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Joined: Wed Feb 15, 2017 12:02 am

The Market Will Kill Oil Before the Government Does The U.K. plans to outlaw the sale of gas and diesel cars by 2040, bu

Wed Jul 26, 2017 10:43 pm

European governments are making a big splash, pledging an assault on traditional cars to help clean up polluted air in cities. The latest strike came Wednesday in the U.K., which says it will ban the sale of diesel- and gasoline-powered cars by 2040.

Those plans might not be quite as ambitious as they first seem. Consumers, automakers, and even some oil companies are already preparing for a battery-powered future.

The U.K. government’s plan to tackle record levels of air pollution was announced two weeks after French President Emmanuel Macron announced a similar plan to cut smog and become a carbon neutral nation.

While the targets will send a strong signal to automakers in Europe about the kinds of vehicles they should be producing over the next quarter century, they’re more likely to confirm that companies like Nissan Motor Co., Volvo Car Group, and BMW AG are on the right track.

“The industry is already working full speed on developing new, more environmentally friendly technologies,” Moody’s Investor Service said Wednesday in a statement regarding the U.K. plans.

Car companies say they’re ready for the paradigm shift. “We do see electrification as absolutely central to our future strategy,” BMW spokesman Graham Biggs said in a phone interview.

Europe’s car market is set to undergo unprecedented changes over the next two decades, driven as much by economics as government policy. Rapidly falling battery costs will make zero-emission electric vehicles as affordable as internal-combustion engine cars over the next 10 years, according to Bloomberg New Energy Finance.

In the U.K., plug-in cars are still only about 1 percent of all vehicle sales in the country. But that will hit almost 80 percent by 2040, according the London-based researcher. In France too, more than 70 percent of new cars sold will come with a plug even without Macron’s new targets, the researcher said.

“Given the rate of improvement in battery and electric-vehicle technology over the last 10 years, by 2040 small-combustion engines in private cars could well have disappeared without any government intervention,” Alastair Lewis, a professor at the National Centre for Atmospheric Science at the University of York, said in an email.

The shift to electric vehicles will upend oil markets, and gas stations will give way to home charging units. Britain’s retail stations are closing at a rate of about 100 per year, according to energy consultant Wood Mackenzie.

“If auto manufacturers can deliver this, then oil demand will peak and then decline swiftly,” Alan Gelder, Wood Mackenzie senior vice president, refining and chemicals research, said in an email. “This will have a massive impact on the refining sector and the oil markets.”

Royal Dutch Shell Plc, BP Plc and Total SA are betting that demand for natural gas will rise as the world shifts to cleaner-burning fuels. The electricity needed for battery-powered cars could be generated by burning natural gas, companies say.

Shell has said oil demand could max out in as little as 15 years, while BP forecasts it may happen in the 2040s. Meanwhile, demand for natural gas will continue to grow for years, they say.

Total has invested in a battery company, and Shell wants more wind and hydrogen production in its portfolio. Still, the investments are small compared with traditional oil and gas.

New infrastructure—such as charging stations for electric cars—will be needed before diesel and gasoline cars can be taken completely off the roads.

“Getting from 70-odd percent to 100 percent is a different ball game,” said Albert Cheung, analyst at Bloomberg New Energy Finance.

— With assistance from Thomas Seal and Rakteem Katakey.
Image ... nment-does

Nice chart but where is the data coming from?

Posts: 76
Joined: Wed Feb 15, 2017 12:02 am

Re: The Market Will Kill Oil Before the Government Does The U.K. plans to outlaw the sale of gas and diesel cars by 2040

Wed Jul 26, 2017 10:48 pm

“In a nutshell, the industry is going to evolve more in the next 10 years than in the last century,” said Gilles Normand, head of electric vehicles for Renault SA, in an interview.
This Is What the Demise
of Oil Looks Like ... ojections/

From giant companies like Exxon Mobil Corp. to OPEC members such as Saudi Arabia, oil producers say their industry will enjoy decades of growth as they feed the energy needs of the world’s expanding middle classes. But what if they’re wrong? There’s a host of reasons to think they might be. Here’s what happens when you test their central assumptions.

The International Energy Agency sees oil demand rising more than 10 percent, to 103.5 million barrels a day by 2040, while companies predict even faster growth.

Traditional Forecasters See Nothing But Growth

Global oil demand, millions of barrels per day
OPEC, Exxon and BP

IEA base case
Source: IEA
But forecasters don’t always anticipate seismic shifts in technology and policy that could slow demand growth, or even eliminate it altogether in some parts of the economy. Even small changes could add up. Advances in vehicle efficiency, a rise in electric cars, tighter emissions standards and shifts to other fuel sources would result in oil demand much lower than the industry is banking on.

“We cannot even begin to comprehend the transformation in the mobility arena that is coming at us,” Jules Kortenhorst, chief executive officer of the Rocky Mountain Institute, based in Boulder, Colorado, said in an interview. “It’s not a question if it will come, it’s only a question of what the timing of the arrival will be.”

The U.K. on Wednesday said it would ban the sale of gasoline and diesel cars by 2040, becoming the second Group of Seven nations to do so, following France. Sweden’s Volvo said earlier this month that by 2019 all of its cars will have an electric motor, while BMW will build an electric version of its iconic Mini compact car in Britain.

