EVs and Oil Demand

[Marina Schwarz + 1,576]

“To say that electric cars are the end of oil is definitely misleading,” said the IEA's Fatih Birol at the WEF in Davos. Not that I agree with the man necessarily but it's a reality check.

[Rasmus Jorgensen + 1,169]

5 minutes ago, Marina Schwarz said:

“To say that electric cars are the end of oil is definitely misleading,” said the IEA's Fatih Birol at the WEF in Davos. Not that I agree with the man necessarily but it's a reality check.

I actually agree. 

Oil is so intervowen in our society - petrochems, asphalt to mention a few.

[Marina Schwarz + 1,576]

Yes, and that's a lot of things that cannot be replaced by other substances like gasoline can be replaced by electricity. Drugs, cosmetics, heart valves, even. This is reality, whether we like it or not. 

[markslawson + 1,057]

The IEA guy is right. Even if the exponential growth of EVs continue, and there are real production bottlenecks, it is hard to see how EVs could be anything other than a bit player for many years to come. What if there were 300 million EVs on the roads as the IEA guy speculates? There are 1.2 billion cars on the roads already according to this report, with double that expected by 2050 and if car ownership in China reaches US levels there would be more than one billion cars in China alone. To expect EVs to make a difference to petrol consumption anytime this century is fantasy.. 

[JunoTen + 118]

Electric cars are only part of the picture. The immediate threat to oil demand are automonous electric vehicles. Those will be deployed very soon.

[markslawson + 1,057]

On ‎1‎/‎26‎/‎2019 at 7:31 PM, JunoTen said:

Electric cars are only part of the picture. The immediate threat to oil demand are automonous electric vehicles. Those will be deployed very soon.

JunoTen - look, I can see where you're coming from but sorry, autonomous EVs, in sufficient numbers to make a difference, are still quite some ways off. The first step, where they would be really, really, useful, is in automation of long distance trucking routes. Truck drivers for those routes, as opposed to the intra-city routes, are in short supply. Even then its more likely that there would be one operator supervising five trucks remotely (this happens in remote mining sites already, and in the trains carrying the ore). When that happens then we might put some time frame on autonomous EVs in any number. Until then don't hold your breath.

[gchakko + 8]

There are a good number of fallacies and embedded ignorance in this proposition of EV’s substituting current oil-run automobile market (OAM). Let me point to few.

1) No established market, esp. when it is global, what the OAM definitely is, can impossibly be substituted by any radical new innovation in a short time of one dozen years. It will take very many decades. To give you an example: A developing country like India put out a small electric motor-bike at the Hannover Industrial Trade Fair in 1984 which I visited. Japanese visitors most carefully studied this vehicle due to its compactness despite the electric batteries used. But whatever happened to this Indian innovation? Market forces gobbled it up or what? Today Indian roads are full of millions of petrol-run motor-bikes, including Harley-Davidson, but not a trace of that 1984 EV-bike anywhere.

2) EV’s almost by definition will have to rid of their outworn unusable batteries. Special underground storage for poisonous battery waste is expensive, making battery-waste disposal a ruinous contentious issue for all environment health seeking world citizens. Even rechargeable batteries have a defined life-time. We know from radioactive nuclear waste storage as to how expensive all deep underground storage is. EV tech is nothing new; it has been limitedly used in-house in German industries even before and during WWII. But cut for the road they were not.

3) A much better proposition will be hydrogen run cars which will boot out EV’s. In the mid-eighties Daimler, BMW and GM had brought out hydrogen run cars. GM even claimed its H2 car run up to 500 miles without need to tank. When hydrogen burns only water is produced. The big problem with H2 is storage. But technologists are working on it to generate a network of underground storage system. Desalinate sea water or use excess Canadian snow ice, you can electrolyse and produce any number H2 filled cylinders for cooking and automobile use. H2 commuter busses  are already plying Californian cities.

4) Hybrid fuels are being developed to down-peddle gasoline prices which would only further consolidate the OAM.  

