I would think there would be support for electric vehicles. Being able to produce your own power to drive your American vehicle could be a message that attracts a younger voter base in addition to the existing one.
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How Will Current Oil Prices Affect Tesla (and other FEV's)?
- Thread starter Carl Leermakers
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I would think there would be support for electric vehicles. Being able to produce your own power to drive your American vehicle could be a message that attracts a younger voter base in addition to the existing one.
omgwtfbyobbq
Active Member
Most commodity prices have rough bounds based on the cost to bring the resource to market, price elasticity of demand, available replacements, etc.... Oil going to $10/bbl for any significant length of time is as likely as it going to $250/bbl for any significant length of time. Oil prices will hurt EV sales in the near term, but I doubt prices will stay low enough to do anything except for low the rate of adoption.When I reserved my Tesla MS, in 2011, oil was at nearly 140$ a barrel. Together with some tax incentives in Belgium, buying a Tesla made sense not only ecologically, but also economically (plus the fun/smart-factor, of course), compared to, say, buying a similarly loaded BMW 5-series (largely because electricity was so much cheaper than gasoline). At the same time, the IMF was predicting oil prices would be around 250$/barrel by 2022 (see this 2012 article).
Today a barrel of oil is at 30$, and 2016 predictions mention 20$, 16$ or even 10$... Of course, when you're filling up at a gas station (for those who remember what that looks like), a liter of gasoline has not become five times cheaper since 2011 (and will obviously not become 14 times cheaper this year), but it is still, anno 2016, a lot cheaper than four years ago! And at the same time electricity prices are rising a lot more than inflation. The result is that charging a VW e-Golf in Europe is now more or less as expensive as filling up the tank of its diesel or gasoline equivalent (which your average VW dealer will sell you for a lot less money)...
I'm not too worried about the Tesla MS or MX not being able to retain their current market share, and I'm also sure regulators will continue to be more and more strict on pollution, certainly in countries/cities where pollution is already very problematic and state regulators have the power and the wish to do something about it (e.g. China, which may well become the largest FEV-country in the next few years, but also the USA, and a lot of countries in Northern and Western Europe).
I am worried, however, about FEV sales in general. I agree with others on this forum that a successful Chevy Bolt (and VW e-Golf and Nissan Leaf etc.) would be much better news for Tesla than a failed Bolt (and failed other FEV's).
But I cannot believe this spectacular evolution of oil prices won't negatively impact FEV sales in the near future. One can buy a Tesla MS or MX out of passion for the ecological/smart/fun-factor, but why would anyone entering a GM dealership buy a Bolt, rather than a way less expensive ICE Chevy?
Your thoughts?
Tin hat alert!
I know oil price is complex but the current reasons are
1) Low demand lack of demand in China and
2) Increased supply Shale oil USA production
3) Saudis cranking out production to try to drive labor capital intensive shale oil rigs into shutting down so they have more market shares
My query is how excited is the oil industry to "magically" have historic price drops on the cusp of the New EV rollout
CHEVY BOLT 200 mile range
LEAF 2.0 rumored to be 125-175 mile range
Model S 200 mile range?/
Coincidence? Or Causation?
I know oil price is complex but the current reasons are
1) Low demand lack of demand in China and
2) Increased supply Shale oil USA production
3) Saudis cranking out production to try to drive labor capital intensive shale oil rigs into shutting down so they have more market shares
My query is how excited is the oil industry to "magically" have historic price drops on the cusp of the New EV rollout
CHEVY BOLT 200 mile range
LEAF 2.0 rumored to be 125-175 mile range
Model S 200 mile range?/
Coincidence? Or Causation?
Bangor Bob
Member
At this point, it's like blaming the butterfly for the hurricane, I suspect. The fuel economy regs from a few years back have had a far larger effect on demand than EVs, at least in the US. Likewise the ratcheting CO2 fleet limits in the Euro zone.
As a quick exercise a few months back, I calculated how much oil is being saved by all 300,000 B/PHEVs currently on US roads - assuming they'd be covering 12,000 electric miles a year and replacing an "average" 2015 car at around 30mpg combined. It worked out to something like 12,000 barrels/day. Peanuts. Noise in the overall scheme of things.
Now, if the fleet keeps growing at 40%/year or whatever the figure has been recently... Then that noise will become a dominant signal -- but the major automakers show no signs of being able to scale their electric production at present. Well, aside from BYD who are growing EV production faster than Tesla. Albeit with an inferior chemistry...
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Pinarello
Member
I don't care what gasoline costs. I drive a Tesla because it's a great car and driving an EV is so much more fun than an ICE. Gas could be free and I would be willing to pay for electricity to drive an EV!