Technological Change

About 60 percent of oil is used in transportation, which is also where the biggest technological changes are emerging.

All over the world, governments concerned about climate change or air pollution are pushing tighter fuel-efficiency standards, or creating low-emission zones for cars and even ships. The exposure of cheating on diesel-emissions tests by Volkswagen AG, and similar accusations against other automakers, has added to the pressure on regulators to toughen standards.

The proliferation of big data analysis is set to dramatically curb fuel waste, according to the Rocky Mountain Institute. Aircraft being produced today by companies like General Electric Co. can already detect small changes in engine performance, meaning engineers can be sent out to fix any issues and keep them operating at peak efficiency. Smarter navigation technologies allow truck drivers to reduce the distances they travel, while improvements to aerodynamics will enable vehicles to travel farther on less fuel.

These and many other technologies would reduce emissions, while also save money, especially in a world where the International Energy Agency sees oil prices rising from about $50 a barrel now to $80 at the end of the decade, and to above $100 by 2030.

All told, efficiency improvements could eliminate the need for about 11.6 million barrels a day of supply, according to the IEA. That’s about six supertankers of oil every day. Here’s what the future looks like with efficiency gains:

Probably the most noticeable shift in transport will be the electric car. This won’t just be about cars with batteries, but part of the wider trend led by companies including Uber Technologies Inc. and Lyft Inc. toward transportation as an on-demand service in driverless vehicles summoned from your smartphone, according to RethinkX, a think tank based in San Fransisco.

A move away from the current norm of individual ownership of traditional petroleum-powered vehicles toward the sharing of high-tech, possibly driverless cars would have far-reaching economic and social consequences, particularly because they’re being pushed hardest in the fastest-growing major economies. China’s latest auto industry plan sees all new vehicle growth coming from electrics. India plans to sell only electric cars by the end of the next decade.

The Drive to Electric Cars
More than 20 million sales are predicted by 2030

“In a nutshell, the industry is going to evolve more in the next 10 years than in the last century,” said Gilles Normand, head of electric vehicles for Renault SA, in an interview.

If electric cars attain a “cool factor” on a par with the iPhone, the global fleet could expand to 450 million by 2035, from about 1.2 million currently, according to BP Chief Economist Spencer Dale. Adoption of electric vehicles on this scale could take away another 5.2 million barrels per day of oil demand, according to the IEA.

So now the baseline looks like this:

Even as U.S. President Donald Trump wavers over his commitment to the 2015 Paris Accord on climate change, envoys from Europe to China and the Middle East say the shift to a low-carbon economy is now unstoppable.

The Future Is Clean
New clean energy investment in world’s biggest economies

2004 to Q1 2017. Source: Bloomberg New Energy Finance
Some major oil companies are reacting to this shift. Royal Dutch Shell Plc, Europe’s largest energy company, is betting on zero-emission hydrogen cars and building liquefied natural gas refuelling stations for trucks in the U.S. and ships in Europe.

Biofuels are also set to take share away from oil in some markets—such as airlines seeking to cut carbon emissions, for which battery power isn’t currently suitable. The growth of bioplastics could also eat away at demand from the petrochemicals industry, which McKinsey and Co. estimates will drive 70 percent of growth in demand for oil through 2035.

Beverage makers like Coca-Cola already pay a few cents more for bottles made from plant-based materials, which won’t add to the growing plastic soup in our oceans.

Widespread switching to alternatives including natural gas and biofuels could displace about 13.5 million barrels a day of oil demand by 2040, according to the IEA. That’s more than double the gains from electric cars.

A Radically Different Future

All these things together, which is what the IEA says would be required to limit global warming to within 2 degrees Celsius, would mean oil demand peaking around 2020 and declining by about 20 million barrels a day by 2040. That’s 36 million barrels a day lower than the average oil company forecast for 2040—a gap larger than OPEC’s current production.

Some oil companies have acknowledged the potential for demand to peak sooner. Shell has said oil could peak somewhere between five and 15 years, while Total thinks a surge in battery powered vehicles will cause demand for oil to peak in the 2030s.

A demand shift on this scale would have dramatic consequences for oil producers, who are among the world’s biggest companies today.

“If you take a large bite out of transportation fuels, then suddenly the economics of the whole downstream oil and gas business look dramatically different,” said Kortenhorst.

There may be a lesson in the dismal fortunes of the U.S. coal industry. Demand for the fossil fuel peaked there in 2007 and has gradually declined as power plants switched to natural gas. That triggered a collapse in the value of some of the nation’s largest producers, including Peabody Energy Corp., which is among about 50 coal companies that filed for bankruptcy in recent years.

Oil companies now tilting toward renewable energy, such as Norway’s Statoil ASA, are best placed to survive peak demand, said Deutsche Bank AG. Exxon Mobil Corp.—due to its size and “reluctance to change”—is the most vulnerable.

State-run giants of the type that dominate the Organization of Petroleum Exporting Countries are even more at risk and could one day be left with billions of barrels of unwanted crude.
Lots of charts to check out along with the written - tried to cut and paste them on here in the appropriate spots but didn't work for me. Interesting follow up to original thread but I wasn't too smittened by either article.

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