Plastic and chemical industries will stay hooked on oil long after the transport sector has largely moved on, and their appetite for it is growing rather than shrinking. Electric vehicles are steadily eroding one of oil’s biggest markets, but a separate industrial demand is quietly expanding to replace it.
According to the International Energy Agency, petrochemicals are on track to surpass transport as the leading source of global oil consumption this year.
The global transport industry’s dependence on oil is genuinely weakening, with battery-powered cars now accounting for close to a quarter of new vehicle purchases worldwide. This steady rise in electric vehicle adoption is dragging down fuel consumption growth across the largest vehicle markets in the world.
China illustrates the trend most clearly, having pushed through a sweeping transformation of its passenger car fleet, commercial haulage and intercity rail networks that has materially flattened the country’s oil consumption curve.
The fuel market is retreating while the materials market moves in the opposite direction. What makes oil so difficult to substitute in manufacturing is the sheer breadth of what it produces. Processing crude yields two particularly critical intermediate substances, naphtha and ethane, which anchor the entire petrochemical supply chain.
Out of those substances come the core materials for everyday packaging, synthetic clothing fibers, industrial solvents and personal care products. Manufacturers also rely on oil-derived inputs for carbon fiber composites, synthetic graphite and engineered plastics. Those materials are built into wind turbines, grid hardware and battery electric vehicles.
Combusting oil as fuel releases its stored carbon into the atmosphere within moments. Converting it into manufactured goods locks that carbon into objects circulating through the economy for a decade or more. The sustainability picture is less damaging but far from neutral.
Plastic manufacturing already generates roughly 3.4% of annual global carbon output, a share that was recorded in 2019 and has risen since. Anticipated petrochemical expansion will push that figure higher and send more material into waste streams that existing infrastructure cannot adequately handle.
Aviation and shipping present a separate problem that clean energy plans frequently underestimate. Powering wide-body aircraft or large cargo vessels demands energy storage that current battery technology cannot support across meaningful distances. The gap is far from being bridged.
Blended propulsion systems combining electric motors with conventional fuel will remain the realistic option for both industries throughout the near term. Rather than oil losing its role as a fuel source as electric cars become ubiquitous, it will likely pull back from transportation but remain firmly embedded in other segments.
As entities like GeoSolar Technologies Inc. work to bring more products onto the market with the aim of displacing fossil fuels in applications like home heating and cooling, a time may come when only a few industries will still require oil in large quantities.
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