Investing.com -- Norway leads zero-emission car sales, but surprisingly that hasn't left a big dent in the electric car superpower's appetite for oil, suggesting that calls on peak oil are premature.
In January, a record 92.1% of all new cars sold were purely electric in Norway, UBS said in Wednesday note, a trend that has been gaining momentum since the rise in EV sales in 2010. But so far, the impact on oil demand in Norway "has been negligible," UBS adds, noting the plunge gasoline demand has been more than offset by other oil products.
Norway's rise to electric car superpower status has been fueled "generous financial incentives," partly funded by the country's huge oil and gas wealth, UBS said.
The lack of bite on oil demand from surging EV sales has been driven by slow adoption of EVs, or slow fleet turnaround, with electric cars making up just 21% of the total car fleet at the end of 2023, while gasoline cars accounted for around 23% and diesel cars for about 33%.
Range anxiety has also possible kept a lid on growth of EV adoption as the fear of running out of power before reaching a charging station has many in Norway opting for internal combustion engine, or ICE, vehicles or hybrids for the longest distances.
"Another possibility is that electric vehicles are used for short distances, but Norwegians still rely on fossil fuels to cover longer distances," UBS said.
Beyond the use of oil for transportation needs, Norway has seen a jump in demand for oil products that has also played a role in cushioning the blow of rising EV sales.
"In Norway, LPG/ ethane demand, which is mostly used in the petrochemical sector, but also as fuel for heating and cooking - has been particularly strong, around 35%, UBS added.
Norway's steady appetite for oil serves as a reminder that rising zero-emission car sales may not lead to an immediate fall in oil demand, UBS says, reiterating its view that global oil demand has not yet peaked.
"We continue to believe it will increase over the coming years, then plateau and begin a gradual decline at some stage during the next decade," it added.