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Industry hit by weak demand finally faces threat from electric cars

Business

Oil companies may be facing uncertainty as the coronavirus pandemic triggers a collapse in demand for their products, but automakers are betting the crisis will help accelerate an electric future.

With economies reeling from lockdowns to curb the virus, the sharpest plunge in oil prices in two decades has slashed the cost of filling up a tank of gas, eroding some of the incentive to make the switch to cleaner fuels.

Looking ahead, cuts in capital spending forced upon energy companies as their revenues crumble could tighten supply enough to cause a spike in oil prices, making electric vehicles more attractive just as automakers ramp up production, analysts say.

“We think this will lead to a tipping point, accelerating the switch to electric vehicles in many more countries around 2023-24,” Per Magnus Nysveen, senior partner at Rystad Energy, a consultancy in Oslo, told Reuters.

“We will start to see that this starts to dig into global oil demand in a very significant way,” he said.

“It’s inconceivable that all that demand for oil comes back in one go, so the real question is how much of that is lost permanently.”

 

According to a Reuters analysis of 27 automakers compiled in partnership with Constellation Research & Technology, most companies apart from Elon Musk’s Tesla and China’s BYD are still in the early stages of transitioning to EVs, which make up a fraction of global sales.

With mid-sized to large petroleum-fueled SUVs and trucks driving much of the recent growth in the auto sector, many companies are banking on these high-emitting gas-guzzlers to drive their near-term performance.

Nevertheless, with China’s BAIC and German rivals Volkswagen and Daimler pursuing some of the industry’s most ambitious decarbonization targets, investors are increasingly using a company’s EV prospects as a proxy for future success.

“All the growth in transportation is being eaten by electricity,” said Harry Benham, chairman of Ember-Climate, a British energy transition think-tank. “Oil and gas companies have got no ability to defeat electricity as a transport fuel.”

Peak oil demand?

With fuel for road transport accounting for about half of all oil demand, the possibility of a faster-than-expected switch to EVs in the wake of the pandemic is one of the main reasons some forecasts for a peak have been brought forward.

Global oil demand hit a record of just over 100 million barrels per day (bpd) in 2019. Rystad now sees demand topping out at 106.5 million-107 million bpd in 2027-2028. The consultancy had previously forecast a marginally higher peak in 2030.

Although the oil industry has defied numerous attempts to call “peak oil” in the past, the fact that the International Energy Agency projects that demand will plunge by a record 8.6 million bpd this year has reignited the debate.

Though as yet a minority view, some believe the pandemic is reshaping patterns of work, aviation and commuting so profoundly that oil demand might never return to 2019 levels — a potential boost to hopes of avoiding the worst impacts of climate change.

Shell CEO Ben van Beurden said the industry was living in a “crisis of uncertainty.” BP CEO Bernard Looney said he would not “write off” the possibility the world had reached peak oil.

“It’s inconceivable that all that demand for oil comes back in one go, so the real question is how much of that is lost permanently,” said Mark Lewis, head of sustainability research at BNP Paribas Asset Management.

Underscoring the changing economics of transport, Reuters revealed last week that Tesla plans to introduce a new low-cost, long-life battery in its Model 3 sedan in China that it expects to bring the cost of EVs in line with gasoline models.

Volkswagen has announced some of the most aggressive long-term plans to decarbonize its fleet, but the company still has to prove it can build EVs at scale, and has led the field in ramping up sales of mid- and large SUVs, the data shows.Despite such potential breakthroughs, the Constellation data shows that automakers still have a long way to go to align themselves with climate goals enshrined in the 2015 Paris Agreement, with Ford and Fiat Chrysler among the biggest laggards.

Although the public decarbonization targets of Japan’s Toyota are only a little bolder than the industry average, the company’s proven capacity to build hybrids may bode well for its EV ambitions, the data suggests.

Japan’s Subaru, which produces only a small number of hybrid vehicles, might have to rely on its partnership with Toyota if it wants to prosper as demand for EVs picks up, Constellation analysts said.

‘Crisis of uncertainty’

Although the oil industry hopes to offset demand lost to EVs with a growing appetite for crude to make petrochemicals and plastics, companies facing growing pressure from investors over climate change are increasingly open about the risks.

In April, Ben van Beurden, chief executive of Anglo-Dutch oil major Royal Dutch Shell, said the company did not expect oil demand to recover in the medium term, saying the industry was living in a “crisis of uncertainty.”

Bernard Looney, chief executive of BP, was later quoted in the Financial Times as saying he would not “write off” the possibility the world had reached peak oil.

Much will depend on whether economies stage a V-shaped recovery, as some forecasters predict, and how far governments adopt new EV targets as part of “green stimulus” packages to spur a faster shift to a low-carbon future.

With many European politicians calling for green recoveries, the French government signaled on Monday that the country wants to boost sales of low-emission cars. China has extended backing for EVs as part of its recovery package, and U.S. Democrats are exploring ways to boost demand for clean vehicles.