These and many more new developments presage EV’s limited future. But I I do wish that hydrogen-run vehicle market will catch up substituting benzene, so that the remaining crude oil under our Earth’s crust can be used for pharmaceutical and chemical industries and not extravagantly burnt for energy-fuel purposes. We have to keep in mind that today’s 7.5 billion inhabiting the Earth will be over 9 billion by 2050 and the medical needs of that population to be covered by vanishing crude oils is extremely high.

George Chakko, former U.N. correspondent and oil-watcher, now retiree in Vienna, Austria.

Vienna, 28/01/ 2019,  11:45 hrs  CET

[Jim Wood + 3]

I think you are entirely mistaken in your post.  Radical change happens quickly, horse to car, film to digital camera and computer adoption took about 15-20 years.  We are likely approaching year 10 of the EV transformation.  The change will continue to quicken.

B) lithium car batteries can be used for utility energy storage when their energy density decreases. BMW has already started this process. You can also put a $5000 battery in an electric car and have essentially a new car.  The batteries are also 99% recyclable at a reasonable cost.

Hydrogen uses 3x the energy to produce when compared to a battery electric vehicle.  Economics will drive Hydrogen out of the market.  See no growth in hydrogen vehicles in 2018.

Oil will still be pumped, but more of it's refined products will be worthless.

Oil prices will continue to decline in 2019 from production pressures, and demand will feel pressure in 2020 from renewable energy generation and EVs.  See building oil inventories in the US.

 

[NickW + 2,714]

50 minutes ago, Jim Wood said:

I think you are entirely mistaken in your post.  Radical change happens quickly, horse to car, film to digital camera and computer adoption took about 15-20 years.  We are likely approaching year 10 of the EV transformation.  The change will continue to quicken.

B) lithium car batteries can be used for utility energy storage when their energy density decreases. BMW has already started this process. You can also put a $5000 battery in an electric car and have essentially a new car.  The batteries are also 99% recyclable at a reasonable cost.

Hydrogen uses 3x the energy to produce when compared to a battery electric vehicle.  Economics will drive Hydrogen out of the market.  See no growth in hydrogen vehicles in 2018.

Oil will still be pumped, but more of it's refined products will be worthless.

Oil prices will continue to decline in 2019 from production pressures, and demand will feel pressure in 2020 from renewable energy generation and EVs.  See building oil inventories in the US.

 

Good post.

To add when EV batteries are replaced the old units are  not redundant but can be reused as stationary storage and will last for decades.

[PeterNaCl + 4]

" The widespread use of fracking in the United States began in 2007 ..."

(Someone said FIFTY years .. well, we'll been perforating and fracturing

right around the drill shaft centerline, but fracking the entire local strata is

a different thing... )

[markslawson + 1,057]

14 hours ago, Jim Wood said:

I think you are entirely mistaken in your post.  Radical change happens quickly, horse to car, film to digital camera and computer adoption took about 15-20 years.  We are likely approaching year 10 of the EV transformation.  The change will continue to quicken.

Jim - its certainly right to say the change can happen quickly, but when such a change happens quickly there are solid market reasons for it. In the two examples you gave, horses to cars and film to digital cameras, those products had distinct edges in the markets of the time. Those conditions just do not exist for EVs. In fact, they have major disadvantages (range, refuelling times and battery replacement) compared to a petrol car, which does everything an EV does and can  be cheaper. Granted there is little difference between a mid-price EV and a petrol-hybrid in ordinary commuting but then where is the advantage? The fact remains that EVs require subsidies to  build up market volumes, which none of the other examples you cite required. EVs are set to remain a niche section of the market inhabited by rich climate enthusiasts. 

[gchakko + 8]

GC - Newbie to Jim Wood

.If I am “entirely” mistaken, then so are a good lot of professional market-oriented economists.

Exceptional cases only prove the rule. New radical cure medical products are other examples when consumers react very positively and quickly, when it could be a life and death issue. Even there Big Pharma continues to block many innovative medicines. I was primarily  referring to long-standing mass markets as is the automobile market. If you are talking of innovation cycles (“bumps”) you still have to consider gestation periods for many products. You yourself agree the computer market took about 20 years to establish itself. On the “recyclability” potential of many of the batteries, including industrial batteries, I am informed quite differently. Sorry! I disagree strongly on hydrogen costs you mentioned on the basis they are mass-produced. If hydrogen is out of market as you state, then why are top oil companies like Royal Dutch Shell and Exxon-Mobil investing in $ 2-digit billion in hydrogen research, a matter that was confirmed to me by a top director of Royal Dutch years ago. Nevertheless, in the interest of the environment, I do hope that some innovation will come about to recycle most of the batteries currently produced, which is definitely not the case, despite the example you mentioned.

