AID Newsletter banner July 2014 the publication for automotive industry executives
Subscribe  |  FREE SAMPLE   Front Page Editions  |  Current Issue page 1  |  BACK COPIES  |  Info  |  REPORTS  |  CONSULTANCY SERVICES  |   CONTACT  |  MEMBERS 

Sub $40 oil aimed to stall electric car take-off?
Peter Schmidt | Editor

Published: Fri, 18th December 2015 13:29:13 GMT

UK Fuel petrol price December 2015 under 1GBP per litre

Open quote signThe current year is almost over. 

The biggest event for Europe’s car makers? 

Apart from this autumn’s toxic fallout from Volkswagen diesel emissions scandal, it could well be the cheery news that Europe’s consumers have finally started to open their wallets. 

Contrary to earlier widespread gloomy predictions, finally Europe’s car market appears to have reached the critical upward momentum needed to get back to speed. 

The starter, this year the 13m level will be cracked, marking the first time since scrappage incentive driven 2009 that the 13m threshold will been breached. 

That’s good.

For the industry there was more good news. 

Largely unexpected, oil prices took a sudden steep tumble. 

For Europe’s motorists, if not for the oil barons, happy days are here again. 

As in recent years, pump prices are on the move. 

But this time into a downward direction. 

Here in the UK, last week’s petrol prices slipped quietly to a new six year low of just over £1 per litre. 

Given the underlying trend in global oil prices, chances are that before long they will dip below the psychologically crucial £1 level.

Apart from today’s US cheap fuel, these trends are echoed in continental Europe. 

Here the pump price of lower taxed diesel is about to slip below the €1 level. 

In Germany last week’s average diesel pump priced dropped to €1.04, slipping below the €1 levels at a growing number of outlets. 

The trend?

Following on the coattails of slipping and sliding global oil prices, the pump price of fuel is on course to slip even further. 

It looks as though some OPEC members are deliberately flooding the market, with the intention to drive the price of oil to new recent lows. 

Apart from strategic intentions to counter, and ultimately drive US shale oil producers out of business, could there be another motive? 

The successful Paris accord on global warning - with governments now marching in rare unison to keep global temperature increases well below 2°C - effectively means a commonly adhered path to a new world dominated eventually by zero-carbon renewable energy. 

In effect, agreed firm steps to gradually wean the world off oil. 

Senior thinkers in oil nations like Saudi Arabia likely greeted the news by throwing their arms up in horror. 

You can’t blame them. 

They are now facing the galling prospect of seeing a global market that soaked up a large chunk of their oil taken away from them. 

That’s because a forever growing chunk of the new vehicles sold in the developed world will be fuelled instead by renewable energy. 

Likely driven not as today by offshore oil, but by offshore wind turbines and trillions of today’s cheap solar power panels. 

Some of the generated electricity will likely produce the liquid hydrogen needed for fuel-cell powered cars. 

Similar scenarios could lead to the widespread electric/hybrid propulsion for the nations’ long-distance truck haulage fleets. 

Powered not so much by heavy batteries, but instead by electric-train-type overhead or underground electric currents, also from widespread future renewable sources. 

For today’s major oil producers that’s the stuff of nightmares. 

The prospect of a lasting cheap oil era, say for the next half decade or so, allied to the absence of discriminatory taxes aimed specifically against conventionally powered vehicles, will conceivably prolong the useful life of combustion-powered vehicles well beyond 2025. 

Likewise, the continuing flow of cheap oil is likely to stall greatly the otherwise inevitable massive future inroads from hydrogen powered fuel-cell vehicles. 

Little wonder then that OPEC has shown little inclination to throttle back production. Looking at the world’s low carbon future that way, low cost oil is here to stay.
Close quote sign

To continue reading this article, please register for a free sample without obligation...

Please note that is a subscriber-only site, and as such it can only be viewed by subscribers to the newsletter.