We'd switch to more mundane substitutes long before oil got to $500/bbl.
Just the spike to $130/bbl in 2006 saw people switching away from SUVs to Priuses in droves. If that were sustained for any length of time, everyone would be driving a plug-in hybrid to work. The technology exists today, and the production capacity would ramp up pretty quickly.
If every switched from a 20mpg car to a 50mpg car where the first 100 miles of each trip was free, it'd more than make up for anticipated oil production declines over the next 50 years.
Yes, we saw people switch to more efficient transport in the US at $4/gallon. I think this is the long term ceiling, where people will switch to at least a plugin hybrid and cover 90% of their driving on electricity.
The transition would be very quick if fossil fuels were taxed according to their damage on health and climate change.
EVs would become comparatively cheap in a just few years, and their price would also come down very fast as the production of battery packs increased massively. The technology is already here, we just have to manufacture these cars and set up the charging network (already much cheaper than the fuel station infrastructure).
An alternative for transportation is actually starting to happen: self-driving vehicles. Recharging times don't matter when you have a fleet of self-driving electric Uber cars that can phase vehicles in and out of service automatically[1]. Plus, with fleets, you replace normal oil-consuming vehicles at a 2-to-1 rate. It's looking like peak oil will happen sooner than you think.
The recent oil price changes made me wonder if the future of cars will be EV or continue to be ICE. It's not because of the current low price of oil. It's what caused it, which is fracking. Fracking has been known for a long time. But it suddenly became viable when oil was at $100+. And it was so successful it crashed the global price of oil.
When oil reaches $100 again, what other new technologies will be viable? What about $200, $300? This could easily happen due to decreasing oil reserves and increasing demand for a carbon tax due to climate change. Many assume that the path from here is EV.
But at $200, $300, the technologies to make oil may become viable. There are technologies right now (I think Audi demonstrated something last year) to take CO2 from the air and combine with hydrogen to make oil. This kind of technology also goes very well with renewable power like wind and solar. The big issue with wind and solar is storing excess electric generation. Most think batteries are the solution. But what about just making oil instead?
All of this works directly with the huge current infrastructure and investment in oil and cars. It even provides a much easier solution to reducing climate change than EV. Just create a government regulation that requires all gas to be at least 10% from carbon neutral source. They already did it with ethanol (E10). And if more CO2 reduction is required, they can just keep increasing the percentage mix.
When all of these technologies are viable, gas will probably be very expensive. I don't know what the number will be, but let's imagine it's $10 per gallon. That's very expensive, but is it enough for everyone to throw away their cars and buy EV? Is it enough to pay the premium for EV?
I've always sort of envisioned that oil would become "motorcycle / classic car fuel" and whatever ugly cars normal people end up buying in the next 20 years would run on electricity generated by a combination of some sort of next-gen nuclear, wind, and solar. There's enough petrolheads that will gladly pay $20/gallon to take their Camaro to the track on weekends.
They will try, and it'll work for a while, but they won't be able to maintain it, and doing so would speed the death of oil
As EVs get cheaper to buy, and more importantly, to run, the petrol-fueled vehicles start to become uneconomical. As use declines, availability of fuel declines, as petrol stations become more unprofitable. Further encourages EV adoption. Range anxiety now comes to petrol-powered vehicle owners as it is now for EV owners, further incentivizing the switch.
While the general impression is that this will be gradual, I think it will be a gradual decline, then sudden, as the overall inconvenience and cost levels cross. Then some minor precipitating event changes the overall mindset, and petrol-powered cars become a perceived liability, and those still stuck with them will barely be able to unload them.
As the decline happens, OPEC will surely try to manage the price of oil, but with demand declining, one of two things will happen. To the extent that they keep the price high, they speed the transition away from oil. They are also much more likely to fail, as the US is now a major producer, and has every incentive to work against OPEC. Plus, their friends are gone. Teh car companies figured out in the 2008 price spike that the oil industry is NOT their friend as that economic crash and oil price spike forced them to look over the cliff of doom as auto sales nearly stopped dead. Then we saw Russia's blatant attempt to use their oil & gas supply to blackmail the world into yielding to their genocidal invasion of Ukraine. No rational businessman now thinks that the oil industry is a reliable supply partner, and will cut them out of the equation at the first opportunity. The oil industry and countries may have some good days ahead, but beyond the intermediate term, they are absolutely screwed.
Oil is also used for plastics, fertilizer, and many other goods. Not just used for fuel.
As the world economy expands, because in 10 years everyone will be on a smartphone, the demand for plastics and fertilizer and rubber and roads etc. that demand should expand more than fast enough to cover the fleet conversion from gas to electric.
200 million vehicles in the USA fleet, and they sell 17 million in a good year. 12 years to replace the fleet; it is currently about 11 years old on average.
