Electric Cars Will Crash Oil Prices to $12 per Barrel

Cathie Wood forecasts that as the world shifts to electric cars and trucks this will take oil prices down to $12 per barrel.

About 35% of world oil is used for cars and trucks. A shift to electric cars and trucks will remove 35% of oil usage. If this shift is over 20 years then from 2025-2035 there will be about 2% per year drops in oil demand because of EVs.

Electricity generation is another 19% of global oil usage. The world will shift to a lot of solar and batteries over the next twenty years.

Oil usage will be halved by about 2040.

SOURCES- Ark Invest, EIA, IEA
Written by Brian Wang, Nextbigfuture.com

51 thoughts on “Electric Cars Will Crash Oil Prices to $12 per Barrel”

  1. roncoBetEV's have increased the profits of FF companies as much of the increased power comes from natural gas ,in addition every Tesla uses a few barrels of oil, anything called Vegan,the coolant the tires

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  2. The Texas grid collapse had very little to do with wind power, but keep parroting the Koch brothers talking points.

    You've been watching too much Mad Max if you think gas vehicles have unlimited power and range.

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  3. I was going to criticise you for zeroing in on a woman's appearance instead of her technical presentation, but then I remembered that we all go on about Aubrey deGrey's appearance too. So actually this is fair.

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  4. I hope we can get to an electric future soon, but even if we do, I think the demand for oil will at least keep its current pace. It is the world's wonder source of carbon. The increase in plastics alone could mitigate a lot the declines from vehicles.

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  5. I think I'm with Johnson K below, but a couple of things come to mind. I will always have a couple of gas power vehicles, of for any reason, to ensure I have unlimited power and range if I need it. And I will enjoy the drop in oil prices as things move along. Finally, the first time 10,000 commuters in EV's get caught in an ice storm, we will see a shift back in the other direction. Alternative energy (forgoing Fusion and Cost Effective Hydrogen) is simply not 'up to speed' yet… Just ask anyone from Texas who was on Wind Power last winter…
    lc

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  6. The two sources quoted above need to get a lesson in reality. Solar and wind power are definitely not less costly to produce, store and use. Batteries, transmission of power, replacement of wind generators will all require huge amounts of available energy. This is now only available from carbon generators – coal&oil -, hydro or nuclear.

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  7. All things being equal, replace IC light passenger vehicles with EV globally, and crude oil demand will still be at the same level as 2008. In 2008, crude was between $100-120. Light trucks will probably transition to EV since they share much of the same components, but heavy duty long range trucks will likely need H2 or bio-diesel, ditto commercial aircraft, trains where it’s not feasible to electrify, and blue water ships. I’m all for the transition of cars to EV powered by a carbon neutral grid, but let’s keep it real.

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  8. The flip side is that, as EVs become more popular, electricity costs will tend to skyrocket, due to to the expensive infrastructure upgrades necessary to charge that many cars. With the grid actually headed in the wrong direction thanks to the 'renewable' mania!

    So for a long while you'll have an uneasy equilibrium between electric cars and gasoline.

    Sure, eventually it will tip decisively to electric cars. But they'll coexist for a long while, unavoidably, because the grid simply isn't up to charging them.

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  9. Or need to evacuate from a wildfire with an uncharged car? Electric cars don't have much range left if you have to keep the batteries full enough to flee in an emergency.

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  10. I have to agree with the UpVote hoodlums. Comparing Hollywood to the other countries' national 'film clubs' is like comparing football's UEFA Euro (and euro/UK premier leagues) to the MLS in North America — yes, they're technically playing the same game, but the industry and influence and culture are worlds different. The number of people directly employed in Hollywood is nearly half a million with uncountable trickle-down effects to all things entertainment. The revenue from US operated films is more than the sum of all other countries' similar combined – and english being the dominant film language really is not that strong when there should be a powerful chinese, spanish, and hindi presence. Shallow and distracting content makes and sells no better than in the homeland of Shallow and Distracting (which isn't to say I would want anything different…)

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  11. Economies of scale. When this goes away, prices for everything in one ‘corner of the ring’ will begin to climb for others utilizing those particular services and products. Less oil being used for gas, higher processing costs, less gas stations, less mechanics trained in ICE, less replacement parts. Etc etc etc. It happened to the horse ‘industry’ when we went to cars, and it’s going to happen again when most cars become EVs.

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  12. In real life adding solar & wind means there is lots of gas & maybe oil burned, because that is what can be turned on quickly when the solar or wind plants stop producing electricity.
    Putting high temperature nuclear with the sort of storage the natrium reactor has is what is needed to replace fossil fuel electricity generation

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  13. If electricity generation with oil is 19% of global usage, then that should be the highest priority, ahead of transportation. Stationary power should be easiest to replace with a mix of wind, solar, and batteries. That would be a huge win for the environment and also immediately begin saving money for the users.

