A world that does not rely on oil for transportation was considered science fiction, something only possible if we found the mythical dilithium crystals that power Star Trek's Enterprise. But an amalgamation of new technologies could dramatically reduce demand for oil, which means a large number of Houston energy companies will eventually need new business plans.
For the last 20 years, per capita oil use has dropped in developed countries as fuel efficiency and public transportation use have grown. In the U. Millennials and senior citizens are less likely to have driver's licenses or own cars, relying instead on transportation networks like Uber and Lyft, or car-sharing services such as ZipCar and Car2Go. Mobile Internet technology has made this more painless, and city dwellers save substantial sums on car payments, insurance, parking and taxes.
Lower rates of car ownership lead to less oil consumption, as the number of discretionary trips decreases. Cars themselves are also changing, with many automakers promising autonomous vehicles by State laws will likely require someone in the driver's seat in the beginning, but it won't be long before empty cars are driving down city streets. Combine autonomous cars with transportation networks, and car ownership is even less appealing.
If you can push a button on a phone and a car will pull up within minutes and deliver you to your destination at a low cost, why own one? Liquid-fueled vehicles only remain cost-effective because lithium ion batteries are expensive, but that price advantage is disappearing. Industry analysts predict lithium battery costs will come down 50 percent over the next five years as large-scale production begins at places like Tesla's Gigafactory in Nevada.
Electric cars could be more economical than gasoline-powered cars by When transportation networks offer a fleet of autonomous electric cars for daily commuting and errand-running, most Americans will not need to own cars and can use in-expensive rental cars for long hauls.
Two-car families will only need one. Widespread adoption of this technology could take place between and , and that's without governments imposing rules designed to reduce carbon emissions. A tax here or a tax credit there could accelerate adoption. When it comes to heavy commercial vehicles, such as trucks and buses, electric motors do not work as well, but fleets are already switching to natural gas. Since natural gas also is used to generate electricity, that's the fossil fuel sector that stands to benefit.
OPEC leaders also recognize the transition, and the only way to slow it down is to keep oil prices low. Saudi Arabia has accelerated oil production to make sure it is not left with stranded assets when the market shifts. Some oil companies are getting ready for electric cars. Royal Dutch Shell is completing a merger with BG Group that will make its primary product natural gas, which will be used to generate electricity.
Electric vehicles and fuel efficiency may grab the headlines in transportation trends, but the role of services like Uber or car2go in driving major change should not be overlooked, says a new report from the IHS Markit Oil Sands Dialogue. Today, this is probably the greatest uncertainty facing both the automotive and energy industries. Oil products find their way into almost every aspect of our lives, IHS notes, including consumer products such as clothing, plastics, detergents and mobile phones.
But most of the barrel worldwide is refined into on-road transportation fuels for cars, trucks and buses. IHS believes that more—not less—personal mobility will be needed in the future. New technologies are making headway, including systems that improve combustion efficiency as well as the viability of electric vehicles, but these technologies face the huge inertia of the legacy vehicle fleet. IHS estimates that fossil fuel-based combustion engines make up 98 percent of on-road vehicles today, and that personal vehicles have an average lifespan of 15 years.
On balance, IHS is predicting that global automotive sales will continue to grow, driven by developing countries, although albeit at a rate slower than previously expected. This could lead to an expansion of personal vehicles on roads from 1. These include increased vehicle efficiency, people driving less, and the proliferation of alternative powertrains and fuels. IHS says that even in the event that disruptive technologies including the adoption of electric cars accelerate more than anticipated or global oil demand growth falls short of expectations, considerable upstream investment will still be required just to maintain current levels of global oil consumption.
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