Big oil to lose control of auto industry?

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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.

 

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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

 

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