Electric vehicles are a threat to the oil industry. While not earth-shattering news, the oil industry appears have been slow in taking note. Sure, in the beginning electric cars were regarded as a novelty but nothing to worry too much about. However, they now present a long-term threat to oil production and exploration.
That said, OPEC has been taking a watching brief and has been wakening up to the effect electric power could have on their budgets. A number of oil companies have been taking the rate and volume of electric vehicle development into account when assessing future oil demand. OPEC and other oil producers have been revising their projections over the past year.
Oil demand is expected to drop significantly over the next 30 years or so. This is due largely to the increasing development of efficient electric vehicles that genuinely do perform well. However, it is also due in part to the increasing amounts of funding being providing for alternative energy sources. Hydroelectric power has been with us for many decades now, but what about the new kids on the block?
The Wind, the sun and even the tides are being explored as major sources of power in this modern world. Have fossil fuels had their day? Perhaps – it depends on where you are and who you are! Larges tracts of the world are now being used for wind farms. Solar power abounds in countries that have high sunshine levels. Even in the UK, many households use solar power for a large proportion of their domestic electricity needs.
However, the UK government’s 800% tax hike on solar energy won’t help. Those schools and businesses who have not had to pay tax on electricity generated by solar panels will now have to. Not only that, but those who have been paying such tax will have their tax bill increased by up to 800%. So perhaps alternative energy sources do not provide the cheap power claimed for them! Certainly not if governments are going to slap high levels of tax on them!
So, traditional oil-based power might still be the fuel of choice meantime. However, the growing popularity of electric vehicles cannot be ignored. Over $700 billion is being invested in the fossil fuel industry every year now. The question now is, how long will this level of investment continue?
The number of electric vehicles is sure to increase worldwide. This will raise a corresponding increase in demand, not only for recharging stations but for the power to feed these charging stations. The First Law of Thermodynamics applies here: energy can neither be created nor destroyed, so that power must come from somewhere. It is more likely to be the wind or solar power that is used to charge batteries. Oil-fed charging stations seem a little bit unlikely!
So, electric vehicles are unlikely to use the oil industry as a source of power. That means that electric vehicles and the oil industry do not exactly need each other. That is not to infer that one or the other must fail – only that they are not interdependent in any way. The smart money is on oil moving steadily, with electric and solar power increasing.
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