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  14. I am heavily invested in oil futures. It is resistant to inflation, and likely to increase in demand due to emerging markets, but there are also many industries that are highly dependent on oil, such as plastics and fertilizer/agriculture. I do see solar offsetting some of the demand for electricity generation, but mostly for gas generators peak demand, oil will always be in high demand as its supply will without any doubt be dwindling at some point.

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  15. Are you laughing at Bollywood on the grounds that it's products are foolish, low class, mindless entertainment? In what way does this make it a poor comparison to Hollywood?

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  16. Electrical infrastructure needs heavy overhaul in order for the world to switch over mostly to EVs. Hopefully we'll have close to working fusion power plants by that time [which will necessitate upgrading our grids?– not sure]. Also, if economies in what are currently third world countries grow (and I hope they will), there will be more capital for people in those places to afford to move away from fossil fuels. This understand this is all a huge oversimplification.

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  17. Countries that are dirt poor have a mix of income. Poor people don't buy cars no matter how cheap. And everyone else wants a nice car. It is a prestige thing. If the rich foreigners buy EVs, they will also buy EVs.

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  18. I gladly welcome pure EVs. I believe they will make the world a little better, even knowing that mining certain elements brings a new set of environmental problems.

    I am curious about one assumption regarding the future: that oil and gas exploration will cost the same or more in the future. Does anyone truly believe exploration companies won't keep innovating to lower production costs? People have been predicting the demise of oil and gas companies for 50 years, yet here we are.

    Unless the cost of EVs drop by half, and our electric grid has it's capacity tripled, and nuclear power is allowed to expand, I predict petroleum companies will be dominant for decades to come…

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  19. I can't find counter-examples for Silicon Valley or SpaceX. But a booming entertainment industry CAN be found in France, and India, and China, and half a dozen other "less individualistic" countries.

    Hollywood is the most influential, because the English language is the language of the largest and wealthiest group of consumers, but that's all.

    Must be frustrating for France that French is not the lingua franca of the civilised world any more.

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  20. Well, there is always a chance, specifically if material science develops a battery that is competitive with ICE, as of now it isn’t, but in 20 years, I believe there will be.

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  21. Batteries?
    The human race is like Galactus, our appetite for energy is insatiable.

    The amount of “wasted” energy will surely be reduced by BEV but I suggest that oil consumption will stay flat or actually increase, not drop.

    2019 global oil usage was about 95 MBD, in 20 years it it will probably be more.

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  22. seems kind of localized.
    not clear on the 'big plans' for enabling charging of 1,000s or 100,000s of such EVs within a single municipal system. These areas are very sensitive to usage spikes. Someone has to make the template to encourge adoption, i guess… but big picture?

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  23. Agreed. Most of the biggest influencers are top 1 – 3% people, very unlikely to conform to 'oversight heavy' regions. Many don't linger where they are constantly held back by red tape and mistrust…

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  24. If you’re talking about Entropy, that’s not a small market. We are talking global gas-gen power. Hard to imagine many bigger markets or more impactful ones.

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  25. expensive install, small group of applicable businesses compared to overall number of factories, and from what I understand, many decades' payback without subsidies….

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  26. yeah. it is certainly unclear who mnoitors, manages, coordinates, and pays for work (maintenance, repair, upgrade) , since so much overlaps various private and public areas – at all different levels.

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  27. A hard to define balance.
    a lot of personalities benefit from not being 'constrained' by the 'nanny' state, as it is often the outliers and ne'er-do-wells who offer quite remarkable productivity, creativity, and unconventional approaches to many things. Silicon Valley and SpaceX and Walt Disney/Hollywood, for better or worse, would be very unlikely to originate in a Germany or France or scandinavian country. The weaker are cherished, but the stronger are often restrained. Meh. Good to have a wide range of political and 'organizational' rich-country systems.

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  28. Just wait until reality sets in with respect to the upgrading the electrical infrastructure and transmission capacity. Never mind replacing all of those joules of energy currently derived from liquid fuels. She thinks we are going to cut out gasoline and diesel? How many joules of energy is that? NIMBY action is already stalling transmission projects needed to get this new green energy to market and the scale of what’s being proposed would require a tripling or quadrupling of electricity production. The US has around 100 GW of installed solar capacity. Coal is over 2000 GW, as is natural gas. No problem, right? Try looking into Entropy Inc… they can capture 90% of the CO2 from gas generated power economically at $50/tonne carbon pricing. Stop the madness of building solar panels and windmills that are just destined for the landfill and look at Entropy’s technology, then think rationally about what the right path is. Once we get recyclable solar panels and windmills, maybe, but they are still both insanely materials-heavy and take up huge areas relative to a natural gas power plant.

