Diesel has the potential to topple the gasoline market by the year 2040.
According to an assessment by ExxonMobil (NYSE: XOM), titled The Outlook for Energy: A View to 2040, economic growth in developing nations will contribute to worldwide commerce. There has been more than enough bad economic news among many nations, but the future demand in diesel fuel is a promising sign that renewed growth is on the horizon.
The world energy market will grow 35% by the year 2040, the report estimates, and the world population will extend from 7 billion to 9 billion. This means a rise in energy demand and the need to expand the commerce sector in order to sustain a higher world population and rising economies.
The Outlook report also reveals that 75% of the world’s population will be in Asia and Africa by the year 2040. These continents will be the centers of economic growth. With low birth rates in Europe and North America, the balance in world population will shift to other parts of the world.
As Europe and North America contend with their own economic crises, there will be economic expansion in developing nations—something that will help post-industrial nations rise above economic dips. The western world will become more reliant on nations like China and India.
Europe and North America heavily rely on China for potential economic recovery. The United States and Europe rely on China through credit and trade. China is becoming more dependent on Africa for fuel and raw materials. All of these nations are interwoven in the commercial and trade sectors, and diesel will be the bedrock of not only the energy market, but the entire world economy.
By contrast, the conventional gas market will remain steady in the coming years due to the growth of hybrid and electric vehicles in the automobile market. Enhanced technology and lower prices will make green-energy cars more available to people around the world, according to Green Car Congress.
Also, vehicles that run on fossil fuels will be more efficient in energy consumption. This means lighter weight vehicles and cars will conserve less fuel—a factor that will slightly lower oil demand.
Gasoline will still be the top energy source for fueling vehicles, but there will be no spark that will push this portion of the energy market ahead of competitors. Diesel, however, will become the fuel of choice by governments and businesses as economies continue to grow.
Oil and natural gas will face stiffer competition from the renewable energy market as well, but, so far, there have been no alternative fuel sources in the diesel market. Other than natural gas and hybrid engines, diesel faces no major threat from any other energy source. Diesel will be the primary choice for airplanes, ships, trucks, and other industrial vehicles for some time.
Manufacturing is on the rise in places like China and India, and the construction of heavy model transports in the aviation and trucking industries will require diesel. Green Car Congress reports “heavy-duty vehicles, the largest subsector, sees the greatest growth in commercial transport demand by 2040.” The article goes on to highlight that 80% of growth in the commercial field will derive from Asian and African nations.
The largest area of manufacturing and large vehicles will be concentrated in Asia. India and China are two of the most populous nations on the planet, which means higher demand for fuel is a potential goldmine for struggling Western nations looking to revive their economies. This could lead to increased trade between Asia and the West, and Asia will have the highest demand in diesel fuel.
From Outlook:
“In Asia Pacific, total transportation demand doubles with almost 60 percent of the growth occurring in the light duty and heavy duty vehicle sectors. India’s energy transportation demand more than triples, and personal vehicle demand accounts for more than 40 percent of this growth. Africa, Latin America, and the Middle East will also see increases in transportation demand, but play a lesser role in worldwide transportation growth.”
In an increasingly globalized economy, diesel markets around the world will be tied together, mostly through the aviation sector, as nations will depend more on airplanes to ship goods abroad. Higher diesel demand will not only originate from the business sector, but also from private air travel, since more people from developing nations will have the means to travel.
No one can deny the worldwide demand in transportation, but there is a lingering question as to whether or not the trucking workforce will be able to satisfy higher demand, and this question is all the more pertinent in Europe and North America, where there has been a trucking shortage for some time.
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Domestically, the trucking driving industry is recovering from the economic crisis. According to Transport Topics, the American commercial transport field added 5,600 jobs in the month of February.
Current diesel prices are $3.93 per gallon. Since many truckers have to pay out of pocket for fuel needs, this may play a role in applicant deficiencies. Future demand for diesel means possible higher prices, which could have devastating consequences on an already starved Western trucking industry.
Unless there is more production of diesel fuel to alleviate price hikes, the high cost of diesel could slow economic growth in many nations.
The trucker shortage is an issue that needs to be remedied, but according to the Outlook report’s 2040 timetable, the Western transport industry has plenty of time to find solutions. This shortage could be temporary, and employers could bring in foreign truckers to fill future voids.
When it comes to commercial transport in Asia, however, nations like China and India will have population growth on their sides. There will not only be a growth in freighter transport, but also more workers that are eager to fill those positions.
Trucking is vital for nations that are undergoing high industrial output, and since China and India have larger populations than North America and Europe, there will be a higher number of applicants ready to work.
Diesel fuel will enhance the domestic and international markets as commerce continues to thrive. This is a positive sign for the world economy because it shows there is future growth for many nations that need an economic boost. The Exxon report is an indicator that all nations can benefit from international commerce, and diesel will be the tool with which that can happen.
Until Then,
Jon Carter
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