28 March 2016, Energy Post, Wake up call for oil companies: electric vehicles will deflate oil demand. The major oil companies greatly underestimate the impact electric vehicles will have on their market, write independent energy advisors Salman Ghouri and Andreas de Vries. According to Ghouri and De Vries, the trends currently underway in the auto industry are likely to have a substantial impact on oil demand in the medium term, and even a devastating impact in the longer term. If there is one event in history that has shaped the crude oil industry, it is the popularization of the internal combustion engine (ICE) by the auto industry. At the beginning of the 20th century, coal and wood were the dominant sources of energy, together providing more than 90% of global energy consumption. From 1910 onward, however, the Automotive Revolution triggered by Henry Ford spurred on demand for liquid fuels, causing crude oil’s contribution to global energy supply to more than double every decade. Consequently, by 1970 crude oil had taken top-spot in the global energy mix. Continued growth in the transportation sector ever since has provided the world’s oil companies with plenty of organic growth opportunities. And judging by the energy outlooks the major oil companies have published, they appear to expect this status quo to continue. For example, BP’s most recent Energy Outlook 2035 assumes that non-oil based transport will grow just 5% per annum for the next 20 years, and that essentially all of this growth will be in the gas-powered transport segment. Similarly, The Outlook for Energy: A View to 2040 published by ExxonMobil assumes that by 2040 “plug in” electric vehicles (EVs) and fuel cell vehicles (FCVs) will have no more than a 4% market share. Chevron, meanwhile, has indicated that it plans on the basis of the assumption that the auto industry will remain fundamentally the same for at least another 50 years. Alternative assumptions However, as we documented elsewhere, the auto industry itself expects its future to be radically different from its present. To assess how the new vision of the auto industry would impact crude oil demand, we have developed an Alternative Energy Outlook (AEO). Read More here
Tag Archives: oil
4 March 2016, Energy Post, BP says not to worry, good times will return. Aside from minor adjustments, BP’s latest Energy Outlook is mostly business-as-usual, writes Fereidoon Sionshansi, president of Menlo Energy Economics and publisher of the newsletter EEnergy Informer.BP seems to have missed out entirely on the agreement reached in Paris in December 2015, as if it did not happen, notes Sionshansi: “The Outlook seems more of a wish list than a forecast.” BP‘s annual Energy Outlook is always worth a read even if you do not agree with BP’s oil-centric outlook. The 2016 edition, which looks out to 2030, is no exception. To its credit, BP is slowly and grudgingly acknowledging that the future may evolve rather differently than the past – e.g., lower global demand growth rates, changes in the mix of fuels that supply the demand, growth of renewables especially in the power generation sector – yet it seems reluctant or unable to abandon the status quo, the history with which it is familiar and comfortable. Call it organizational inertia, or bias, common among all oil majors. Few would fundamentally disagree that at $30 a barrel, oil is too cheap – certainly compared to highs of 100+ in 2014. But given the supply glut and fierce competition among many producers it is less clear how soon the rebalancing will take place, to what extent prices will rebound and for how long. US shale producers, for example, are likely to be back in business once prices rise above $50, dampening the price recovery. Read More here
3 March 2016, Energy Post, Exxon’s never-ending big dig. ExxonMobil not only appears to have ignored its own scientists when they warned about the dangers of greenhouse gas emissions in the 1980s, the company even took advantage of its inside knowledge by leasing large tracts for Arctic oil exploration, writes famous author and activist Bill McKibben in a revealing essay. What is worse, says McKibben, is that even today Exxon continues to spend billions finding and producing ever more fossil fuels. But he notes that “revulsion is growing”: Big Oil may yet suffer the same fate as Big Tobacco. Courtesy of TomDispatch.com. Here’s the story so far. We have the chief legal representatives of the eighth and 16th largest economies on Earth (California and New York) probing the biggest fossil fuel company on Earth (ExxonMobil), while both Democratic presidential candidates are demanding that the federal Department of Justice join the investigation of what may prove to be one of the biggest corporate scandals in American history. And that’s just the beginning. As bad as Exxon has been in the past, what it’s doing now – entirely legally – is helping push the planet over the edge and into the biggest crisis in the entire span of the human story. “We will adapt to this … It’s an engineering problem, and it has engineering solutions” Back in the fall, you might have heard something about how Exxon had covered up what it knew early on about climate change. Maybe you even thought to yourself: that doesn’t surprise me. But it should have. Even as someone who has spent his life engaged in the bottomless pit of greed that is global warming, the news and its meaning came as a shock: we could have avoided, it turns out, the last quarter century of pointless climate debate. Read More here
1 March 2016, Jeremy Leggett, Big Oil faces courtroom showdown. ExxonMobil is being investigated by the Attorney’s General of New York and California with a view to criminal charges for securities fraud and racketeering over their stance on climate change. The ramifications are enormous for the course of the global energy transition. The oil and gas giant stands accused of lying to its shareholders for many years. On the one hand it professed that climate change was a green scaremongers’ invention, and paid many millions of dollars to organisations devoted to torpedoing the international climate negotiations that began in 1991. Meanwhile, on the other hand, it suppressed its own research proving the dangers of climate change, yet built assumptions of global-warming-driven sea-level rise into engineering of coastal and offshore infrastructure. In my book The Carbon War I documented much of what its lobbyists did and said in and around the climate negotiations through the 1980s and 1990s. I know the company is guilty of malfeasance. Now that ExxonMobil has finally been dragged into courtrooms, its problems are likely to escalate fast. Legal experts expect other States’ Attorneys General to launch suits. Presidential candidates Hilary Clinton and Bernie Sanders have called for the federal Attorney General to investigate. Class actions by investors will surely not be far behind. Existing investigative journalism makes it almost certain that other oil majors will soon stand accused with Exxon. Ongoing investigations will surely add to their legal woes, since Exxon and Mobil alumni are beginning to blow whistles. On top of this will come the evidence that subpoened internal communications will bring into the open. Read More here