What Will Happen With Oil?
Here’s another article that speculates on the ultimate disposition of oil in our civilization. Prices are going up, which usually means more revenues and earnings for the oil companies. But what happens in an environment where consumers can jump to EVs?
First, let’s be honest: no one knows.
Perhaps more to the point, there are factors that go far beyond pure market economics:
• Refusal to internalize the externalities of fossil fuel exploration and consumption
• Using a $600 billion military budget to maintain access to cheap oil
• The continuation of government subsidies for the oil companies
• The refusal of the U.S. government to make substantial investments in cleantech generally
What happens here really is anyone’s guess. And we have plenty of time to let this sort itself out. After all, it’s not like there is an urgency associated with climate change and other forms of environmental devastation.
Craig,
People can indeed jump to EV’s, but let’s not kid ourselves… that is not an economically viable transaction right now.
Right now, EV’s are far more heavily subsidized than any form of fossil fuels, and in most cases – on most grids – the EV’s are merely a form of dispatch switching from oil to natural gas and coal. Even now – 8 years after we started arguing about it long ago… most grids will see the preferential switch to coal and result in a net worsening of environmental pollution.
But it’s not just the numerous forms of government subsidizing EV’s. It’s the shareholders.
Last quarter, Tesla sold about 30,000 cars and saw a net loss of an eye-popping $700 million dollars. We’re nearly 9 years in and Tesla has seen only 2 quarters of profit, and those quarters showed very small profit margins, while the losses have been… large.
The shareholders are subsidizing the sales of the cars, even as government offers subsidies for cars.
So while oil companies are enjoying the idiot saber-rattling from the POTUS, as it’s causing their profits to soar, EV’s are still facing an inevitable price increase so their producers can stop losing money… For now, I don’t think EV’s will be a major factor in the oil industry’s near-to-mid-term outlook.
Glenn,
Tesla is a new car maker, with a radically new product. Tesla’s “losses” are quite sustainable for shareholder willing to invest in order to establish an entirely new marque in an industry primary noted for marques disappearing !
Tesla has been an astonishing success story as a maker of pure EV’s. On the other hand, Toyota has been hugely successful in ushering in an era where EV hybrid technology is rapidly becoming dominant among car makers.
Coal technology is improving rapidly and soon “clean(er) coal ” may become a reality, in which case EV auto technology will become dramatically more viable.
Now here’s an idea, why not drop by under our bridge ? We’ve owns several EV’s and Hybrids for more than 20 years. You know it’s possible to own a solar powered lawn mower ? Oh, my goodness here under our bridge we’ve got all sorts of clean tech….but then we actually practice what we preach,……( This Saturday we’re having BBQ goat, (well let’s be honest here at Trollhättan we eat BBQ’ed goat every Saturday !).
Slowly EV technology is evolving to replace the old ICE technology and more and more models embrace hybrids technology, and ESD continues to develop.
Craig,
You keep repeating inaccurate and out of date information. It been many, many decades since the US oil received any significant subsidies, and since the US sources most of it’s imported oil from Canada the role of the US military in dealing with Canada seems a bit far fetched !
The oil industry produces more than 350,000 products, the lowest profit margin is in energy (gasoline, diesel, aviation fuel ) it would appear you are tilting at enemy that just don’t exist.
Hey Craig,
Can’t you show just a tiny bit of interest in real, practical environmental progress ? Maybe not perfect, maybe not forever, but occurring here and now in the real world, not some distant Utopia.
President Donald Trump signed a bill into law on February allowing expanded tax incentives for companies making use of carbon capture technology. The new law successfully promoted investment in coal plants and other fossil fuel companies to significantly reduce carbon footprints. Companies are now using captured CO2 to extract additional domestic oil reserves from the ground, very economically.
Chevron, Southern Company, BP, ExxonMobil, Denbury Resources and Mitsubishi Heavy has formed The ‘Energy Advance Cente.
The Energy Advance Center’s main mission is to promote investment and issues related to carbon capture and storage, improve greenhouse gas emissions profile of fossil fuels, and enhance economic opportunities using of CO2 with benefits for the economy, energy security, and the environment
If successful the technologies could within five years make the targets of the Paris Agreement look puny !
Now,why isn’t that good news ?