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Earth Transportation

How Electric Cars Will Affect Oil Company Investors (cnn.com) 181

Posted by EditorDavid from the peeking-at-peek-oil dept.
"Between global warming, Elon Musk, and a worldwide crackdown on carbon, the future looks treacherous for Big Oil," argues CNN Business writer Matt Egan, calling the rise of electric vehicles "an existential threat to the oil industry."

"Passenger vehicles are the No. 1 source of demand for oil -- and tomorrow's transportation system may no longer rely on the gas station." Reliance on oil will probably peak between 2030 and 2035 if countries adhere to their recent low-carbon pledges, Barclays said [in a new report published this week]. However, the peak could arrive as soon as 2025 -- just six years from now -- if the world increases its focus on slashing carbon emissions. Electric vehicle sales have surged faster than anticipated, but they still represent a small portion of overall car sales. That means EVs are hurting oil demand, but they have yet to put a dent in it....

Research firm DNV GL estimates that peak oil will become a reality during the 2020s and demand will flat-line through the entire decade. "By 2030, oil shareholders will feel the impact," said Sverre Alvik, lead author of the firm's energy transition outlook report. Electric vehicles are likely to cause light vehicle oil demand to plunge by nearly 50% by 2040, Alvik said. Jens Peers, an executive at Mirova, an ESG affiliate of Natixis, advised owners of oil stocks to get out while they can. "We do not find them financially attractive today," Peers said, noting "prohibitively high" regulatory and technological risks....

The deep uncertainty surrounding the future of oil demand that long-term investors should use caution in this space by carefully monitoring trends and steering clear of companies that are in denial about the future.
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How Electric Cars Will Affect Oil Company Investors More

How Electric Cars Will Affect Oil Company Investors

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  • Oil Companies are Energy Companies (Score:5, Insightful)

    by Cmdln Daco ( 1183119 ) on Sunday May 12, 2019 @05:40PM (#58579494)

    They have diversified. 'BP' used to advertise that 'BP' stood for Beyond Petroleum. 'Big Oil' isn't the stereotypical operation it may have been in 1958, which is how many people seem to still view them.

    Companies involved in the peripheral oil industry, i.e. specialized suppliers, contractors for oilfields, etc. may not be as good off. But I guarantee the big capitalists with money in Energy aren't shaking in their boots about Electric cars.

    • Re: Oil Companies are Energy Companies (Score:4, Insightful)

      by Anonymous Coward on Sunday May 12, 2019 @05:46PM (#58579536)

      Anyone who thinks electric cars or even renewable energy is going to destroy oil is completely ignorant of what oil is used for.

      From mining to processing to feedstock, fossil fuels aren't going anywhere.

      Just look at a Tesla. How many materials cannot exist but for fossil fuels that are used in one car?

      • Re: Oil Companies are Energy Companies (Score:1)

        by Anonymous Coward

        Oil as a source of energy far outweighs it's other uses.

        So if oil is no longer used for energy, there will be an abundance of supply for it's other uses, bringing down the price. This has serious geopolitical ramifications.

      • Re: (Score:1)

        by Anonymous Coward

        "Passenger vehicles are the No. 1 source of demand for oil". Nobody is saying fossil fuel is going anywhere, and it will still be useful in places like you have mentioned. But these are fringe applications compared to the scale of billions of ICE vehicles.

      • Re: Oil Companies are Energy Companies (Score:4, Interesting)

        by ceoyoyo ( 59147 ) on Sunday May 12, 2019 @10:19PM (#58580822)

        About 75% of oil (in the US) is used for fuel. If that goes away there will still be oil-related companies and infrastructure, but that's a huge hit for any industry to take.

        But oil hasn't really been a growth industry in a long time. It's nothing new.

        • Re: (Score:2)

          by jabuzz ( 182671 )

          You missed out jet fuel, and other fractions that are burnt for heating, electrical generation etc. It's more like ~15% is not burnt.

          The thing to bear in mind however is the fraction of oil that is not burnt actually provides as much value if not more than that which is burnt.

