Monday, May 29, 2017

Too Good/Bad to Be True? The End of Internal Combustion Propulsion?

It's been rumoured to be coming. Now it seems that a truly seismic event may be almost on our doorstep.

A report from Bloomberg New Energy Finance (BNEF) shows that within as little as eight years, electric cars in Europe and North America will be cheaper to buy and run than traditional vehicles powered by internal combustion engines.

The report comes at a vital moment for the world's oil industry.

Enter the Beast, Donald J. Trump. The Fossil Fuelers aren't going anywhere, not without a fight.

As a representative of established business interests, few would be surprised if Trump dumped the Paris agreement.

That's because vested interests in the existing industrial economy — based on fossil fuel extraction, distribution and consumption — would like to hold back the changing tide.

That includes the auto retail sector.

On a recent visit to a Toyota dealership to check out a plug-in hybrid, none were available to see. The salesman actively encouraged this potential customer to buy something else.

According to BNEF, a trend to improving battery technology and falling costs, combined with higher costs for diesel and gasoline cars, will mean electrics will match the cost of internal combustion engines by about 2025.

As is usual with such long-range predictions, the exact dates can only be an estimate, but the direction of the trend is clear: People are going to be using less gas.

And while the world continues to pump out more and more oil, total demand will begin to slow and then decline.

The Down Side.

The fossil energy giants are carrying an estimated 27 trillion dollars worth of proven fossil fuel reserves on their books. Those reserves are, in turn, subscribed by investors on the world's stock markets and bourses. Those investors span the gamut from institutional investors and mutual funds to pension plans to Ma and Pa's retirement funds.

There is a massive Carbon Bubble that is poised to burst. The current and former governors of The Bank of England have for years warned of global economic catastrophe if that bubble bursts with investors unprepared. The problem is that some can get out in time but not many, not at this point. Confidence won't dwindle. It will shatter. The bubble won't deflate. It will burst and, when it does, many trillions of dollars of wealth will suddenly cease to exist.


Anonymous said...

The fossils will not go down without a fight.
Expect to see similar situations as special interests secret their monies out of the back door so as to avoid panic with their investors!
Change is everywhere but sudden change will destroy stock markets around the world.


The Mound of Sound said...

TB, I expect you're right. The early money out is the safe money. Once the herd starts moving prices plummet. Bubbles, performing predictably since 1907.