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  29. oh look someone who sees reality and the real world, seriously though.. you are right on the money… unless the first world finances this for the rest (never going to happen save for token gimmicks for good publicity)… this transition wont happen for those segments of the world.

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  30. not to mention we just witnessed and continue to witness the electric grid in the USA fail from too much heating or cooling depending on the weather… and Im supposed to believe the grid can handle all this new demand ? lol

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  31. While you are right there will be places with socioeconomic instability/stagnation and dysfunctional institutions (especially in Africa), your 80℅ mark is overpessimistic. India, Bangladesh, Indonesia, China etc will make it to middle income or higher status by then and with government subsidies you can see lot of adoption. Delhi in India for example is rolling out EV charging stations to reduce pollution and fossil fuel cars worth $10-20K are pretty common sight. No reason to believe these people won't be able to afford similar priced EV 20 years from now.

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  32. Right?!? Absolutely nuts. Cheap, ubiquitous, and reliable electrical energy, even if slightly subsidized, should be the fundamental infrastructure provided to enable all kinds of wealth, success, and opportunity. How is such a basic expectation any different than safe and widespread roads, responsive and progressive government, healthcare, minimum paid vacation, cheap childcare, reasonable freedom from gun violence… oh wait, I forgot where this blog was based….

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  33. well.
    random C/H fueled generators and whatever authorized/ad-hoc electricitry soucres cannot possibly handle the influx of EVs, from any scale of 2-wheeler to ultra-light-cube truck… battery tech will bottleneck at grid and localized supply… (maybe also even in rich countires for the next 10 – 20 years per other articles featured under this site.. ho-hum, all those energy conservation programs of the 90s and early 2000s… shame…

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  34. yo-yo. cheap EVs with 200-mile and carries over 500lbs and charges on 110AC equiv. China is building millions of them. Silk road + Changli/ SAIC/ Wuling Hong Guang industries will flood the south-east asian land-locked areas… municipal and shared generators can charge these things overnight…

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  35. because 80% of the world is and will be dirt poor then; their countries disorganized and unmotivated. They cannot afford $0.10kWh; they cannot afford rock-bottom $20k EVs; they cannot afford 5kW solar panels at $10k today and $2k then. They can afford 20-YO ICEs at 1% residual value; they can afford oil and nat-gas based infrastructure for heating and eating; they can afford cheap cels and wifi. This is what the world has to work with.

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  36. Why does anyone think oil usage will be more than 20% by 2040? Solar and wind will get cheaper and cheaper. Batteries will get cheaper and cheaper. And EVs will also get cheaper and cheaper.

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  37. We need to accept that pure EVs are not the panacea to all things. Burgeoning H2, hybrids, and bio-fuels can transition us to a less fossil-focused 'near-balance' future. Providing solutions that enable the masses, such as cheap, personal vehicles; ubiquitous and reliable affordable power; planned infrastructure under private control; and fast and cheap comunications, should provide wealth and opportunity – the key stone of an essential consumer culture… more money is to be made and greater advancements happen when you address your market audience needs/wants, not the idealistic world one wishes we could all live in….. build wealth, all else will follow…

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  38. well that's the challenge then… the first company to provide a $3,000 EV vehicle with 500-mile range, carries 4 and transports/ payloads over 1,000 lbs.
    The versatile vehicle 'for the rest of us.'

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  39. Agreed. The great carbon-driven economy has been a near inescapable plateau for generations – only now being slowly overcome by incredible difficulty by a slim majority of rich countires. Easy transition for the bottom 75% economies within this half of the century – not a chance.

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  40. Not convinced that this will have the effect of reducing CO2, ICE vehicle production or dismantling of the cheaper forms of oil extraction. $12 oil? Great, says the bottom 80% of humanity or 7B of 2035. Now they can drive the 2020-2030 pick-ups, SUVs, and minivan models that were cast off from the rich countries — which will then be supplemented by old/new local ICE factories for off-brand vehicles no longer available with the G7 countries and the dozen of similar economies down a bit further.
    EVs are rich people's vehicles that belong mostly in rich countries' infrastructure, supplemented with energy production technolology that is expensive, over-regulated, hard-to-maintain, or scarce in fundamental metals or tech.
    EV penetration of 50% by 2035 in rich countries, maybe. So what? – if it is only 5 – 10% of all others by the same time and likely not doubling there for decades after.
    Also $12 oil is well within reach (and profitable) of most of the middle east, russian, and shallow water fields belonging to countries with little or no interest in Paris Accords, etc.
    The world may not be as poor in 2035, but it certainly will not be lower-middle-class with a competent infrastructure. Oil and ICEs are here way, way into the last half of this century.

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