          Another thing to bear in mind is that once electric vehicles become a significant proportion of vehicles on the road it will have a rapid and detrimental impact on the availability of gas/petrol and diesel. That is the retailers operat

          • Re: (Score:2)

            by ceoyoyo ( 59147 )

            No, I added those in. IIRC (not going to look it up again, but it's easy to find), gasoline is around 60%, jet fuel is about 8%, and other fuels (including heating oil) rounds it out. The remaining 25% is feedstock for chemical manufacturing, plastics, etc. Electrical generation using oil or oil products is pretty much limited to diesel generators for backup and remote locations.

            The reason oil is so rare in electrical generation is because oil is becoming a very poor energy source. It's used mostly as suc

      • See: polymerized plant cellulose, or the larger family known as bioplastics [wikipedia.org].

      • Re: Oil Companies are Energy Companies (Score:5, Insightful)

        by ivano ( 584883 ) on Monday May 13, 2019 @02:39AM (#58581466)
        Like people don't know that already. But how much do we use for those purposes? Is it 50%, 5%, 0.5% of the total oil we use? Also on the other side of the coin: if oil is so precious and valuable why the fuck do we mostly use it to pour into our cars and burn it?!? I would think people like you (and the ex-Top Gear guys who had a whole talk to camera about how useful oil products are) would be the front runners in making sure we just don't burn it for a bit of fun and laziness.
      • Uh the article itself mentions that private transportation vehicles only represent 50% of demand. But a 50% drop in demand will do serious damage to almost any industry. Suddenly there is way too much capacity and that doens't change until some companies go bankrupt and exit. If that happened quickly it wouldn't be so bad, but each company will try to be the last survivor and bleed money in the process

      • Correct, oil is used in the manufacture of many materials such as plastics. However, the burning of oil is not used in these manufacturing processes except indirectly in the electricity and gas heating that is used. The era of burning oil is coming to an end.

        BP is diversifying as can be seen by their purchase of ChargeMaster in the UK https://bpchargemaster.com/ [bpchargemaster.com]
        Shell is also providing EV charging points at some of their petrol stations in the UK https://www.shell.co.uk/motori... [shell.co.uk]

    • Re: (Score:2)

      by jonwil ( 467024 )

      Not all oil companies are as forward-looking as BP when it comes to a future without oil.
      Look at Exxon Mobil, they aren't exactly looking for revenue streams beyond their oil operations...

      • Re: (Score:3)

        by isdnip ( 49656 )

        BP is "beyond petroleum" in its public relations, given its miserable record such as Deepwater Horizon, but it's still British Petroleum at heart.
        Exxon has over the years invested in all sorts of sidelines. They owned a speech recognition company 40 years ago, a phone equipment company, and a bunch of other techie stuff over the years. But they're just sidelines to oil.

        • but it's still British Petroleum at heart.

          Even after it merged with Amoco in 1998? Want to take a guess what the "Am" bit is short for?

          And of course US companies never spill oil anywhere.

        • The name "British Petroleum" was abandoned after the merger in 1998 with Amoco.

          The UK government was appalled by President Obama using the name "British Petroleum" during the Deepwater Horizon disaster because it wrongly implied that it was a British company that caused the disaster. In reality, BP is more American than British these days.

          BP's role in the disaster was a failure to fully monitor the quality of workmanship of companies that had been sub-contracted to work on the well head. There were only 7 B

          • That's false, BP made tons of horrible decisions such as spraying dispersant to hide their crimes and deliberately "losing" computers with damage claimants' info as an excuse to not pay them back. BP has all kinds of blood on its hands from this.

    • Not to mention that electricity used in electric cars does not necessarily come from solar or wind in any significant amount. Electric cars simply make the fuel source fungible, which will surely dampen the cost of oil specifically, but will not, by a long shot, remove it as a source of fuel in our lifetimes.

      • Re: (Score:1, Troll)

        by Solandri ( 704621 )

        Not to mention that electricity used in electric cars does not necessarily come from solar or wind in any significant amount.