Greetings

George Chakko, Vienna (Austria),   29/01/ 2019   08:21 am 

[Guillaume Albasini + 851]

Oil companies are also investing in EV technology...

https://reneweconomy.com.au/oil-and-car-companies-are-suddenly-investing-in-electric-vehicles-why-59960/

Some major car manufacturers are clearly shifting to EVs. Volkswagen said it will launch the last generation of combustion engines around 2026 and then it will be full EV.

https://www.reuters.com/article/us-volkswagen-emissions-combustion/volkswagen-says-last-generation-of-combustion-engines-to-be-launched-in-2026-idUSKBN1O32O6

An increasing number of European countries and cities are planning to ban the sales of petrol cars in the coming years :

https://www.roadtraffic-technology.com/features/european-countries-banning-fossil-fuel-cars/

Even China is considering a ban on petrol cars and under the new rules published last month it will be very hard to establish a non EV car factory in China.

https://qz.com/1500793/chinas-banning-new-factories-that-only-make-fossil-fuel-cars/

 

[entertenter + 24]

On 1/28/2019 at 12:44 PM, gchakko said:

3) A much better proposition will be hydrogen run cars which will boot out EV’s. In the mid-eighties Daimler, BMW and GM had brought out hydrogen run cars. GM even claimed its H2 car run up to 500 miles without need to tank. When hydrogen burns only water is produced. The big problem with H2 is storage. But technologists are working on it to generate a network of underground storage system. Desalinate sea water or use excess Canadian snow ice, you can electrolyse and produce any number H2 filled cylinders for cooking and automobile use. H2 commuter busses  are already plying Californian cities.

There are many technologies available that technically work, only commercially they can not be used. Like there are many oil reserves that commercially can not be used, despite technically, it is possible to produce oil from these reserves.
The same thing is with hydrogen driven transportation. But there is very bad problem that can not be solved - it is energy efficiency. Especially producing hydrogen by electrolysis, which has prohibitively low efficiency combined with compression and cooling losses + fuel cell efficiency 50%. At the end from input electricity energy only 35-25% reach wheels. Add to that complex compression, hydrolysis and fuel cell apparatus instead of battery+conversion electronics.
It is much cheaper to produce hydrogen from natural gas, CO2 still released into atmosphere, but it is much more efficient to burn methane right in the ICE.

[Johan Nel + 4]

On 1/28/2019 at 5:44 AM, gchakko said:

There are a good number of fallacies and embedded ignorance in this proposition of EV’s substituting current oil-run automobile market (OAM). Let me point to few.

1) No established market, esp. when it is global, what the OAM definitely is, can impossibly be substituted by any radical new innovation in a short time of one dozen years. It will take very many decades. To give you an example: A developing country like India put out a small electric motor-bike at the Hannover Industrial Trade Fair in 1984 which I visited. Japanese visitors most carefully studied this vehicle due to its compactness despite the electric batteries used. But whatever happened to this Indian innovation? Market forces gobbled it up or what? Today Indian roads are full of millions of petrol-run motor-bikes, including Harley-Davidson, but not a trace of that 1984 EV-bike anywhere.

2) EV’s almost by definition will have to rid of their outworn unusable batteries. Special underground storage for poisonous battery waste is expensive, making battery-waste disposal a ruinous contentious issue for all environment health seeking world citizens. Even rechargeable batteries have a defined life-time. We know from radioactive nuclear waste storage as to how expensive all deep underground storage is. EV tech is nothing new; it has been limitedly used in-house in German industries even before and during WWII. But cut for the road they were not.

