Electric vehicles are growing in popularity every year as eco-conscious drivers look for ways to reduce their carbon footprint and their reliance on fossil fuels. One topic that keeps coming up when consumers are talking about electric cars is the impact they will have on the oil industry. It would make sense that consumers switching from internal combustion engines to electric vehicles could be detrimental to oil, but the opposite appears to true. Why will Big Oil continue to grow in spite of the adoption of electric vehicles?

Complement Instead of Disruption

New technologies have a habit of disrupting old ones. Look at what happened to film when digital cameras became affordable for the average consumer, for example. Film used to be the go-to for taking pictures because digital cameras were either expensive or created low-quality photos. Today, high-quality pictures are standard even from cellphone cameras, and film has been reduced to something used by hobbyists. This isn’t always the rule, though.

Electric cars won’t be a disrupting technology for the oil industry, for multiple reasons.

First, as they do now, these vehicles will co-exist with gasoline and diesel-powered vehicles for quite some time. Right now, electric cars are an oddity when compared to gasoline vehicles. While they are becoming more affordable for the average driver, many — such as those being manufactured by Tesla — are still too expensive to consider purchasing.

Reducing Oil Usage and Increasing Demand

The International Energy Agency estimates that there will be 50 million electric cars on the road in less than 15 years. That number will increase another six times by 2040 to 300 million. Even with that massive influx of electric vehicles, it’s estimated that these vehicles will only reduce global oil use by roughly 2 percent.

The use of electric cars won’t be enough to offset the growing demand for oil in other industries like shipping, aviation and petrochemical production. Electric cars might mean consumers are putting 2.5 million barrels of oil a day fewer in their vehicles, but the demand for oil in these other industries is expected to add an additional 12 million barrels a day to the global demand by 2040.

Air travel alone can account for a large portion of this increased demand. According to industry experts, air passenger traffic is expected to double in the next 20 years.

Investing in Oil and Gas

Today, the oil and gas industry is considered one of the most tax advantageous investments in the world. The industry is rife with tax deductions, from deducting tangible and intangible drilling costs to classifying income as either active or passive, depending on the type of investment. Earning royalties from an oil drilling expedition would be classified as passive income, while the activity itself is classified as active income.

Efficiency Improvements and Consumer Tax Incentives

Car manufacturers have come a long way from the vehicles of yesteryear, which had fuel efficiency in the single digits. Gasoline and diesel-powered cars are becoming more efficient every year, and while they don’t yet rival the fuel-to-distance ratio of electric or plug-in hybrid vehicles, engineering is pushing them in that direction.

For many people, purchasing an electric vehicle is only feasible through the use of federal or state tax incentives, which can save the buyer anywhere from $2,500 to $7,500 on the purchase price. These are in place to encourage drivers to choose more eco-friendly transportation options, but if they aren’t available, there will be less of a market for electric vehicles.

There is also the problem of charging these vehicles on current electric grids, which rely primarily on the burning of fossil fuels to create electricity. This can be offset by utilizing solar, wind or hydroelectric power sources, but they aren’t available everywhere, so the average driver might not have access to these eco-friendlier power alternatives.

When it comes down to it, electric vehicles are becoming more mainstream. While they can help offset some of the carbon monoxide generated by daily traffic, they won’t impact the Big Oil industry enough to have any sort of major impact. If anything, other industries will take up the slack when it comes to oil and gas usage. Electric cars are a great option for consumers who want to reduce their carbon footprint, but they won’t be taking any money away from Big Oil any time soon.