Surging oil prices could accelerate the shift to EVs, says the IEA

Soaring oil prices may help speed climate action by boosting the shift towards electric vehicles, says the International Energy Agency (IEA). However, this would come at the toll of the economic recovery from the SARS-CoV-2 pandemic, adds the global energy watchdog.

As compared to May 2021, the global crude demand has escalated by an average of 3.2 million barrels per day in June 2021. However, the return of oil production has failed to maintain pace and has triggered a constant upsurge in market prices.

For the record, U.S. drivers are already witnessing all-time high costs when filling up their tanks owing to escalating oil market prices. While the price for every gallon reached a record high of $3.14 on Monday, 12th July 2021, analysts have raised the possibility that the price may climb to $5 per gallon.

Therefore, the cheaper price of operating an electric vehicle might encourage more number of motorists to switch sooner than planned, pushing efforts for reducing emissions from transport. However, the higher prices of fuel could tend cost inflation across the global economy, especially in developing countries.

The energy watchdog warned that the prices, which escalated by two-thirds in 2021 to highs of $77 a barrel earlier in July 2021, could climb higher, leading to market volatility unless more barrels are pumped by big oil manufacturers.

As added further by the IEA, the prices at these levels could assist in the acceleration of energy transitions and escalate the speed of electrification of the transport sector. In addition, these prices could also put a drag on economic recovery, especially in developing and emerging nations.

As per sources, the Paris-headquartered watchdog utilized its distinguished monthly oil market report for warning the members of OPEC and OPEC+. It stated that without triumph in its oil production talks, the industry would considerably tighten as the demand rebounds from the previous year’s coronavirus-induced plunge.

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