I think the article is over stating it. There won't be any problem, it will take decades to adjust anyway.
Oil prices [0] are at breathtaking all time highs. As in "wow, these prices are really high". Fighting peak oil turns out to be really expensive.
I'd say electric cars are guaranteed to take over in the near term. But there is an open question about what % of people will still have cars.
The future isn't set in stone. Maybe it'll be hydrogen, maybe it'll be electricity, maybe it'll be no car. But there isn't really a plausible path for internal combustion powered by fossil fuel.
I’m hoping the transition to electric vehicles will be in full swing by that point. While we use oil for more than passenger cars if the decline in demand could more or less match the reduced supply it would be ideal.
I would invest in oil companies if I were you. There are certainly going to be bottlenecks during the switchover since network capacity can't be increased sufficiently fast enough to accommodate all those BEV's.
The switchover is, however, unstoppable. Even though no one has asked themselves if this will save the environment (it won't). I've roughly calculated that we can half our oil usage if we all switch over to electric vehicles. But that's far from what's needed to save the world from climate change.
I also predict that BEV's will eventually be a lot cheaper than ICE cars. This will in itself have profound consequences since more people will want to use the road network and congestion is already a problem today.
Interesting that the Economist is looking at a future where oil demand is lower, but that realization hasn't hit the public yet, at least not in the US. I have been thinking about the Standing Rock protests in North Dakota, and they are objecting to the environmental risk of pipelines. But in the big picture, oil is getting more expensive to extract, more dangerous to ship, and contributes to global warming then used. Given electric cars, some fueled from solar power, there could really be a time soon in the US when the whole gasoline industry is reduced to almost nothing.
I think the concept is in the back of many poeple's mind, but the status quo is dominant and electric-everything on the road seems futuristic still. But as more and more people try electric cars and install solar panels, more people will see it and accept it as the new normal, and then things could change quickly, within 5 years perhaps.
And yes, this comment is intended to speed up that change.
That's true to some degree. However, much of our infrastructure are designed for 1000 year timescales but rely on technologies with far shorter timescales.
There are plenty of alternatives to powering our cars, but none currently (and none on the horizon either) that are as good (cost effective) as petroleum. The cost-benefit analysis will be changing, but we won't be able to adapt because our communities rely on cheap fuel. People will have the unenviable choice of paying an arm and a leg commuting, or letting their exurban communities (and the massive investment they represent) fall back into farm land.
Personal transport going close to 100% electric is going to take a long time, but combine all electric vehicles with plug in hybrids and demand may start to drop within 10 years. Especially if bio fuel production remains steady, the total demand for oil could actually start to fall significantly within ~15 years.
Remove oil as an energy source and industry would still keep 1/4 of current demand. So, oil is not going to become stranded, but that’s still going to crush any company or country depending on current profits.
Combustion engines are an inferior tech, so they'll get replaced everywhere they can be.
I also think we could have been a decade ahead on this transition, if not more, but I think you'll still also be suprised at how quickly EVs totally replace ICE cars, even if you live in some poorly run area of the globe.
EVs already have lower TCO and leasing companies are keen to loan you the upfront difference and let you pay it back month by month instead of spending it on gas and use the more reliable EV as collateral, reducing financing risk and cost.
They'll continue to do that as the upfront price drops below ICE too.
It would be nice if the US moved to a healthier, more walkable lifestyle, but if they do insist on continuing that form of slow suicide, it'll only make the transition faster. EVs make more monetary sense the longer you drive, due to lower fuel costs.
If everyone transitions to EVs, the remaining gasoline users would have to pay a lot more of the infrastructure. Pipelines, oil platform, refineries etc, are all expensive.
When the costs of running those gas cars becomes irrational to continue, purchasing behaviour will accelerate. We keep being surprised how fast this transition is happening, those surprises are more likely to continue than not.
2035 is a long time away. iPhone was released 16 years ago and the world changed within the next decade.
When cheap cars and trucks really arrive the primary limit will be supply. ~nobody uses feature phones anymore. Electric vehicles could well be like that once we get real scale, and especially in countries that don’t currently have very high car ownership because they won’t be defending the old regime. Countries that embrace and accelerate this change will receive the most economic benefits.
I wonder what will happen to the price of oil as we switch to electric vehicles. Could we end up increasing demand elsewhere in the energy economy as the price falls?
Just the spike to $130/bbl in 2006 saw people switching away from SUVs to Priuses in droves. If that were sustained for any length of time, everyone would be driving a plug-in hybrid to work. The technology exists today, and the production capacity would ramp up pretty quickly.
If every switched from a 20mpg car to a 50mpg car where the first 100 miles of each trip was free, it'd more than make up for anticipated oil production declines over the next 50 years.
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