Big oil to lose control of auto industry?
The mainstream press insisting that electric vehicles aren’t selling and that cheap petrol (not in Australia) will be the final nail in the electric coffin. Most recently a widely cited report in the US found that car buyers were rushing to trade in their hybrid and electric cars for fuel guzzling SUVs. Bloomberg, however, has long presented a more pro-EV picture. A recent article, Big Oil Is About to Lose Control of the Auto Industry, highlights a few facts that are seldom mentioned outside the EV media:
- Oil consumption has been flat for a decade. Demand peaked in 2004 and has been falling ever since.
- Plug-in sales have quintupled in the last four years. Global sales were 288,500 units in 2014 and manufacturers are steadily introducing new models.
- EV battery costs have fallen 60% since 2010, and analysts at Bloomberg New Energy Finance (BNEF) expect them to keep declining at the same pace, bringing plug-in prices in line with those of legacy vehicles within a decade.
- Investment in bio fuels, Big Oil’s preferred ‘clean’ solution, has plunged 90% since peaking at $29.8 billion in 2007.
Bloomberg finds that all of these factors are converging to weaken the link between oil and driving and predicts that the transportation system of the future will look a lot different than what the major oil companies are fuelling now According to BNEF founder Michael Liebreich, we are is in an age of plenty: “We have cheap oil, cheap gas, cheap renewables. You do have an abundance of supply in a way you haven’t had for decades. We also are in an age of competition.”
As you’d expect Shell Oil has a different view according to a company presentation a recent conference in the US. From seven presentations over two hours and almost 80 PowerPoint slides, several key points emerged:
- Global energy demand will continue to increase through 2050, potentially doubling from the level consumed in 2000
- Carbon dioxide emissions “must be half today’s [level] to avoid serious climate change”
- Renewables could supply up to 30 percent of the world’s energy in 2050
- In 2050, coal will still provide three times as much total energy as solar; the global proportion of wind energy will be far smaller yet
- Natural gas will play an increasing role in electricity generation
- It will also become more important as a vehicle fuel, both in liquid natural gas (LNG) form for commercial vehicles and as a feedstock for synthesized motor fuels
- Liquid fuels are the sole alternative that can be used by every form of transport: city cars, long-distance cars, light and heavy trucks, rail, ships, and aircraft
- Natural gas (in compressed form or as liquid petroleum gas) can be used for city and long-distance cars and light trucks
- Hydrogen, too, can be used for city and long-distance cars and light trucks
- But the H2 Mobility Hydrogen initiative in Germany shows that building a hydrogen-fueling infrastructure requires collaboration among many parties
- Those include automakers, Federal and local governments, transnational bodies like the EU, other funders, and third-party suppliers
- Electric cars are suitable for city use; for long-distance travel and in light trucks, they can be used “only with major restrictions”
- To conserve fuel, all vehicles must get much lighter, more efficient, and in some cases smaller