Electric Cars will Be Main Reason for Next Oil Crash
The world is running out of oil. At least, it was the idea behind the peak oil hypostases might be a dominating economy for the decade. But it turns out that there is a lot more oil than we thought. What if instead of thinking about running out of oil, let’s stop buying it.
In the early 2000s, Martin Eberhard was offered a financial grant for not developing electric car production, at least, in the next 5 years by Exxon Mobil. Because plug-in cars are not supportive to oil refining products and might be the cause of net loss of these big oil company. But when Elon Musk became a CEO and board member of Tesla Motors and started to work on chargeable cars, it was clear that the future of oil is under threat. This might be a basic impulse which will pull the oil refining to next cost crash and there may be no recovery.
In the next two years, Tesla and Chevrolet plan to start selling electric cars in a range of more than 200 miles priced in the $30,000 range, according to Bloomberg. Ford is investing billions, Volkswagen is investing billions, and Nissan and BMW are investing billions. Nearly every major carmaker — as well as Apple and Google — is working on the next generation of plug-in cars.
This is a problem for oil markets. OPEC still contends that electric vehicles will make up just 1 percent of global car sales in 2040. Exxon’s forecast is similarly dismissive.
The oil price crash that started in 2014 was caused by a glut of unwanted oil, as producers started cranking out about 2 million barrels a day more than the market supported. Nobody saw it coming, despite the massively expanding oil fields across North America. The question is: How soon could electric vehicles trigger a similar oil glut by reducing demand by the same 2 million barrels?
That’s the subject of the first installment of Bloomberg’s new animated web series Sooner Than You Think, which examines some of the biggest transformations in human history that haven’t happened quite yet. Tomorrow, analysts at Bloomberg New Energy Finance will weigh in with a comprehensive analysis of where the electric car industry is headed.
Even amid low gasoline prices last year, electric car sales jumped 60 percent worldwide. If that level of growth continues, the crash-triggering benchmark of 2 million barrels of reduced demand could come as early as 2023. That’s a crisis. The timing of new technologies is difficult to predict, but it may not be long before it becomes impossible to ignore.