How hard will it really be to stop using oil?

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Like many other people, I sometimes fall prey to adopting sweeping generalizations based on sheepishly arbitrary observations. The other day I was having coffee with a friend at a hipster-ish coffee shop, and as we contemplated the world’s problems we noticed that many of the male customers had beards. This useless observation then of course took over the conversation and we concluded that everyone has beards these days. The fact that neither of us has beards somehow eluded us, and once the silly notion was lodged in my brain as fact,  the natural tendency to reinforce beliefs took over and I noticed beards everywhere.

 

Luckily I was shaken out of my reverie before anything tragic happened. One morning on the train I noticed a bearded dude, but then noticed that he was one of the few on the train with beards. While this caused distress to my ego as I realized I might be wrong, it was an inescapable conclusion that probably only 10 percent of the population had beards.

 

OK that’s a bit of useless trivia, but the same phenomenon takes root in other far more relevant facets of life, such as the conclusions that we readily deduce about our energy future.

 

In the general media stream, it is easy to conclude that electric vehicles are taking over. That message also emanates from the automotive news world, where most new models are introduced with hybrid or electric options. Those versions tend to gather the media’s attention, because they’re different and cutting edge.

 

But that doesn’t mean they are taking over. While sales of electric and hybrid vehicles is growing, sales of conventional vehicles is growing even faster. In the US, sales of pickup trucks continue to dominate and SUV sales are on the rise, which is no surprise I suppose, but it is when it happens elsewhere. Even Europe has SUV fever, with sales of SUVs up 16 percent year over year, and the category accounting for over one quarter of new vehicle sales and growing.

 

Like beards, electric cars seem to be everywhere, maybe because they are novelties. Who notices a Toyota Corolla? But lots of people notice Teslas, and I bet the primitive part of my brain that keeps score of these ridiculous things would argue that it sees as many Teslas as Corollas on any given day.

 

There is definitely progress on the EV front, but the size of the task to get rid of oil is daunting. The world consumes 95 million barrels per day, a number that grows by 1 to 2 million barrels per day, every year. The US, Europe and China combined for a total of over 50 million new vehicles sold in 2016, a tiny fraction of which were electric or hybrid. The rest of the world probably added similar numbers.

 

The future is for greener cars, and it’s definitely coming. But the end goal of removing hydrocarbon usage is still off in the distance. What is really needed to speed up the transition is another spike in oil prices. That catalyst always gets people’s attention, but it has to last more than a few months. The flip side of that then is that higher oil prices are like higher taxes – a net drain on businesses and consumers, which creates other hardships. There are no easy answers.

 

If only life was a simple as counting hipsters in beards.

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4 Comments

  1. The city of Amsterdam strongly discourages driving by e.g. high parking fees (€ 5 per hour where I live). However, electric cars can be charged and parked for free in some areas. But of course all hipsters with beards travel by bicycle! 🙂 (and me too)

    Liked by 1 person

  2. That makes a lot of sense to me as a way to encourage urban use of electric vehicles. I think congestion in Europe is worse than in here in North America, so those incentives are helpful. I am a bit surprised at your local hipsters. They seem to favour BMWs here. The European hipster may be quite different than the species here I suppose. Thanks for reading and for the comment:)

    Like

  3. Evan Brown says:

    There are very hard limits on where the current push for EV can take us. A MPG equivalent for a Tesla is tricky to nail down, but most calculations that don’t remove real world factors such as battery efficiency transmission loss, AC to DC loss, thermal inefficiency in power generation etc, show that they get about 35-40% of the claim vs gasoline. Competitive vs the peers in the 100k range but not enough to make the trillions in infrastructure upgrade needed to carry the voltage to charge large numbers of them.

    Every single week I come across an article claiming a breakthrough in battery technology, but it is hard to track a follow up success that brings them closer to the market. Very telling that Musk has gone all in on a rather traditional battery technology for his massive factories. Tells me that a wall might be hit in materials science.

    That or he is very confident that investors will ignore all traditional ways of evaluating companies financial health and allow him to keep raising capital so he can jump on a breakthrough.

    Also, as a young energy professional you are correct, the 3-4 series is king.

    Like

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