With various European countries planning to ultimately ban sales of new petrol and diesel cars, some see increasingly ambitious EV commitments by automakers as another sign of the beginning of the end of the fossil fuel era.

“One of the primary factors holding back the transition has been resistance by the fossil fuel incumbents,” said Kingsmill Bond, senior strategist at financial think-tank Carbon Tracker. “Now those incumbents are significantly weakened.”

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73 Comments on "Industry hit by weak demand finally faces threat from electric cars"

  1. makati1 on Wed, 20th May 2020 1:42 pm 

    I always have a thumb up my ass because it’s really really true. I am full of shit.

  2. Duncan Idaho on Wed, 20th May 2020 3:38 pm 

    “Absent the military and the death squads there wouldn’t be a US ally between Texas and Terra del Fuego.”

  3. makati1 on Wed, 20th May 2020 5:33 pm 

    I see the goat fucker, Davy, has been playing his usual demented self since I went away. I wonder if his mommy knows he is in the basement watching porn instead of doing his online lessons? I doubt that he is over the age of 12.

  4. makati1 on Wed, 20th May 2020 5:37 pm 

    The auto industry is really hurting and will be from now on. There will be no surge in electric vehicles as there will be no buyers that can afford any new cars in the future. The auto industry could shut down for 10 years and there would still be unsold cars on the lots.

    Not to mention Boeing’s backlog of useless airplanes.

    A whole new world unfolding. Adjust!

  5. makati1 on Wed, 20th May 2020 6:25 pm 

    My girlfriend who puts out on a regular basis is a goat but that’s the best I can do in a shithole place like the Philippines. Sheep’s no longer want anything to do with me, they caught on.

  6. Davy on Wed, 20th May 2020 6:52 pm 

    “I see the goat fucker, Davy, has been playing his usual demented self since I went away. I wonder if his mommy knows he is in the basement watching porn instead of doing his online lessons? I doubt that he is over the age of 12.”

    That is your boyfriend makato and it looks like he turned on you. What did you do to the lunatic? What ever you did you deserve anything and everything you get. I will tell you what I will mess with you tomorrow and I will tell you it is me. How is that old bat?

  7. makati1 on Wed, 20th May 2020 7:31 pm 

    I’m a loser and that’s why I picked the Philippines. The only thing that makes living in this shithole tolerable is my Gov’t check from Amerika. I wished I had worked a little harder. My $25 monthly check only goes so far.

  8. makati1 on Wed, 20th May 2020 7:46 pm 

    Davy, if you cannot take the heat, get out of the kitchen, goat fucker. Everyone here can tell my posts from your pathetic attempts at identity theft.

    You are a loser, big time. Everyone on PO is laughing at you. I notice all your so called “supporters” are gone. They saw thru your arrogant bullshit and got smart.

    Scanning the headlines again this morning, I see more proof that the US is dying. Not ONE positive in all the dozens of sites I visit. Not one! All negative decline.

    How is that house arrest going for you? But then, you have no way to get out of your swamp anyway, even though you should get psychiatric help. Must be boring staring at that antique I-phone’s little screen all day, wasting your life one klik at a time.

    I will be gone for the rest of the day. Anything posted in my name here will be Deluded Davy’s immature warped mind. Both semi-active brain cells, that is. LMAO!

  9. REAL Green on Wed, 20th May 2020 8:16 pm 

    So true makato. So true. We bin trying to get Davy to see the docter for a real long time. But he still refuses to go. Don’t tell him I made this comment. He gets real mad at us.

  10. Davy on Wed, 20th May 2020 8:29 pm 

    You best keep one eye open while were sleepin tonight.

    fuckwack

  11. Duncan Idaho on Wed, 20th May 2020 8:42 pm 

    The Black Death Killed Feudalism. What Does COVID-19 Mean for Capitalism?
    https://www.resilience.org/stories/2020-05-14/the-black-death-killed-feudalism-what-does-covid-19-mean-for-capitalism/

  12. makati1 on Wed, 20th May 2020 9:33 pm 

    Okay I decided to come back to see if anyone posted under my name. It’s the real me because I hate Americka but then I hate myself even more because now I have no place to go but to live in the Philippines trying to live off my $25 monthly govt check. I wish I wasn’t such a loser in life.

  13. REAL Green on Wed, 20th May 2020 9:47 pm 

    Its weigh passed are widdle bedtime Davy. We all ready had enough fun fer today. Wadda ya say we call it a nite?

  14. joe on Wed, 20th May 2020 11:00 pm 

    Duncan Idaho on Wed, 20th May 2020 8:42 pm

    To be replaced by what, a non violent, non corrupt system of love and hugs and sharing?
    God damn idealist utopian children.
    Democracy exists BECAUSE we are corrupt, democacy does not make you corrupt. China regularly claims to arrest, punish, execute corrupt officials, does that mean Chinas state owed fake capitalism is not corrupt. I always find it funny how ‘Free Tibet’ slogans have vanished from Chinese backed US campuses in the last 20 years…..
    Corrupt?

