lack of refuelling infrastructure, and relatively expensive hydrogen fuel will make fuel cell electric vehicles less likely to become a global breakthrough technology over the forecast period. Natural gas vehicles will be the most attractive option. However, high price premiums and a scarce network of refuelling points in most countries will limit the large-scale adoption of this technology. The overall picture is not too different in the commercial vehicles segment.