3) A much better proposition will be hydrogen run cars which will boot out EV’s. In the mid-eighties Daimler, BMW and GM had brought out hydrogen run cars. GM even claimed its H2 car run up to 500 miles without need to tank. When hydrogen burns only water is produced. The big problem with H2 is storage. But technologists are working on it to generate a network of underground storage system. Desalinate sea water or use excess Canadian snow ice, you can electrolyse and produce any number H2 filled cylinders for cooking and automobile use. H2 commuter busses  are already plying Californian cities.

4) Hybrid fuels are being developed to down-peddle gasoline prices which would only further consolidate the OAM.  

These and many more new developments presage EV’s limited future. But I I do wish that hydrogen-run vehicle market will catch up substituting benzene, so that the remaining crude oil under our Earth’s crust can be used for pharmaceutical and chemical industries and not extravagantly burnt for energy-fuel purposes. We have to keep in mind that today’s 7.5 billion inhabiting the Earth will be over 9 billion by 2050 and the medical needs of that population to be covered by vanishing crude oils is extremely high.

George Chakko, former U.N. correspondent and oil-watcher, now retiree in Vienna, Austria.

Vienna, 28/01/ 2019,  11:45 hrs  CET

' ...To give you an example: A developing country like India put out a small electric motor-bike at the Hannover Industrial Trade Fair in 1984...' 

Try to keep up with technology.  Totally laughable that you want to use an example from 1984.  It clearly shows you have no leg to stand on.  Do you know what has happened in the field of batteries since 1984?  Do you know what the cost per kwhr for batteries were in 1984 vs today?  Or the energy density or power density of battery technology in 1984 vs today?  These are the only 2 things that will determine the success of electric cars.  Battery cost in dollars per kwhr and it's energy density in watts per kilogram.  With current battery technology electric cars can already achieve 200-300 miles of range at a cost of maybe 20% to 30% more than conventional cars.  On a total cost of ownership basis it is already cheaper than a comparable ICE vehicle.  However, 8 years ago that cost gap was much bigger. Battery cost has dropped over 80% since 2010.  At the rate it is dropping and energy densities improving, BEV will be cost-competitive on purchase price with ICE vehicles by 2021 to 2023.  Once it reaches price parity, it outperforms ICE vehicles in all respects (cost per mile to operate, longevity, safety, performance, etc.).  Charging speeds are increasing dramatically and adding 200 miles of range in 15 minutes will be standard by 2023 or before.  That is only an issue when traveling during vacation since you will have a 'gas station' in your garage, at your parking lot at work, at the mall, or any other place you park our car.  When gasoline cars were produced the first few decades there were no gas stations!  You had to go to a chemist to buy a can of gasoline.  We have electricity everywhere today.  We just need to put up the chargers (off course some other infrastructure goes with that).

'...EV’s almost by definition will have to rid of their outworn unusable batteries...'   

Have you heard of recycling?  Also, batteries don't 'wear out'.  It has no mechanical stress on it.  It loses capacity in storing electricity.  There is not much battery recycling for BEV batteries right now because there is not much demand for it.  Also, you clearly think that a BEV battery is the same as the one in your phone.  Well, it's not.  There are literally hundreds of different battery chemistries and batteries can be built for various functions (like a grid battery is different from a car battery in almost all respects).  BEV batteries are 'at the end of their life' when it can still hold about 80% charge.  It is perfectly good for utility use still, and that is actually what is happening with 'worn out' BEV batteries.  They get re-purposed as grid storage.  There are many examples of Tesla vehicles with 100k to 300k miles on them with these batteries still retaining 90% or more of their original capacity.

'...A much better proposition will be hydrogen run cars....'

No, hydrogen EV is not better than BEV.  Hydrogen is very expensive to produce and you need energy to do so.  You might as well just continue running gas-mobiles.  The entire process of converting water to hydrogen, storing and distributing it and then using it in fuel cells to produce electricity in EV is less than 15% efficient.  Using the same source of electricity instead of performing electrolysis to produce hydrogen to charge batteries for BEV, is at least twice as efficient as the hydrogen option.  Hydrogen is an inefficient no go.  Not to mention all the other issues with the technology.

 

'....Hybrid fuels are being developed to down-peddle gasoline prices....'