  15. I AM THE MOB on Thu, 21st May 2020 12:35 am 

    Britain First leader Paul Golding convicted of terror offence

    https://www.independent.co.uk/news/uk/crime/britain-first-conviction-news-paul-golding-terrorism-act-a9524351.html?fbclid=IwAR0vP4NJmeJfEZFs1GX8Fc9oOMfBQN2CRRIG7Eshhh5lzZl_Hw10S6CXQ7A

    Bye Bye Right wing nationalism! Its the new radical islamic boogey man.

    Life in prison for all nationalist

  16. Abraham van Helsing on Thu, 21st May 2020 12:58 am 

    “Britain First leader Paul Golding convicted of terror offence”

    And what was the “terror offence”? Refusing to hand over the password of his phone to the police, when he returned from white nationalist heaven Russia.

    “Life in prison for all nationalist”

    Train to the East for all mobster types. Work liberates!

  17. Abraham van Helsing on Thu, 21st May 2020 2:37 am 

    Pictures from the Amsterdam in the 1960s, my youth, when the city was still 100% white:

    https://www.youtube.com/watch?v=iDDkdSUHokw

    And then came 1968, the year of the launch of the holohoax and May-revolution in Paris, yet another CIA-color-coded revolution, led by a (((Daniel Cohn-Bendit))), which led to the downfall of Europe’s last white nationalist president Charles de Gaulle.

    Now Amsterdam has become a shithole like this, with noisy mosques:

    https://www.youtube.com/watch?v=tXT44_VLzXA

    With (indirect) Chinese help we can finally get rid of the globalist pestilence.

    Like this:

    https://reason.com/2020/05/18/united-nations-gender-neutral-language-twitter/

    Husband & wife are now UN-discouraged terms, likewise: “Humankind” instead of “mankind,” “salesperson” instead of “salesman,” and so on.

    The globalist UN needs to be closed down and replaced by a multi-polar world round table club in Eurasia and dominated by PBM and China.

  18. I AM THE MOB on Thu, 21st May 2020 4:07 am 

    Clogg

    DNA tests of 39 of Adolf Hitler’s living relatives suggest he had both Jewish and African ancestors.
    http://www.history.com/.amp/news/study-suggests-adolf-hitler-had-jewish-and-african-ancestors

  19. Abraham van Helsing on Thu, 21st May 2020 4:57 am 

    Clogg

    DNA tests of 39 of Adolf Hitler’s living relatives suggest he had both Jewish and African ancestors.
    http://www.history.com/.amp/news/study-suggests-adolf-hitler-had-jewish-and-african-ancestors

    As reported by a Jennie Cohen.

    Next.

  20. Antius on Thu, 21st May 2020 7:56 am 

    Britain is a kosher run police state, not that different to East Germany before 1989. Britain’s Terror Police are essentially a secret police force. They work in the same way.

    I am not surprised by the way Golding was treated. I am disappointed by the number of English that bury their heads in the sand and appear to believe that the UK is still some sort of free democratic state, despite all evidence to the contrary. It hasn’t been free in that sense since the second world war when Mosley was incarcerated essentially for telling the truth about Germany.

    People forget that China has elections for local officials. What makes it undemocratic is the complete absence of any kind of freedom of speech or freedom of association. The same things that make Britain an undemocratic state. You can have all of the elections that you want. If you are not free to communicate without fear of persecution by the state, then the elections are worthless.

    The lesson to learn from Golding’s treatment is that nationalism in the UK needs to be an underground movement. In a land where you have no freedom of expression and no freedom to privacy or association, there is no point in doing things openly and in good faith. We need to treat the UK government as what it is. A puppet government working for globalism Jews. And we should use all means necessary to bring it down and give power back to the people.

  21. SocialRevolutionComing on Thu, 21st May 2020 8:16 am 

    As reported by a Jennie Cohen.

    The Jews are panicking now because Whites people have a low birth rate. A lot of old Whites people and very few young Whites people. Very soon the West won’t be controlled by Whites people but by Arabs or Asians. These people won’t let themselves be manipulated by the ugly Jews like the Whites people did.

    If Hitler was a Jews, it means that it is not Whites that killed the Jews. So it means that Whites people should not feel guilty about the holocaust. It is just a more subtle way for them a manipulation Whites people. Jews are just pieces of shit.

    I don’t think the Whites race can be saved at this point. Too low birth rate. You should see the amount of Negros we have in politic here in Canada. Same with UK with the Pakistani.

    No matter what happen, I am happy to be born White with green eyes, and high IQ. Whites are the best achievement of GOD in term of beauty, everyones knows it

  22. Osama bin bag on Thu, 21st May 2020 12:28 pm 

    the holy jihad has begun!
    burkala derka derka!
    liquid farts are here hoorah!
    FOR FREEDOM!

  23. King Saud of Arabia on Thu, 21st May 2020 12:30 pm 

    Osama burkala! derka derka!

    Mohammed Jeehad!

    Bakala derka!

    200 million barrels a day here we come!

    I fly the jet my wife rides a camel!

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