Demand for Vehicle Fuel Forecast to Drop
South Korean oil companies are becoming increasingly concerned with the rapid expansion of the global electric vehicle (EV) market. At present, 95.6 million barrels of petroleum are consumed a day across the world and vehicles account for 45 percent of the daily consumption. However, the ratio is likely to fall over time.
The International Energy Agency (IEA) recently said in its Global EV Outlook 2018 report that the global EV market showed an average annual growth rate of 59 percent during the past five years and a total of 3.1 million EVs were supplied around the world until 2017. The volume is expected to reach 228 million units in 2030, causing a decrease in fuel tax of no less than US$92 billion in 2030 alone. This means diesel and gasoline consumption for internal combustion engine vehicles cannot but decrease.
As of the first half of 2018, petroleum accounted for only 1.5 percent of South Korea’s total power generation fuel imports. The ratio is likely to fall as the ratios of renewable energy sources are going up.
South Korean oil companies are mulling over how to respond to such market changes. “EV market expansion will pose a significant threat to our business in the near future,” said S-Oil CEO Othman Al-Ghamdi in his new year message. “We need to proactively respond to industrial changes that will follow EV and hydrogen vehicle market expansion,” said GS Caltex CEO Huh Se-hong.
“Demands for vehicle fuels are likely to drop mainly in advanced economies where EVs are becoming popular at a faster pace,” said an industry expert, adding, “South Korean oil companies can take a leaf from SK Innovation, which successfully transformed itself into an EV battery manufacturer.”