Is Norwegian Oil Demand Finally Peaking Thanks to Electric Cars?

It takes a while for all those electric cars to really make a dent.

"UK electric car sales grow 366%"
"Dutch plug-in car sales up 170% in April"
"US plug-in car sales post highest ever month in March"

OK, I admit it. It's easy to get carried away as a clean energy/electric transportation advocate. With all these headlines rolling in about record sales and growing numbers, we might be tempted to think the end of the oil age is already upon us. But it's important to remember a few caveats:

1) These high percentage growth rates are starting from a really low baseline
2) They are a percentage of new car sales, not overall cars on the road
3) They are usually based on monthly sales, so particularly high numbers may be based on anomalies—such as a new model hitting the market, or an incentive package soon disappearing
4) If everyone else is driving a giant tank, then any emissions savings are going to be offset by other people's consumption

In Norway, however, the sales of electric cars have been so high for so long, that we might be more justified in positing questions about oil industry disruption. In fact, an article by Robert Rapier over at Forbes suggests we might finally, finally be seeing the start of an actual shift in oil consumption thanks to the adoption of electric cars.

Here too, of course, caution is justified. After all, we're only talking about a 2.9% drop in gasoline sales, and a 2.7% drop in (taxed) diesel—coming on the heels of flat sales the year before. But with plug-in vehicles now representing something like 10% of the cars on Norway's roads, it is getting to the point that we might start seeing an impact at the pump.

The real question will be whether the trend now accelerates, and I believe it should. After all, technological adoption isn't linear, and as a growing number of people opt for electric vehicles, acceptance and interest among the hold outs ought to follow. Also, it's worth noting how rapid the growth in sales has been—meaning it's only been in the last few years that we've seen 20-30% of overall sales being plug-in. That means that, while early growth years were a necessary stage to get through, it will really only be these later years that put a dent in demand. But now that we've gotten to that stage, for the foreseeable future, we'll see almost all cars being 'retired' from the fleet being fully fossil fueled, and a majority of those being added being electric and/or plug-in hybrid.

Add to that the fact that—beyond a certain point—it will become challenging for fossil fuel retailers, and traditional mechanics shops, to continue with business as usual, and we may see further disruption in the market that means the dropoff in oil consumption will be unpredictable and a lot more rapid than these early blips suggest.

So, how you look on this depends on whether you're a glass-half-full, or half-empty, kind of thinker. [I already look forward to Lloyd's piece telling me why I am wrong :-)] On the one hand, it's a sign that we can indeed put a dent in oil demand—and that it's the beginning of a much longer, more sustained decline. On the other hand, it's a reminder of just how long it takes to turn a system around. That Norway, which has been pushing the electric car thing for some time now, is only just seeing a (tiny!) shift in demand should be an incentive for all of us to get our acts in gear.