What a difference a few years help to make.
Perhaps you’re old enough to keep in mind when scientists cautioned?us about an impending ice age. Today, climate change concerns relate to global warming.
Just a few years ago, “peak oil” – the theory of terminal decline once we’ve reached the utmost extraction rate through known petroleum supplies?- was well-liked. A couple of recent perspectives, however, indicate that people may not hit maximum oil production and consumption for the foreseeable future – and that the cost of oil may actually go down long-term.
Perhaps ironically, part of the forecasted future glut of oil will be due to embracing electric cars. Back in February, Tom Randall of Bloomberg published a lengthy analysis of the sales growth of crossbreed and electric cars. He concluded?that while EVs don’capital t make up much of the worldwide automotive fleet these days, sales are increasing at double-digit percentages annually and eventually EVs will add up to a significant fraction of the light vehicle navy. Global sales associated with EVs grew by 60 percent in 2014. EVs would make up 35 percent of passenger cars and light vans by 2040 if that rate continues.
A 60-percent annual growth in EV sales would mean the drop in demand for oil by about 2 zillion barrels a day inside a decade by 2023. 2 million barrels a day is about the amount of extra oil supply that was at the rear of the 2014 oil accident and our present low gasoline prices. Since a?60-percent growth rate may not be sustainable, absolutely no pun intended, Bloomberg’utes New Energy Financial group looked at the results of more modest EV sales predictions based on predicted component cost falls. Battery prices fallen 35 percent in 2014 and, if the trend continues, EVs should?be affordable against gasoline or even diesel-powered cars about 6 years from now.
Using that model, it will take longer for EVs in order to depress demand for essential oil by 2 million casks a day, but only by another five years, in order to?2028. The law of demand and supply says that when demand goes down, so do costs.
As an aside, I’lmost all note that Randall doesn’t consider a?somewhat recursive, but important, question: if EV sales mean decreased interest in oil, won’t the resulting lower prices for oil slow?EV approval?
What about the supply side of the question? 3 factors seem?to possess caused the?present glut: increased oil production in North America due to horizontal positioning and fracking in the U.S., production from processing tar glass beads in western North america, and the decision through the Saudis and other Middle East oil producers to help keep the spigots open to keep up their own market share.
Two economists who?study the price of oil point out that the United States and North america are not uniquely located with oil effortlessly?extracted by contemporary methods. Many nations have similar build up. Marian Radetzki of Lule? University of Technology in Norway and Roberto Aguilera of Curtin College in Australia are the writers of “The Price of Essential oil.”?In a post upon?Scientific American’s web site, titled The Age of Inexpensive Oil and Natural Gas Is Just Beginning,?they say that as new oil extraction processes tend to be applied to newly found build up and?older, partly depleted oil mines around the world, we could see supply increase by as much as Twenty million barrels each day by 2035. That’s 10 times the amount of the current?increase in the supply of essential oil.
Of course, there will still be demand pressure while?China, India and also the rest of the developing world get richer as their financial systems industrialize and develop. However,?even with that elevated demand, Radetzki and Aguilera predict that an additional 20 million barrels each day would mean a 2035 cost of $35 a barrel in today’s dollars. Which low price and its attendant low profits might not be an obstacle to increased production. While $30/bbl is usually given as a price floor these days, there are several American frackers who state they can make money at that price; there may be a new, lower price floor as extraction technology improves.
Redetzki and Aguilera are not only optimistic about the price of oil. They believe which what they describe as the “geographically diversified oil supply” will also make obsolete the notion of using energy materials as a geopolitical tool. Regional conflicts, like those who work in the Middle East, dwindle of a global problem because producers?won’capital t have the leverage to?threaten the world economic climate.
Lovers of the internal combustion energy can belay their worries. The voice from the?V8 engine will be heard in the land for generations.