I write about energy, the environment, and the economy.
This article is taken from here.
Many people talk about fossil fuels as if they are monolithic, but there are key differences between them that impact their outlook. Coal and natural gas are used primarily for heating and power production, but there are many competitors in this space. Not only do they compete with one another for supremacy in power production, but there are scalable non-fossil fuel alternatives like nuclear power which in theory could totally displace either or both from the market. Further, they compete against hydro-electricity (which actually supplies more power globally than nuclear power), and fast-growing renewables like wind and solar power. For these reasons I think coal’s days in particular are numbered.
Petroleum is in an entirely different category. It is used primarily for transportation, and it has held more than 90% of the transportation market for over 60 years. To date there have been no scalable, economic competitors in the transportation space:
Oil has held more than a 90% share of the transportation market for more than 60 years. Source: Energy Information Administration.
Biofuels made a push in the 2nd half of the last decade, particularly in the U.S. as the Renewable Fuel Standard (RFS) mandated more ethanol in the gasoline supply. But the 1 million barrel per day (bpd) global increase in biofuel consumption in the past decade was a drop in the bucket compared to the nearly 7 million barrel a day increase in crude oil consumption over that time period. Thus, despite claims from many that biofuels would be a crude oil killer, demand growth for crude oil has been remarkably consistent, rising by an average of 1 million bpd for more than 30 years:
Globally demand growth for crude oil has been consistent for >30 years.
This constant demand growth happened despite biofuels, conservation, higher fuel standards, skyrocketing crude oil prices, and carbon emission legislation — which was contrary to the expectations of those who have been predicting the end of the oil age for the past 2 decades or more.
That preamble brings me to the latest candidate to vie for the title of “crude oil killer.” This week Bloomberg published an article on electric vehicles (EVs) that made many of the same arguments biofuel proponents were using a decade ago: Another Oil Crash Is Coming, and There May Be No Recovery. The article starts by arguing that the present oil price crash is a result of 2 million bpd in excess crude capacity caused largely by the surge of U.S. shale oil production.