The Great Transition: Andreas De Vries and Salman Ghouri on the Future of Oil

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Competent forecasters produce strategic guidance based on probable trends and their effects within a broad range, rather than making bold statements about the future. An omnipresent debate among energy analysts is the impact of electric vehicles (EVs) on oil demand as they encroach on the Internal Combustion Engine Vehicle (ICEV) market.
Predictions here often only consider near-term EV trends while missing a more holistic picture, including the historic curve of technological adoption and a systemic analysis approach that looks beyond an application’s initial intended use. Given these divergent approaches, estimates of the number of electric vehicles in the world by 2040 differ by hundreds of millions, with varying scenarios carrying profound implications for resource revenue dependent countries, including Iraq. Looking beyond EVs, there are a growing number of trends that will have a dramatic effect on oil demand, set against the march of changing demographics. In this respect, some have argued EV adoption is only one component of a much bigger picture.
To discuss these developments, Iraq Energy Institute invited Salman Ghouri and Andreas De Vries, who have built their careers in strategic energy forecasting and understanding the political economy of energy, advising senior government officials and private sector decision makers. We have shared their commentary below, under five broad headings:

We do not foresee oil demand to go away anytime soon, not even if transport electrifies faster than (we) assumed in “Wake up call for oil companies: electric vehicles will deflate oil demand”. It is not likely, namely, that the 1 billion or so ICEVs on the road will simply be abandoned once EVs become cheaper to manufacture than ICEVs. We expect that to take probably another decade, after which the existing fleet…

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