        100% of the electricity used by EVs comes from fossil fuels. When you add an EV to the power grid, the grid has to generate a little extra electricity to charge it. Nuclear plants are run at full throttle 24/7. Hydro, solar, and wind already operate at 100% capacity (they generate all the electricity they can; hydro's generators don't run at 100%, but its capacity is fixed per ye

      • Not to mention that electricity used in electric cars does not necessarily come from solar or wind in any significant amount. Electric cars simply make the fuel source fungible, which will surely dampen the cost of oil specifically, but will not, by a long shot, remove it as a source of fuel in our lifetimes.

        If reducing oil as a fuel reduces its cost then oil, being a rich source of hydrocarbons, could become one of the reasons why electric cars get better range: lightweight super plastics, which currently can be expensive. Even if the costs have come down in recent years, cheaper oil could make them cheaper still. But you're right, in the meantime we're stuck with oil, nat gas, coal etc. as principle sources of energy, even for electric cars.

    • Huh, I thought BP stood for Biggest Polluter

      I'm still mad about the spill in the Gulf of Mexico and after seeing how it was handled I now assume BP stands for Bad People.

    • They have diversified.

      And they are continuing to do so. Shell, and BP are both getting into the electric car charging industry. The latter also owns 1GWe of Wind generation in the USA alone. Exxon is heavily investing in Wind and Solar in Texas.

      The oil companies themselves see some of the writing on the wall... However that's where the good news ends. I regularly look at the various energy presentations from the industry and none of them are planning for a decline in oil. They are all planning for a increase in primary energy co

    • Will there be all electric airplanes, or fifty-three (25meter) transport trucks that will not have a reliance on diesal, natural gas,or gasoline?
      Oil will be needed for lubrication, and for situations were battery powered equipment is not practical.

    • Seriously dude? BP used the Beyond Petroleum branding as part of their greenwashing campaign after the Deepwater Horizin disaster, not because they are planning on upending their entire international business model. Sorry but but judging a company's aims based on their marketing, let alone a sociopathic corporation like BP, is just naiive. BP is still a petroleum company.

  • Oil is not only for fuel (Score:5, Insightful)

    by Suren Enfiajyan ( 4600031 ) on Sunday May 12, 2019 @05:44PM (#58579518)
    Oil is also for many other materials, such as plastic, lubricating oil, bitumen and many other chemicals.

    • Yeah but it makes up the bulk of what it's used for. The vacuum electric cars create may be filled with more plastic stuff floating around and filling the landfills!

      • And the fun thing is that many parts of electrical cars are made of plastic and electricity production directly or indirectly needs some oil.
        • yes, because its still early days in getting renewables to be the majority power generator. A bit like when cars started to appear on the roads, the majority of people still used animal drawn transport.

    • What I can't understand is... if "Big Oil" is able to continue to suppress all this "run your car on water" technology, how come they've faile so miserably in stopping EVs from becoming a thing? (LOL).

      As for "the other stuff" we get from oil -- well it strikes me that "refuse-tip futures" will become a big thing in a short while. We throw away so much plastic and other stuff made from oil that when it becomes too expensive to continue sucking the black ooze out of the ground, companies will turn to mining

      • Because Tesla is an EV only manufacturer who has bucked the trend and is now eating into the fossil car sales. "Big Oil" did put pay to EVs within big old tech manufacturers like GM though but I expect that was partly because GM had billions invested in fossil fueled vehicles.

    • Re:Oil is not only for fuel (Score:5, Informative)

      by im_thatoneguy ( 819432 ) on Monday May 13, 2019 @01:54AM (#58581374)

      About 19% of oil isn't used for heat or transportation.

      An industry contracting 81% is pretty catastrophic.

      • Re: (Score:3)

        by jabuzz ( 182671 )

        I would point to the coal industry in the UK as an example. At the beginning of the 1960's around half of all coal mined in the UK was used to make gas, with a significant amount of the remaining coal used to heat peoples homes.

        Then gas was discovered in the North Sea. In less than a decade half the market for the coal disappeared. Then with lots of cheap gas, everyone switched to gas central heating, further decreasing the market. Even worse they started using it to generate power and today we go extended

        • Yeah, people seem to always ignore the minimum viability of an industry.

