The rise of electric vehicles and the world’s changing oil demand
May 14, 2018
May 14, 2018
When we sit in traffic and wait to pull away at the lights, the damage we’re doing to environment can’t escape our attention. Cities like LA and Beijing are some of humanity’s greatest cities but are shrouded in air pollution. It’s mostly the result of our love affair with gas-powered vehicles over the last hundred years. They’ve made the world smaller, but are they still on the rise?
Gas is alive, but maybe not so well
Because of the damage greenhouse gas emissions cause to the environment, we can never say gasoline is ‘well, safe’ That point aside, are gas-powered vehicles still experiencing the growth that made them one of the world’s most profitable industries? Let’s take a look at the most viable contender and see just how close it is to usurping gas power…
The rise of electric vehicles
The idea of electric cars has been around for a long time, but for most of that time, it was something of an ideal to aspire toward. Being able to drive without ejecting fumes into the atmosphere would be fantastic, but where’s the infrastructure to support it? Go down Route 66, and you can be sure of a gas station every few miles. Can you say the same of a charge point? Interestingly the answer is an increasingly loud and confident ‘Yes.’
Ever-increasing growth fueling a new sector
Today car sales are 99% gas and 1% electric. While this may seem like a significant disparity, it’s important to look at the second derivative: the rate at which change itself is occurring. Interestingly new car sales are predicted to be 30% electric by the year 2040. To put some numbers to that, you’ll be looking at 36-million electric cars on North American roads as soon as 2025.
The upshot of this is a fall in demand for oil and an ever-increasing need for the infrastructure to support electric vehicles. It’s important to know that the demand for oil is still predicted to grow as more and more people get on the road. But it will occur at a slower rate than for electric vehicles. That means that while the gap will still exist, you can expect to see it close fast. Over the coming two decades’ electricity is predicted to displace far more than the 50,00 barrels of oil it does today.
The need for energy security
One issue that many countries face is one of energy security. While this is true of the United States, it is especially prescient when looking at the Chinese market. As the world’s largest consumer market, they are expected to be driving 9 trillion miles a year by 2040. That compares to a relatively modest 1.5 trillion today. The issue for China is that they’re a major oil importer which means they’re reliant on the stability of other countries to fuel their vehicles. Electricity can be generated, whereas oil must be extracted, which gives electric cars inherent price stability when it comes to fuel.
A world that’s starting to connect
When you look at the early rise of the gas engine, you’ll see a few trendsetters create proprietary technology. These advances were then made accessible to the rest of the market, and the standards of all vehicles rose with the tide. This process was then repeated over and over as the industry carved out a seemingly insurmountable position.
Electric vehicles have their pioneers too, most prominent amongst them being Tesla, led by the charismatic Elon Musk. Supercharger stations where Tesla drivers can recharge their cars are becoming an increasingly common sight. The pleasing thing about this for the electric car market is that Tesla is opening up their technology to other manufacturers. This will serve to expand the infrastructure of the electric market and again reduce the demand for oil. When you factor in that electric is the cheaper way to drive, all you have to ask is ‘how much cheaper?’
The savings are there, but they depend on where you live
The evidence is already clear that electric is the cheaper way to drive. It’s currently less expensive to travel in any of the 50-states in an electric vehicle than in a gas equivalent. While the savings you make will depend on the local price of oil and electricity, in the US they’re surprisingly robust. The average driver can expect to save $60 per month on fuel alone. If you additionally factor in the expected higher reliability of electric vehicles, then the rise of the electric car is set to continue.
The rise of electric is also a sign of the times
As every generation comes and goes they bring with them something different. Smoking was far more commonplace at the turn of the last century than it is today for example. Interestingly the fall in demand for gas-powered vehicles may be more than just economics. There’s also a social element…
Young people are driving the move to electric
Research from the UK suggests that people aged 18-24 are the most likely to own an electric vehicle. There are several reasons for this. The environment is more of an issue now than it has ever been. New drivers are far less wedded to the idea of only using gas than older drivers. And it’s also becoming increasingly fashionable and popular to make green choices both in work and in your private life.
This interesting trend is one of the key drivers in the accelerated demand for electric and the commensurate slow in the growth of oil demand. All in all, oil will continue to be the dominant fuel used for vehicles, but its position will no longer be insurmountable.
The rise of electric vehicles and the birth of new generations who grow up seeing viable alternatives is set to accelerate things. There are indeed exciting times ahead, and times that are sure to open new possibilities in some unlikely places.