Despite the potential for dramatic changes in the transport
sector in coming years, the slow rate of global passenger vehicle
fleet turnover likely means the impact on oil demand and key
sources of supply such as Canadian oil sands will be gradual, IHS
Markit says
The prospect for dramatic changes in transportation has led to
increased uncertainty about future oil demand. But the gradual pace
of global vehicle fleet turnover and the need for significant
upstream investment to maintain existing oil production volumes
over the longer term will continue to present opportunities for
ongoing expansion of the Canadian oil sands, according to a new
report by IHS Markit (Nasdaq: INFO), a world leader in critical
information, analytics and solutions.
Entitled Where Will Transportation Drive Global Oil (and Oil
Sands) Demand?, the IHS Canadian Oils Sands Dialogue report
explores the key factors and uncertainties that may shape the
future of automotive demand for liquid hydrocarbons—and, in turn,
on global oil demand and key sources of global crude supply, such
as the Canadian oil sands.
While IHS Markit and many other prevailing long-term global
energy forecasts expect oil demand to continue to grow over the
next two decades, the potential for disruptive changes to
transportation—a sector that accounted for half of the 96 million
barrels per day (mbd) of oil consumed globally in 2016—have added a
level of uncertainty.
The report says that the potential proliferation of increasingly
stringent vehicle ownership and use policies, changes in consumer
behavior, new technologies and the pace of economic growth, as well
as the impacts of new mobility models such as ride hailing services
and autonomous vehicles are key sources of uncertainties facing
global oil demand. The combination of these factors could
foreseeably lead to a peak in oil demand or, alternatively, lead to
it reaching new heights.
Regardless of how these factors play out, the gradual nature of
transitions and the long life of the existing on-road fleet means
that the impact on oil demand will likely be at a measured pace,
the report says. 96 percent of new vehicle sales featured
combustion engines in 2016. IHS Markit estimates the average
vehicle life globally to be about 15 years, which means that the
impact of new vehicle technologies is expected to take time to
materially affect the vehicle fleet and overall fuel demand.
“When we look at the future of the car and the impact of key
factors such as electric vehicles sales, we see the slow turnover
rate of the global vehicle fleet muting the effect of new
technologies on global oil demand,” said Kevin Birn, director for
IHS Energy who leads the Oil Sands Dialogue. “However, the future
of the car—and the sources of energy that propel them—is certainly
not predetermined and the potential exists for the future to
surprise—up or down.”
The report also notes that with slower or even flat world oil
demand, key sources of oil supply will remain an important part of
meeting global oil demand. IHS Markit expects that the world needs
to find and replace about 45 million bpd of crude oil by 2040 (more
than half of what the world consumed in 2016) to meet demand
growth—37 mbd to offset production from declining fields plus 8 mbd
to meet demand growth.
Canadian oil sands are expected to remain one of the key pillars
of global crude oil supply growth due in part to the fact
that—unlike most other sources of supply globally—production from
oil sands facilities does not decline. The absence of production
declines means that each investment in new oil production results
in growth, the report says.
“Looking ahead to future automotive demand for refined products
and, in turn demand for crude oil, it is easy to fixate on one or
two factors. But this misses the larger picture,” said Tiffany
Groode, IHS Energy senior director. “More likely, the future for
transportation will come from a variety of variables, from economic
activity and government policy, to shifting consumer preferences.
Navigating this uncertainty and understanding how numerous
variables will interact and influence one another will be
pivotal.”
Where Will Transportation Drive Global Oil (and Oil Sands)
Demand? and all other IHS Oil Sands Dialogue Research is available
at www.ihs.com/oilsandsdialogue.
Related Research:
Following on this research area, IHS Markit has launched a major
multi-client research initiative, Reinventing the Wheel, to further
analyze the deep and potentially dramatic changes occurring in the
automotive market. To be conducted over the first half of 2017,
this project will provide a first-of-its-kind, system-wide analysis
of transportation and the potential implications for the oil, gas,
automotive, electric power and chemical industries.
Chaired by Daniel Yergin, IHS Markit vice chairman and Pulitzer
Prize-winning author, Reinventing the Wheel will focus on the
world’s largest automotive markets—the United States, Europe and
China, as well as India—with projections out to the year 2040.
The study, to be completed in 2017, will consist of two parts.
Part I will include the development of scenarios representing
potential paths for the future of the car, energy and chemicals.
Part II will assess the impact, investment implications and
strategic choices for the automotive, oil, gas, electric power and
chemical industries.
For more information about Reinventing the Wheel, please contact
Kate Hardin (Energy), Kate.Hardin@ihsmarkit.com; Bjoern Huetter
(Automotive), Bjoern.Huetter@ihsmarkit.com; or Anthony Palmer
(Chemicals), Anthony.Palmer@ihsmarkit.com
About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical
information, analytics and solutions for the major industries and
markets that drive economies worldwide. The company delivers
next-generation information, analytics and solutions to customers
in business, finance and government, improving their operational
efficiency and providing deep insights that lead to well-informed,
confident decisions. IHS Markit has more than 50,000 key business
and government customers, including 85 percent of the Fortune
Global 500 and the world’s leading financial institutions.
Headquartered in London, IHS Markit is committed to sustainable,
profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd. All
other company and product names may be trademarks of their
respective owners © 2016 IHS Markit Ltd. All rights reserved.
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