The potential growth of electric vehicles and driverless cars wouldn’t only hurt oil and gasoline demand, it could also put a dent in the growing petrochemical sector.
Vehicles’ bumpers, consoles, rubbers, paints and much more are all derived from petrochemicals, and the shift from steel to plastics in cars has driven a lot of the growing petrochemical demand, experts said Tuesday at the World Petrochemical Conference by IHS Markit in Houston.
Smaller vehicles being shared by more people and getting into fewer accidents — less replacement parts and longer-lasting vehicles — all result in shrinking petrochemical demand per vehicle. That’s more than offset though by the growing global demand overall for new vehicles, especially in the developing nations where most people have never experienced car ownership.
“It’s that revolutionary potential to change mobility that really could drive the EVs,” said Kurt Barrow, IHS Markit vice president for oil markets, midstream and downstream insights.
It takes a while to make this major shift because vehicles typically last about 12 years. But the changes can occur faster in emerging countries than in the U.S. where they don’t have the prolonged history of personal car ownership. They can shift right to ride-sharing and maybe even driverless cars.
The effects are at least 20 years away from making substantial impacts, Barrow said. “It’s kind of a snowball rolling downhill,” he said.
IHS Markit Senior Vice President Dave Witte said the potential exists for “pretty rapid change” with Americans already embracing ride-sharing technologies with companies like Uber and Lyft. Most American cars sit idle the vast majority of the time, and the shift already is beginning, he said.
For his part, Barrow acknowledged he’s part of the grand experiment.
“I do drive a Tesla,” he acknowledged with a laugh. “You have to understand your competition.”