The winds of change are blowing in the oil sector where demand is expected to be significantly disrupted by the electric car revolution – particularly in China.

The global auto industry would soon undergo a massive transformation as electric cars replaced petrol-fuelled vehicles, Westpac Institutional Bank director of economics Justin Smirk told the RIU Good Oil conference in Perth yesterday.

“We have this environment where we have seen a tradition of stronger growth leading to stronger oil consumption,” he said.

“We have these lower prices stimulate growth in demand particularly in the US and a recovery in the Western world in terms of oil consumption that we hadn’t seen for a while.

“Electric vehicles are coming and are going to be revolutionary. Not just in terms of what energy they use but also in terms of the quantities used to manufacture them, the number of people taken to manufacture them.”

For the last hundred years, the middle class in North America and Europe defined consumption and global production.

“By 2030, it’s going to be Asia with its huge market,” he said. “Whatever they determine will be the dominant form of transport. They will dominate everything just by their pure size.

“Whatever China thinks is a dominant form of technology or consumption will dictate what we do.

“If they are going electric, whether electric plug-ins or electric hybrids or electric hydrogen, it will define the types of cars we get as well,” he added.

For 100 years or so, oil supplies have dominated the automotive industry, however, the increase demand for electric cars from China will inevitably lead to a fall in oil consumption, Mr Smirk said.

“Economic growth in China may not drive the same amount of oil consumption that it has in the past and it is something that could blow up my forecasts about oil prices so watch this space,” he said.

In 2016, China was by far the largest electric car market, accounting for more than 40 per cent of the electric cars sold in the world and more than double the amount sold in the United States.

It is envisaged that electric car stocks may range between 9 million and 20 million by 2020 and between 40 million and 70 million by 2025.