Tuesday, May 16, 2017

Slaying the Fossil Fuel Beast

Here's a big heads up for all of Canada's petro-pols from Justin Trudeau on down.

A new report out of Stanford University predicts a permanent collapse in oil prices within four years.

The report points to a significant threat to Canada’s economy, dependent as it is on oil and auto manufacturing, but it also predicts “huge opportunities” for companies that jump into the new “transportation-as-a-service” industry.

“We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history,” begins the report from Tony Seba, a Silicon Valley entrepreneur and lecturer in entrepreneurship, disruption and clean energy at Stanford.

Using economic models based on existing technologies, the report predicts that ride-hailing services will be cheaper than owning a car by 2021.

By that time, ride-hailing will be “four to 10 times cheaper per mile than buying a new car and two to four times cheaper than operating an existing vehicle,” the report says.

“Global oil demand will drop from 100 million barrels per day in 2020 to around 70 million barrels per day in 2030. The price of oil will drop to around $25 per barrel,” the report stated. “The impact of the collapse of oil prices throughout the oil industry value chain will be felt as soon as 2021.”

What's bad news for the oil patch will be equally bad news for Ontario's auto industry.

Meanwhile, the costs of manufacturing combustible-engine cars will start going up, as they become less common.

Auto manufacturing will collapse by 70 per cent between 2020 and 2030, the report predicts. The number of cars in the U.S. will plummet from 247 million to 44 million in the same period.

“This could result in total disruption of the car value chain, with car dealers, maintenance and insurance companies suffering almost complete destruction.”

It will become next to impossible to sell a used fossil-fuel car, the report predicted.

I'm not convinced. We're culturally attached to our cars and the convenience they afford. While urban dwellers may make more use of ride-hailing services to save some bucks here and there, I'll bet most of us will still have a car in the garage for what the insurers call "pleasure use."

Also bear in mind that the burgeoning market for private automobiles today isn't in the developed world. It's coming from the emerging economic superpowers, places where owning one's own car has been a lifelong dream.


Toby said...

I'm not convinced either. The car is a self-indulgent cocoon. People are addicted. Additionally, I don't think drivers want self driving cars. Imagine discovering that the robo-car obeys the speed limit!

Dana said...

Besides the Auto Workers Union will never put up with it.

UU4077 said...

And motorcycles. What about motorcycles?

The Mound of Sound said...

To me, UU, motorcycles are like a gun to some Americans. They can have it when they pry it from my cold, dead fingers.

Unknown said...
This comment has been removed by the author.
crf said...

I would think that nearly every adult who doesn't own a car probably wishes they had one. I really doubt that ride-hailing (which is probably not much different than a taxi service in many developing countries) would be seen as an adequate substitute to the middle-class.

Trying to predict the future of technologies is hard. But a good bet is that as things become relatively cheaper, more people will use them. (for example: cell phones, air conditioning units, meat consumption) So if people in the developing world become a bit richer, the cost of owning a car becomes relatively smaller, and they are likely to buy more cars and use more petrol. And the idea that electric cars will become cheaper than gas cars is really pushing the envelope. Gas cars today are cheaper than ever. Electric cars are a small niche today, quite expensive, and there are real issues to do with materials with scaling up their production dramatically.

Anonymous said...

When things change they can change quickly.
Change is usually dictated by economics the other reasons follow.
However , change we have and it is unstoppable.



The Mound of Sound said...

We had a comment from Cy Loke which, for some reason, he removed. That was unfortunate as it contained a very useful link to an article in Pacific Standard that I would recommend we all read.


Do check it out.

The Mound of Sound said...

I tend to agree with Chris, motoring won't go quietly into the night. Ride hailing probably will grow, especially if it has the claimed financial edge, but there will likely be a number of factors in play before we'll give up the private motor car in any significant number.

The Mound of Sound said...

Thanks for the link, TB. I had watched that presentation a while back but missed the name, Tony Seba. I do hope he's right but I also hope we don't get overtaken by events before his vision produces meaningful results.

Anonymous said...

Re Seba.
If Seba is correct and I have no reason t doubt him considering the ever growing research that agrees with him; other events will be mere blips on the way to a transformation of all we have believed in.
Even , all be it on page three,the MSM is posting articles that show the new age.


In it's infancy; yes but undeniably here forever.


Anonymous said...

Walking at Duke Point , Nanaimo today.
A new shipment of wind farm vanes are stacked awaiting shipment ( to the north Island)
Another nail in the carbon sphere.
It's happening folks.