Like what?  Please don't say ethanol because the amount of ethanol in the US gasoline supply system is already maxed out.

 

 

 

 

 

[PeterfromCalgary + 60]

Comparing EV adoption to computers or cell phones is not realistic.  Computers and cell phones have benefited from what is called Moore's law which is the observation that the number of transistors in a dense integrated circuit doubles about every two years. 

Batteries which are the basis of EV technology improve at a much slower rate.  Certainly they do not double in capacity every two years.

I think a better comparison is EV batteries and lighting.  Over the decades lighting technology has become much better.  However these improvement took much longer than the very fast improvements in computers.  EV batteries will improve greatly but the pace of improvement will be closer to that of lighting technology than computer technology. 

[gchakko + 8]

Repy to Black Bean

Batteries don’t wear out! No mechanical stress! This shows ignorance of a kind.

Sorry, I worked with one of post-WWII Germany’s top battery specialist who in his life time challenged brand Japanese Yuasa’s  battery wisdom. Your cited batteries do wear out. Tell me, how many industrial battery sludge worldwide has been recycled so far, have you any statistics? Without wide data input and riding on new innovation fever is as easy as unwise; but sticking to hardware battery waste realities is different. Reportedly, big battery companies always put out,  batteries of kinds are 100 pc recyclable, knowing fully well they are not. On what established scientific data do they or you put your wild claims on, that a colossal mountain of poisonous battery waste do not exist or have been gotten rid of, or will not be gotten rid, will continue to be generated industrially, apart from citing few particular type of batteries that are recyclable for a short time limit, however not commercially even (waste recycling on an any mass scale). Industrial battery waste has not radically changed since since its exponential rise in decades.

Who told you hydrogen is very expensive to produce? H2 automobile-tech is slow to flower commercially because of H2 storage tech problem on mass-scale. It is not the electrolysis that is the cost carrier, but storage. But if you can have natural gas cylinders to store, you can have H2 cylinders as well, if not for home use but also for the roads in fuel cells.

Selective ignorance and soiled data can’t be sold as objective reality.

George (Chakko), Vienna, Austria.   30/ 01/ 2019     20:27 hrs CET

 

[gchakko + 8]

GC to Black Bean

I forgot to add, that benzene-based hybrid fuels are being researched on; at least I know of one Austrian patent on it. However, commercialisation of natural fuel mix is today more visionary than reality.

There is another problem no one has touched upon seriously today is the the artificial electro-magnetic fields masses of EV's will create disturbing or interferering with the human "biotronic" spheres or fields. Already we are victims of low electro-magnetic radiation in the pervasive use of computers in everyday life. Add to that the EV electro-smog, you can happily sing Louis Armstrong's 'What a wonderful world!'

gc

Vienna, 30/01/ 2019     22:52 hrs CET

[Marina Schwarz + 1,576]

I've no idea, don't know much about this technology. So all this stuff gets recycled back into crude and then this crude is again refined?

[Michael Jones + 34]

I'm still a BEV skeptic.  For all their talk Governments will not ban ICEs. It is easy to say they will in 2030 etc but they will have all retired by then or thrown out of office. With  Euro4 standards ICE car exhaust emissions are not responsible for local air quality issues. In fact road friction of the vehicle creates 95% of PM10 and PM2.5 pollutants and typically BEVs weigh more than a similar sized ICE vehicle.  On a life cycle emission BEVs make about the same CO2 emissions and an ICE vehicle if there is significant coal use in the power grid as is the case in most major economies (exceptions are France  due to nuclear and Brazil hydro power). China needs to get coal power in the grid down to ca 50% to reach parity on emissions for an ICE v BEV. Costs of the batteries have a long way to go to meet ICE price partity (<US$125/kwh). 

[chrismarchant1830 + 1]

The world uses 100 million barrels of oil per day. With around 1 billion automobiles on the road, only 20% of total oil demand are used for automobiles.

Lorries and shipping use about 30% respectively with aircraft using the remainder.

If you electrify the automobile - eventually replacing 1 billion EVs on the road, you only reduce oil demand by 20% (saving around 20 million barrels). This is in addition to quadrupling the amount of worldwide electricity to power these cars, although there is a case for using cars as storage back to the National Grid in times of need.

