Oil’s Long Goodbye: Why the Energy Transition Will Be Slower Than Many Expect
The rapid rise of electric vehicles has fuelled predictions that the world’s dependence on oil is nearing its end. China now dominates the global electric vehicle market, while governments across Europe, North America and parts of Asia continue to subsidise the transition away from internal combustion engines. At the same time, some oil exporters have begun pursuing more independent pricing and export strategies, prompting speculation that an era of intensifying competition among producers may be approaching as long-term demand weakens.
The logic appears straightforward. If petrol and diesel consumption steadily declines, oil-producing states may increasingly compete to secure market share by selling larger volumes at lower prices. Such a scenario would challenge the cohesion of producer alliances and could reshape the geopolitical influence of major exporters.
Yet this conclusion rests on an incomplete understanding of the global energy system.
The electrification of transport does not eliminate the need for energy; it merely changes the form in which that energy is consumed. Electric vehicles replace liquid fuels with electricity, but electricity itself must still be generated. Across much of the world, that generation continues to depend heavily on fossil fuels. Oil plays a smaller role than coal and natural gas in electricity production globally, but hydrocarbons collectively remain indispensable to modern power systems, particularly in developing economies and regions with limited renewable capacity.
This is why the growth of electric vehicles, although significant, should not be mistaken for the end of the oil age. Decarbonising transport without simultaneously transforming electricity generation simply shifts emissions from the fuel tank to the power plant. The broader energy transition therefore depends not only on the adoption of electric vehicles but also on the large-scale expansion of renewable electricity.
That transformation is underway, but it remains incomplete. Solar and wind power have expanded rapidly, while hydroelectricity continues to provide substantial low-carbon generation in many countries. Yet these sources still face structural constraints, including intermittency, storage limitations, transmission bottlenecks and the enormous capital investment required to modernise electricity grids. Until these challenges are addressed at scale, fossil fuels will continue to underpin global energy security.
Consequently, oil is unlikely to lose its strategic importance in the foreseeable future. Beyond transport, it remains essential to aviation, shipping, petrochemicals, plastics, fertilisers and countless industrial processes for which commercially viable alternatives remain limited or prohibitively expensive. Even if road transport becomes increasingly electrified, these sectors will continue to sustain substantial demand for crude oil.
This suggests that the transition away from oil will be evolutionary rather than revolutionary. Producer states may eventually face greater competition as demand growth slows, but the prospect of a rapid collapse in oil consumption appears overstated. Instead, global markets are likely to experience a prolonged period in which hydrocarbons and renewable energy coexist, with the balance gradually shifting over several decades rather than a few years.
The decisive turning point will not be the number of electric vehicles on the road but the composition of the world’s electricity mix. Only when renewable sources—solar, wind and hydroelectric power—become the dominant providers of reliable, affordable energy will oil’s central role begin to diminish in a meaningful way.
Until then, despite accelerating technological change and ambitious climate policies, oil is likely to remain the backbone of the global energy economy for many years to come. The transition has undoubtedly begun, but the age of oil is entering a long twilight rather than approaching an abrupt sunset.