Electricfan
Active Member
Causation. I knew they (oil companies) were terrified of EVs when the mid-East caught fire and gas prices didn't respond. Always before if a firecracker went off anywhere there gas here jumped 25 cents the next day. The hell that is the middle-East today should be causing $5/gallon or more, but its not. Why? There is an alternative, for the first time in history. They're trying to drive a stake through EVs. Maybe I need thicker ga tin in my hat though. But that's what I think.
nwdiver
Well-Known Member
It's a bit more complicated than that... oil price spikes in the past due to turmoil in the mid-East have largely been due to speculation... this is old school supply/demand.
The price of oil has literally collapsed... it's become a race to the bottom. Petrol states like Saudi Arabia and Venezuela are desperately trying to maintain their budgets as oil gets cheaper. They are attempting to compensate by selling more... further compounding the problem. The more they sell the cheaper oil gets.... and the more they need to sell... it's a vicious cycle.
The Iranian nuclear deal has had a huge impact on the oil price. Suddenly Iran's production is on the world market (legally), and Iran has the ability to ramp up production substantially. Speculation on collusion to thwart EVs is just that, speculation. If you want to start a conspiracy theory, the better one IMO would be an attempt to undermine large-scale renewable energy, which is currently taking a MUCH bigger bite out of the fossil-fuel juggernaut than EVs.
adiggs
Well-Known Member
An additional related dynamic appears in the idea of "stranded assets" (Stranded asset - Wikipedia, the free encyclopedia). The dynamic that the Saudis see is a vast resource (proven reserves) that they hold in the ground, and an increasing likelihood that it won't all be extracted and turned into cash. Or at least, if that someday comes to pass, centuries or millennia will transpire in the doing of that.
Portal:Energy/Quotes/14 - Wikipedia, the free encyclopedia
Here's a collection of quotes expressing the same idea. My favorite is the first one by a Saudi Oil Minister - the Stone Age came to an end not for a lack of stone, and the oil age will come to an end not for a lack of oil.
The moment you think it might be decades instead of centuries before the oil pumping party is over is the moment you realize that profit maximization calls for maintaining and growing market share. For the Saudis, that means lower and lower prices are a good thing as they will start driving other marginal / more expensive producers from the market. Those other producers may return in the future, but there's also a decent chance that those other more expensive assets will be the ones that become inaccessible (economically) for centuries or more.
I agree with nwdiver - this is supply and demand, and enlightened self-interest. For the Saudis, they are pursuing a course of action that maximizes their profits. The fact that the world has changed on them and doesn't afford the same lifestyle for the country that it did even a year ago doesn't change the approach needed today to maximize their short, medium, and long term profits. The stranded assets idea suggests, and I believe, that we'll see the effective end of the oil age in the next couple of decades. The behavior by Saudi Arabia and what they have to say about how to control the market persuades me of that notion more than anything else.
So no - I do not believe that this is the Oil & Gas industry's attempt to stop EV adoption in its tracks.
I'm sure that's valid for nearly everyone on this forum
. However, we don't have to convince ourselves, but others: it's hard enough already today to convince ICE-ers that most of what they think about EV's are pure myths, but it was easier to make that point when there was also a clear economic argument (at least in Europe, for those doing a lot of driving). Gasoline and diesel are nearly 40% cheaper now, and that does somewhat change the equation. And BTW I'm also sure the low oil prices have very little to do with trying to kill the EV (which seems of a minuscule importance in this question). My only worry is if these prices will affect how minuscule the percentage of EV sales will remain in the near future...
(Incidentally, Audi, which produces 100,000 cars per year in Brussels, announced a few days ago that the Brussels plant would be building an EV SUV in 2018, competitor to the MX. I would really welcome Audi being able to sell 100,000 EV SUV's by 2018 - would probably be good news for Tesla as well, as it would prove the market is accepting EV's - but I think it is a 'challenge'...).
omgwtfbyobbq
Active Member
I could see that if Iran wasn't part of OPEC and could completely undermine the cartel, but they are. Besides selling what they can while they can because of climate change legislation/EV adoption on the horizon, what other reason would they have to keep production up and prices down? Most cartels behave in the opposite fashion.
OPEC is pretty much irrelevant today. All discipline has broken down, now that the Saudis are no longer willing to curtail pumping.
omgwtfbyobbq
Active Member
That's assuming OPEC as a whole isn't deliberately maintaining production, right? Trying to blunt mass market adoption of EVs by driving oil prices down in the short term seems to be a viable strategy if EVs look to be viable at higher oil prices. It wouldn't work if we had a perfect market that could continuously transition from ICEs to EVs as oil prices increased, but given the substantial variation in oil prices that we've seen, and the time it takes to transition away from oil use, my sense is that it's now or never if OPEC wants to blunt EV adaption. Being the largest producers, they may also benefit by reducing competition down the road.
Price war - Wikipedia, the free encyclopedia
Price war - Wikipedia, the free encyclopedia
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