Popularization Of Electric Vehicles: The End Of The Oil Era Will Be Just Around The Corner

- Dec 05, 2017 -

In 1956, geologist M. King Hubbert put forward a theory that the rate of oil production will cease to increase when the U.S. oil production reaches a certain level. Once production has peaked, it will begin to decline. The resulting plot of oil production resembles a bell-shaped curve, and the peak in production is considered the oil peak, yielding no returns.


Peak oil curve

From the very beginning, Hubbert predicted that U.S. oil production would peak in 1970 and begin to decline rapidly. His prediction proved to be partly correct, as indeed the U.S. crude oil production peaked in that year, but was not eroded until the shale boom started.


U.S. oil production

"The end of the oil era is just around the corner, and if the current trend continues, oil production will peak in 1995 - a deadline this year will replace alternative energy sources - before falling sharply." In 1974, Has proven 628 billion barrels of oil reserves, Hubbert made this judgment. 


However, due to the discovery of new fields and improvements in exploration and drilling technology, global oil production soared, so Hubbert's prediction failed to materialize.


In fact, as the chart below shows, despite the decline in U.S. oil production in the 1970s and 2000s, global crude oil production has steadily risen between 1965 and 2015 without the bell-shaped curve depicted


In conclusion, there is no evidence that we are approaching the peak of oil production. In contrast, agencies such as the Energy Information Administration (EIA) and the International Energy Agency (IEA) all predict that crude oil production will grow steadily for at least the next few years.


However, when analyzing the end of the oil era, suppliers will not be the only factor or even the most important factor. The world is progressing regardless of oil. Therefore, rather than discussing peak oil from the supply side, it is better to analyze "peak demand" than the latter.

If oil prices are in line with the traditional demand law, then low oil prices will lead to high consumption. However, something unusual happened in 2014. BP's 2015 statistical yearbook shows that energy consumption in 2014 only increased by 0.9%, the slowest in nearly two decades. At the same time, oil prices have declined.


if demand growth will slow down how? Does this imply that global demand for crude oil will eventually hit the ceiling?

"Global oil demand will peak in the next two decades," energy expert Amy Mayers Jaffe recently wrote in The Wall Street Journal.


What can the oil demand peak in the next 20 years?

It is noteworthy that about 50% of the crude oil is used for gasoline production, while most of the gasoline is used in automobiles. So what happens when people stop driving gasoline-powered cars?

blob.png

Electric car

The past few years, the global growth in sales of electric vehicles amazing. China, the United States and Japan have the largest number of traditional cars but their EV growth rates are 120%, 69% and 45% respectively. Despite the small base of electric vehicles market, electric vehicles are steadily growing, and gradually become the mainstream products.


Although EVs are more expensive than traditional cars, their relatively low operating costs can offset higher car prices in just a few years. Ucsusa.org even concluded that if the price of gas was $ 3.50 a gallon, electric vehicle owners would save $ 1,200 a year compared to a 27-foot-by-one car.

Once electric cars become mainstream, gasoline and crude oil demand will begin to decline.


Another thing to note is that auto giant Audi recently created a "blue crude" that can be converted into a carbon-neutral "E-Diesel" in three easy steps. Thanks to the fact that it emits less carbon dioxide and is likely to bring about energy change in the near future, the technology is receiving the full support of the German government.


Obviously, scientists and engineers are developing oil-bypass shipping, regardless of the future of electric vehicles.


Renewable Energy

Although not too many countries are still using oil power generation, but there are still always a few. Saudi Arabia is a prominent representative. However, it is reported that Saudi Arabia plans to supplement 54 billion kilowatts of electricity by renewable energy by 2032, of which 41 billion kilowatts come from solar energy. "We do not think that one day, Saudi Arabia will need fossil fuels anymore, I do not know when it is, maybe 2040, 2050 or later, so we have a solar development plan and hopefully one day we export It's electricity, not fossil fuels, "Ali Saudi Arabia oil minister Ali Al Naimi said in a meeting in May.


The biggest factor that supports renewable energy is its growing affordability. As the cost of producing renewable energy continues to decline, it will continue to keep fossil fuels at its margins. For a few countries that still use oil and electricity, renewable energy will cut their demand for crude oil.


Oil era

In 1956, geologist M. King Hubbert put forward a theory that the rate of oil production will cease to increase when the U.S. oil production reaches a certain level. Once production has peaked, it will begin to decline. The resulting plot of oil production resembles a bell-shaped curve, and the peak in production is considered the oil peak, yielding no returns.


From the very beginning, Hubbert predicted that U.S. oil production would peak in 1970 and begin to decline rapidly. His prediction proved to be partly correct, as indeed the U.S. crude oil production peaked in that year, but was not eroded until the shale boom started.


"The end of the oil era is just around the corner, and if the current trend continues, oil production will peak in 1995 - a deadline this year will replace alternative energy sources - before falling sharply." In 1974, Has proven 628 billion barrels of oil reserves, Hubbert made this judgment. However, due to the discovery of new fields and improvements in exploration and drilling technology, global oil production soared, so Hubbert's prediction failed to materialize.


In fact, as the chart below shows, despite the decline in oil production in the United States in the 1970s and 2000s, global crude oil production has steadily risen from 1965 to 2015, with no bell-peak oil spikes.


In conclusion, there is no evidence that we are approaching the peak of oil production. In contrast, agencies such as the Energy Information Administration (EIA) and the International Energy Agency (IEA) all predict that crude oil production will grow steadily for at least the next few years.


However, when analyzing the end of the oil era, suppliers will not be the only factor or even the most important factor. The world is progressing regardless of oil. Therefore, rather than discussing peak oil from the supply side, it is better to analyze "peak demand" than the latter.


If oil prices are in line with the traditional demand law, then low oil prices will lead to high consumption. However, something unusual happened in 2014. BP's 2015 statistical yearbook shows that energy consumption in 2014 only increased by 0.9%, the slowest in nearly two decades. At the same time, oil prices have declined.


China strategy

What if the slowdown in demand? Does this imply that global demand for crude oil will eventually hit the ceiling?

With strong domestic demand and economic growth, China is the second largest oil consumer in the world after the United States.


China imported about 5.5 million barrels of oil in May, down sharply from 7.4 million barrels a day in April. However, due to low oil prices, China is busy replenishing its strategic oil reserve (SPR) and the oil market will soon be shaken by China.


China already has over 12 strategic oil reserve points and plans to raise its strategic oil reserve from 250 million barrels to 500 million barrels by 2020. What will happen once this goal is achieved? "We need to understand the dilemma of China's invisible oil demand, which has two oil needs - normal demand and strategic reserves, which will not last forever." Jamie Webster, IHS (Information Processing Services Company) Jamie Webster recently told Reuters.


In the next few years, what happens if China's huge appetite for oil begins to diminish? This will bring the world economy closer to the oil peak demand.


Since China's new energy vehicle sales doubled in 2008, China has started to push the promotion of new energy vehicles from top to bottom. According to China Association of Automobile Manufacturers data show that in May 2015, China's production of 19,900 new energy vehicles, an increase of 3 times. Among them, the pure electric passenger car production 9922, an increase of 3 times, plug-in hybrid passenger car production 4923, an increase of nearly 4 times; pure electric commercial vehicles 2832, an increase of 7 times, plug-in The number of hybrid commercial vehicles was 1431, an increase of 36% over the same period of previous year. The first four batches of new energy vehicles listed in the Catalog of New Energy Vehicles Exempted from Vehicle Purchase Tax produced 17,800 units, accounting for 93% of the May production.


Source: China Battery Network

Related Products