          Just because there is still demand for 19% of the previous number doesn't mean it's profitable to still even extract that 19% without the other 81% propping up the industry. Sure we need lubricants but without the volume of business from transportation will it even be worth to drill or will we use alternative approaches.

          E.g. inside of that 19% "Other" oil usage is motor oil. Motor Oil is pretty cheap so lots of people still buy it.

      • ...and you know what happens then?
        The price of oil plummets...which makes electric vehicles even less competitive.

        • Re: (Score:2)

          by urusan ( 1755332 )

          While that makes sense from an econ 101 perspective, the reality is much more complicated in this case. Basically, the current demand for oil is making it worthwhile to extract and distribute oil and gasoline at the current scale, but a drastically reduced demand will completely mess with that.

          The main thing that is really going to collapse when this hits the fan is the gasoline distribution network. Gasoline is a volatile compound, it becomes unusable after 3-6 months of storage, so you can't just stockpil

          • Lots of good thoughts here (unlike an awful lot of the other posts). On the subject of gas stations going out of business when demand decreases:

            I think you're probably right for gas stations that are primarily gas+repair services, but these days a fairly large number of them are combo gas+quickie mart. I suspect the profit from fuel in those businesses is extremely small and is really a loss leader just to get people into the quickie mart. I suspect those places will do okay until the fleet eventually ages

            • Re: (Score:2)

              by urusan ( 1755332 )

              True, there's even a clear route forward for them: installing electrical charging stations instead. The longer charging times would actually be a boon for them, since people would hang around in their shop longer. Maybe they'd even start making them more comfortable places to wait around when they can realistically have people waiting around for half and hour or longer.

              That said, I think many of these shops would still suffer during the transition, even if their long term prognosis is good, just due to how

  • How on Earth are we going to be able to justify endless war on Middle Eastern countries if we don't need their oil any more? What is our military industrial complex to do?

    Fun fact: with shale oil, in 2019 the USA is set to pass Saudi Arabia as the world's #1 producer of oil, becoming self sufficient. With bad luck like this, how are we going to keep bombing countries that never did anything to us? Our media will need to work overtime to come up with new justifications. Remember how they supported the Iraq

    • becoming self sufficient.

      No. That oil you speak of is being shipped overseas because the extractors can get a higher price for it than in the U.S. In fact, Obama lifted a 40 year-old ban [bloomberg.com] on shipping oil out of this country.

      Even oil from Alaska, previously prevented from going overseas, is now allowed to be shipped out of this country [okenergytoday.com].

      That is not the same as saying we're self sufficient. The U.S. still gets over 40% of its oil from outside the country. Further, if we were self-sufficient, the price of ga

      • Further, if we were self-sufficient, the price of gas would be much lower than it is now.

        When adjusted for inflation, gas prices are lower than they were 40 years ago....

  • Probably not due to carbon (Score:5, Interesting)

    by edi_guy ( 2225738 ) on Sunday May 12, 2019 @05:58PM (#58579612)

    I doubt that there will be much downward pressure to oil based strictly on the environment or carbon emission goals. One could see a dramatic reduction in the use of oil as transportation fuel based on the performance of the actual cars. Having spent some time in electric cars as a passenger and driver (but not owner), they are superior in terms of performance, cabin noise, etc. I think once people get to that tipping point where a couple folks on their block buy electric, they see the convenience of fueling at home, the reduction in maintenance, things like range anxiety, and cold weather anxiety will fall away. Especially if additional entrants like VW apply some price pressure.

    Sorta like a new restaurant. They might have great food, but people will continue to pass by until they see other people already in there. Once a few more people show up, the place will be filled. And the next generation of people who are now growing up on those godforsaken electric mopeds, scooters, and skateboards won't even consider a gas car. So yeah, I could see 10 years from now a lot more turnover from gas to electric cars

    • Having spent some time in electric cars as a passenger and driver (but not owner), they are superior in terms of performance, cabin noise, etc. I think once people get to that tipping point where a couple folks on their block buy electric, they see the convenience of fueling at home, the reduction in maintenance, things like range anxiety, and cold weather anxiety will fall away.