The only problem you have as well is that oil demand is increasing at 1 to 1.5 million  per year (Not necessarily cars but increased bunkered fuel from shipping, more trucks on the roads)

What I am trying to say is that EV are a good idea, but won't reduce oil demand that much- and depending on the speed of the rollout, if at all

 

[Refman + 207]

EV's are definitely going to have an impact on oil demand. On the one hand you have folks (think Saudis) saying they will have almost negligible effect on oil demand for decades. Then you have the opposite end like Toney Seba with his prediction “By 2025, all new vehicles sold will be electric.” Personally I think the guy is smoking crack, and that as usual the truth lies somewhere between the two extremes.

In the US the average vehicle age is about 12 years, so even if we could produce 100% EV tomorrow, it would take 12 years to cycle through the whole fleet. Currently EV's are only about 1-2% of production, so it's going to take a few more years before we see a meaningful effect. However the transition is gaining speed, and I think many will be surprised at how quickly they become mainstream. Here in the US nearly every household has multiple cars, so it would be easy to switch one of those to EV for local driving and medium range trips, while keeping a regular car of Hybrid for longer trips.

The 2020's will be a very interesting decade, as plenty of new EV's start hitting the market, giving consumers much more choice, and the competition should help drive down prices faster.

[Robert Ziegler + 121]

On 1/29/2019 at 5:34 AM, PeterNaCl said:

" The widespread use of fracking in the United States began in 2007 ..."

(Someone said FIFTY years .. well, we'll been perforating and fracturing

right around the drill shaft centerline, but fracking the entire local strata is

a different thing... )

I worked myself on a well that became the largest fracturing job at that time, in 1985, in northern Germany...

https://www.onepetro.org/conference-paper/SPE-65108-MS

[Bobby P + 88]

Anyone who believes we won't need oil for the next 50 to 100 years is delusional. If you are one of these people - then show the rest of us the path...haha! 

[taamvan + 19]

EV will not affect oil demand very much until 2050.   

However, it is the continuous growth of oil demand that drives price up--and all that it takes to affect markets and suppress price long term is the possibility or sentiment that there will be some future where demand growth slows or stops and that a technological alternative exists to the status quo, that at some future point, will destroy a substantial part of that demand.   

If we can see that the chance of oil demand increasing 1-2% yoy for the next 30 years is low, then there is only a limited investment thesis in oil.   This is precisely why we see the majors strongly outperforming services, OSD, middles minors and micros--those companies have lower production costs, huge war chests of cash and reserves, very profitable enterprises regardless of the spot price of oil at any given time; and most importantly, they can style themselves as "energy companies" that are not eternally tied to a dying commodity, habit, or fad.

When we combine this with

1) Cheap credit and abundant $ seeking return

2) No export controls or other non-market forces to discourage production

3) positive incentives to overproduce will continuously destroy any possibility of supply destruction 

Oil price will not break out of this range under these conditions.  Now its just following the overall market.   It may not fall much, as the base supply-demand, the dynamic is always in play.    However, for the high cost and marginal producers, they're really competing against each other and as some other people have stated here, its simply stupid to export, underprice or waste our US based petro resources at this point in history, as oil import dependence has an extremely negative effect on the US economy and its actions vis world politics.

Bulk shipping;  has only 4 primary products; ore coal grain and salt

Steel; the vast majority of steel demand comes from buildings bridges ships etc.  If growth and construction aren't thriving, not much steel is needed whereas in the past (WW2 and before) there were fewer material alternatives and much more was used per item/unit and gigantic ships used massive amounts of steel...whereas demand for ships and rigs is in the basement and has been since the crash(es) 

Oil;  the other petro products are used for a variety of things, but oil is tied primarily to driving and transport.   The idea that plastics or asphalt demand would take up the slack is silly--that is just a small proportion of oil demand.    

Once you understand these industries and commodities, you can see that demand is highly focused on certain types of consumer behavior and when those behaviors, fads, habits, etc. change, it has a devastating effect on these sectors individually, even when the overall economy is supposedly thriving.

Edited January 31, 2019 by taamvan