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Electric Vehicle Sales Foretell a Big Oil Crash
By Paul Brown
If the car manufacturers' projections of future sales of electric cars are correct, then demand for oil will have peaked by 2027 or even earlier, sending the price of oil in a downward spiral as supply exceeds demand, said Carbon Tracker (CT), an independent financial think-tank carrying out in-depth analysis on the impact of the energy transition on capital markets.
It said fossil fuel companies have taken into account some engine fuel efficiencies and the effect they would have on oil demand, but not the expected increase in electric vehicles themselves. There is a big mismatch between forecasts of EV market penetration from vehicle manufacturers and from oil majors, said Laurence Watson, a CT data scientist.
"The oil industry is underestimating the disruptive potential of electric vehicles, which could reduce oil demand by millions of barrels a day. Increases in fuel efficiency will also eat into oil demand and the industry's profits. The oil majors' myopic position presents a serious investor risk," he told the Climate News Network.
Expectations Far Lower
The report looks at all the projections of the oil majors, including Exxon and BP, and says their figures for electric vehicle growth in the 2020s are 75 percent to 250 percent smaller than those expected by the global car manufacturers that have announced targets.
Electric vehicle sales in China alone, a figure bolstered by government intervention, are expected to be seven million a year by 2025. These, plus the three million a year aim of Volkswagen by the same date, would exceed oil industry estimates for sales for the whole world.
There are immense variables taken into account in the report. These include the number of miles driven by the average electric vehicle and the sort of car it replaces.
These variables depend on the influence of various governments' policies to reduce oil in transportation in order to keep global temperature rise below 2°C beyond pre-industrial levels. The need to reduce air pollution also strongly favours the introduction of electric vehicles in cities.
More Demand Reduction
Another of the imponderables is the increasing efficiency of the internal combustion engine, which in itself also reduces demand for oil. It follows a growing trend already well-established in several countries, including Sweden, which from 2019 will produce no more vehicles powered by internal combustion alone.
The take-up of electric vehicles is crucial to the future of the oil industry because transportation takes up 50 percent of total oil demand. About half of the demand from transport is from light passenger vehicles, those that are most likely in the short term to switch to electricity.
Heavy-duty transport, aviation and shipping are also beginning to switch, but it is cars that will make the early difference.
The report argues that it is not total oil demand that matters but the difference between supply and demand. The 2014 crash in the oil price was caused by a surplus of 2 million barrels of oil a day, mainly because of a boom in U.S. shale production.
To get the price back up in order to improve oil company profits took the combined efforts of the OPEC oil countries and the Russian government in cutting production, a process that needed three years.
According to the CT report, demand for oil will fall by 8 million barrels of oil a day by 2030 because of the expected deployment of electric vehicles, meaning that the oil-producing countries will have to constantly reduce their production in order to keep prices up.
The report argues that although oil demand will continue to be very large, the peak demand will have been reached around 2025. Demand displacement by electric vehicles "will significantly disrupt oil and gas company business models. Furthermore, we believe that when global oil demand peaks this will fundamentally alter investors' approach to the industry."
Reposted with permission from our media associate Climate News Network.
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By Daisy Brickhill
Each morning, men living in fishing communities along Ghana's coastline push off in search of the day's catch. But when the boats come back to shore, it's the women who take over.
By Sam Nickerson
Links between excess sugar in your diet and disease have been well-documented, but new research by Harvard's School of Public Health might make you even more wary of that next soda: it could increase your risk of an early death.
The study, published this week in the American Heart Association's journal Circulation, found that drinking one or two sugar-sweetened beverages (SSBs) each day — like sodas or sports drinks — increases risk of an early death by 14 percent.
Tyson Foods Recalls Nearly 70,000 Pounds of Chicken Strips After Customers Find ‘Fragments of Metal’
Tyson Foods is recalling approximately 69,093 pounds of frozen chicken strips because they may have been contaminated with pieces of metal, the U.S. Department of Agriculture (USDA) Food Safety and Inspection Service (FSIS) announced Thursday.
The affected products were fully-cooked "Buffalo Style" and "Crispy" chicken strips with a "use by" date of Nov. 30, 2019 and an establishment number of "P-7221" on the back of the package.
"FSIS is concerned that some product may be in consumers' freezers," the recall notice said. "Consumers who have purchased these products are urged not to consume them. These products should be thrown away or returned to the place of purchase."
Environmental exposure to pesticides, both before birth and during the first year of life, has been linked to an increased risk of developing autism spectrum disorder, according to the largest epidemiological study to date on the connection.
The study, published Wednesday in BMJ, found that pregnant women who lived within 2,000 meters (approximately 1.2 miles) of a highly-sprayed agricultural area in California had children who were 10 to 16 percent more likely to develop autism and 30 percent more likely to develop severe autism that impacted their intellectual ability. If the children were exposed to pesticides during their first year of life, the risk they would develop autism went up to 50 percent.
ExxonMobil could be the second company after Monsanto to lose lobbying access to members of European Parliament after it failed to turn up to a hearing Thursday into whether or not the oil giant knowingly spread false information about climate change.
The call to ban the company was submitted by Green Member of European Parliament (MEP) Molly Scott Cato and should be decided in a vote in late April, The Guardian reported.
Bernie Sanders has become the first contender in the crowded 2020 Democratic presidential primary field to pledge to offset all of the greenhouse gas emissions released by campaign travel, The Huffington Post reported Thursday.