      Acceleration, no engine noise, no trips to the gas station, and less maintenance are indeed attractive benefits, but range anxiety and cold weather concerns exist despite those benefits. What is needed are longer-range batteries and extremely fast charging. 30-minute charging times will result in very long lines for highway charging stations when 100% of cars are electric, and many/most drivers will eventually encounter a day that exceeds the battery range when stopping for a 30-minute charge is not accep

      • Re: (Score:2)

        by King_TJ ( 85913 )

        Extremely fast charging doesn't look all that viable to me, though, because some huge breakthroughs in battery technology would be required before it could happen.

        Right now, EV makers like Tesla and auto-makers experimenting with EV options like Porsche are cutting down charging times by increasing the power output of their high speed charging stations, and actively cooling the batteries in the vehicles to try to keep excess heat under control during the charging process.

        I think they're reaching the upper l

        • A new technology that might roll out could be super-capacitors that allow very fast charging up of the capacitor. In principle, a super-capacitor could be placed inside the EV between the charging station and the battery. The super-capacitor acts as an energy buffer so that the charging station uses a high power level to dump a lot of energy into the EV over a short period of time. The EV then drives off and the super-capacitor slowly charges up the EV battery so you no longer need to wait for the battery i

      • With Tesla v3 Superchargers you can get 75mi of range in 5 minutes. For those rare days where 30 minutes is too long, I bet 75 miles of range will be "enough".

        Especially if everybody has a 14kw charger in their home or apartment building or on the street or within a block or two of the destination. That would give someone 400 miles of range with 5 minutes of delay.

        If you're traveling for 6+ hours at a time you'll probably need to stop for lunch at some point.

        • yes, your bladder is more likely to encourage you stopping than running out of charge

  • Heavy equipment isn't switching over to electric any time soon. Ore refineries aren't switching to electricity either because it's too inefficient when all you want is heat. As demand for batteries increases, we'll have to start excavating places that are more remote or that contain far lower concentrations of the elements we're looking for (primarily lithium). This will drastically increase overhead -- not just in terms of time and labor, but also in energy consumption.

    The whole proposition is a joke un

    • Re: (Score:2)

      by Ichijo ( 607641 )

      Agreed, there are better uses for oil than for surface transportation within urban areas. The more oil we save now, the better off our children and grandchildren will be.

    • Ore refineries aren't switching to electricity either because it's too inefficient

      Huh? Aluminum refineries popped up all over the pacific northwest because it was so cheap to use hydroelectric and nuclear electricity vs oil. That was long before literally, the environmental movement even existed.

      • Re: (Score:2)

        by Bert64 ( 520050 )

        That was long before literally, the environmental movement even existed.

        Exactly, and this movement also protests against nuclear and hydro (due to flooding etc) which makes it harder to locate such plants and more expensive to build or operate them.

    • For heavy equipment check youtube and search "electric heavy equipment" or this one is worth a look "https://electrek.co/2017/09/17/electric-dumper-truck-worlds-largest-ev-battery-pack/" - uses power to take stuff out of a mine and recharges with regen on its way back down to pick up the next load

    • Lithium is NOT the main component of Lithium ion batteries. Lithium is present in seawater in low concentrations but it is possible to get the Lithium out of seawater therefore no mining is needed.

      Cobalt is a problem element in batteries due to geo-political concerns. However, Tesla is making progress in reducing the amount of Cobalt in their batteries with an intention to eliminate Cobalt altogether.

      Lithium ion batteries do not use "Rare Earth Elements" (chemical name of the group of elements and these ele

  • FTA:

    Rapidly evolving technology and shifting political winds could hasten the arrival of peak oil well before Wall Street's estimates.

    No it wouldn’t. If anything, the rise of electric vehicles will postpone peak oil. The term “peak oil” refers to the peak in supply, not demand. It’s the moment when the rate at which we can extract oil from the ground is at its highest, or (according to a slightly different definition) the moment when demand outstrips the maximum oil production volume. At this rate, the latter might never happen.

