“Nowadays 70% of oil production is used for transportation: the world produces about 80 million barrels a day globally, and about 60 million barrels go to cars, trucks, and airplanes, according to Vitaliy Katsenelson, Chief Investment Officer at Investment Management Associates. This is a fact that has the oil and gas industry’s attention, as electrical vehicles (EVs) become increasingly popular among well-known car manufacturers.
Car manufactures such as Tesla, BMW, Nissan, Chevrolet, Ford, Volkswagen and Kia have all jumpstarted the push to create the most advanced EVs on the market. With technology rapidly changing, it is evident that these manufacturers are increasing their efforts to support the demand for EVs in the marketplace. Ford recently announced a brand-new EV to hit the streets in late 2020 and labeled it after its most iconic symbol, the Mustang Mach E. Just days after its unveiling, the Mach E sold out its reservations for the late 2020 model. Tesla, the leading manufacturer of EVs around the world, announced its newest model, Tesla Model Y, which, much like the Mach E, has a significant following among the automotive world. These are just two of the many examples of the increase in demand for EVs in the U.S.
So the big question now is how will EVs affect the oil and gas industry around the world? The increased demand for EVs will most definitely drive negative changes in the oil and gas industry due to the fact that oil sales are mainly from transportation such as cars and trucks. Increasing demand for EVs will slow demand for combustion motor engines, which in turn will affect oil prices and sales around the world. These effects, though, will likely not be seen for another 10 to 15 years, depending on many different roadblocks such as technology, infrastructure and politics.
Even with new technology advances made daily in the EV world, there are still some major concerns with consumers about the convenience of EVs—more specifically, the range of the EVs’ batteries. Engineers are working hard to determine a solution to the limited mileage capacity of EVs. Currently, EVs range from approximately 100 miles to 350 miles per charge. The answer is still unclear on how EVs will be able to match the convenience of combustion motor vehicles that can fill up at any gas station in minutes. EVs typically take hours to fully charge, which could cause problems for consumers on long road trips.
Infrastructure is another obstacle EVs face, as the number of charging stations across the world is only increasing slowly. In order for EVs to truly gain traction and for their demand to skyrocket, consumers need to see more charging stations. Sheetz, an operator of nearly 600 convenience stores and gas stations, has begun to place charging stations at its stores around the United States. While this is a great start, EVs need more charging stations around the world in order for consumers to feel confident that they will be able to charge up anywhere.
Lastly, politics pose a significant barrier to the rise of EVs. Many politicians from oil-producing states are at odds with the EV industry. Lobbyists for the oil and gas industry are working hard to block government incentives for purchasing EVs, such as tax credits. There is a political war now between EV proponents and oil and gas lobbyists, which, for the time being, has successfully slowed the government backing of EVs.
In conclusion, the oil and gas industry should remain stable as it relates to its market share of the transportation industry for many years to come. Although, with major auto manufacturers’ support of EVs, decline in the oil and gas industry seems almost inevitable.
Works Cited
Katsenelson, Vitaliy “Why it’s only a matter of time before oil runs out of gas and electric vehicles power ahead,” https://www.marketwatch.com/story/why-its-only-a-matter-of-time-before-oil-runs-out-of-gas-and-electric-vehicles-power-ahead-2019-10-08. Accessed 12/2/2019.
