By Drs. Robert and Sonia Vogl
President and Vice President
Illinois Renewable Energy Association
The current energy glut is expected to continue as OPEC members agreed in December to maintain oil production at 30 million barrels per day in order to sustain their market share and drive out higher cost producers. The strategy is proving effective as US shale production is beginning to drop. The executive director of the International Energy Agency expects North American production to fall by a half million barrels per day next year. Any reduction in supplies will leave the world’s oil production even more concentrated in the politically volatile Middle East.
Goldman Sachs indicates the price of oil could fall as low as $20/ barrel and bottom out. If prices drop below that level it will force more producers out of the market curtailing supplies and potentially leading to an increase in the price of oil. Some analysts expect oil prices to rise in the fourth quarter of 2016 as firms will have downsized to a level which makes a rapid response to an increase in demand unlikely.
Both Exxon’s World Energy Outlook to 2040 and OPEC’s World Energy Outlook expect fossil fuels to continue to be heavily relied on through 2040 and longer. Their expectations are in marked contrast to the pledges world leaders made at the recent COP 21 meeting in Paris to initiate action to make dramatic reductions in greenhouse carbon emissions by 2040. No mention is made of the need to leave 80 percent of fossil fuels in the ground.
In a recent article, OPEC faces a mortal threat from electric cars, Ambrose Evan-Pritchard accuses the oil cartel of being unaware that global energy politics have changed forever. He summarizes OPEC’s predictions that demand for oil will increase by 18 million barrels per day to 110 million barrels per day by 2040. OPEC expects the world’s fleet of cars will rise from 1 billion to over 2.1 billion by 2040 and 94 percent of them will run on petro and diesel. OPEC believes electric cars are too costly and their range too short. Their performance in the extremes of hot and cold weather limits their acceptance. Without a technological breakthrough in battery technology they do not expect electric cars to gain significant market share.
In contrast to OPEC’s dismissal of alternatively powered vehicles is Chris Schneider’s Renewable Energy and Sustainability Fair presentation on Toyota’s intent to end all production of gasoline and diesel powered cars by 2050 and embrace of hydrogen fuel cell vehicles starting with the Miria.
Evan-Prichard cites multiple sources that are heavily investing in plug-in electric vehicles including Apple, Google, Tesla, Ford and Volkswagen.
The race is on to challenge the global dominance of fossil fueled vehicles.
Goldman Sachs expects that grid connected vehicles will capture up to 22 percent of the global market within a decade with battery costs falling 60 percent in five years. The firm directs attention toward Norway where electric vehicles constitute over 16 percent of the market driven by tax incentives, supportive policies and a plethora of charging stations. Although they are a major oil producing nation they appear to realize the importance of embracing electrification of the transportation system.