    • Re: (Score:2)

      by Paxtez ( 948813 )

      The article/summary is using the new definition of "Peak Oil". It used to mean: "when our supply of oil will peak and then start to fall". The article is clearly using the term to mean "when our DEMAND of oil will peak and then start to fall".

      While odd they choose the same term to kinda mean the opposite thing, but words evolve.

  • "...the future looks treacherous for Big Oil," argues CNN Business writer Matt Egan, calling the rise of electric vehicles "an existential threat to the oil industry."

    Good, I look forward to the fossil fuel industry pissing and moaning about the free market working as intended. Only, just for once, it will not be working in a way that is to their advantage. Expect the word 'unfair' being frequently used, in a whiny tone of voice, by Armani suit wearing conservative TV pundits in the pay of the Oil industry.

  • Mentioning electric cars and global warming in the same sentence is only a marketing ploy. So assuming big petrol companies have years (centuries even) of marketing expertise, they would spend some more money, when population will be more informed and objective about electric cars. So at the end probably most likely scenario would be an increased percentage of electric car owners charging their (utilising environmentally harmful batteries) cars in gas stations using (produced in good old CO2 producing metho

    • Nobody I know who drives an electric car charges it at a gas station.

      Most of the time they charge it at home, and sometimes at work.

      • I am assuming in a few years, maybe a decade the trend would be banning of hydrocarbon burning cars, following the upcoming Diesel ban in some locations. So after a while people would need to use their electric cars more like we do with regular cars. That is to say, they need to use their vehicles on routes those are not carefully planned daily commute routes, so the need for roadside stations would increase, again this is just an assumption. I do not know US trends, but here (in Turkey) most people I know

        • Or they could take the electric trains, as are used in most nations nowadays, powered by wind and solar. Even electric planes are used up in BC as well as Norway, so it's not hard.

        • That is to say, they need to use their vehicles on routes those are not carefully planned daily commute routes, so the need for roadside stations would increase, again this is just an assumption.

          And a poor one at that.

          A "station" for charging an electric vehicle is a parking space with box in front of it that has a cord sticking out. Without the need to pump flammable fuel from an underground tank, there's no need to build a separate station that is designed to pump flammable fuel from an underground tank and put a charger where the pump was.

          If EV's take off as forecast by this author, chargers will just become a standard part of parking lots, parking meters, and any other place where people regul

          • In the UK, around the early 1900's people had to go to their local chemist (pharmacy) to get petrol for their ICE car and batteries for their electric car.

      • It is a thing in the UK, Shell are deploying some EV chargers to their petrol "gas" stations which are also known as "service stations" https://www.shell.co.uk/motori... [shell.co.uk]

  • I suggest anyone who isn't an authentic expert on this subject take a few minutes to at least browse the basic information for an informed perspective: (1) Predicting the timing of peak oil: https://en.wikipedia.org/wiki/... [wikipedia.org] Many individual countries have clearly hit peak per table at the bottom. Figuring the year of peak globally is complicated by grossly UNRELIABLE information on oil reserves per country (it is strategically unwise for poker players to reveal their hands) AND counting "equivalents" in p

  • It is shocking that an investment company that invests in alternative energy doesn't want you to invest in oil stocks.

  • U.S. petroleum consumption by sector and share of total in 2017
    Transportationâ"14.02 million barrels per day (b/d)â"71%
    Industrialâ"4.76 million b/dâ"24%
    Residentialâ"0.52 million b/dâ"3%
    Commercialâ"0.47 million b/dâ"2%
    Electric powerâ"0.10 million b/dâ"1%

     https://www.eia.gov/energyexplained/index.php?page=oil_use/ [eia.gov]

  • They have the resources now to use their science with refining and advanced levels of chemistry science to perhaps find a way to capture carbon out of the atmosphere at large scales - and then find ways to make it profitable by charging nation states to do so within their borders and perhaps creating new carbon based energy from that captured.

    Or perhaps transform into green energy based companies. Or both.

    In any case, doing nothing and just pumping oil is headed for a small nitch market position in the com

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