Just a random musing. As EV’s become more popular, means less gas being used, means potentially lower prices since supply of gas should increase? Or do they just cut production and keep prices the same.
Wondering what will happen in the long term.
All of the oil producing nations plan on increasing their production over the next few years to increase their wealth. I doubt Opec can stop it this time. At some point that wealth generation thing fails. Oil won’t be sold at a loss for long though, so owning an electric car when it goes back up would be nice. Regardless of what gas prices do, I want to own an electric car.
There are plenty of other uses of petroleum other than petrol and diesel, so less demand for them won’t cheapen the bigger product.
I think no. In fact the projection I’ve seen somewhere(unfortunately lost the reference to) is that when demand drops, the cost of gasoline will likely to increase, due to the operating cost of the refineries is still there and most of them still has around 30-50 years of designed lifespan to them.
And it’s likely not only gasoline fuel price going to increase, but all the products/byproducts of the petroleum processing chain, like plastic for instance.
For gasoline you also have all the transportation infrastructure that has fixed costs l, but is distributing less product.
Yeah. Someone mentioned the other day that 40% of the natural gas was used to transport natural gas…
That’s a dubious number. Pumping through a pipe is far more efficient than hauling gas on a roadway with trucks
You forgot the LNG ships
Did you forget crude ships?
1846: The Year We Hit Peak Sperm Whale Oil
(TLDR: Yes, the price of oil will fall.)
Counterpoint: spermaceti is currently $22.75 for 100 grams. No idea on the conversion rate to oil or the price relative to inflation because I’m starting an absurd argument and I’m not wasting much energy on it, but it seems really high.
Anyways, in 180 years, oil may be much more expensive.
Think of it this way: Spermaceti is basically free. There’s no demand for it, and therefore no infrastructure to produce and transport it. What you’re paying $22.75/100g for is the bespoke packaging and transportation of a non-commodity.
Go into a commodities market and start offering options on large quantities of spermacetti and you’ll find you get no takers.
Gas is still needed for stuff other than cars so it’s not going to go away any time soon. Not sure about price. That will affect farmers though.
Isn’t farm equipment ripe for electrification? Almost all equipment is used within a short distance of its base.
People steal fuel from farmers. That is a cost.
We would have loved an electric tractor that was always full in the morning and you use your cell phone instead of a key!
If half of our farm tractors were changed immediately, we would have no difference in productivity.
Electric tractors always start in the coldest -40 and require little maintenance. All you do is fix things on a farm, anything not broken would be wonderful!
The common barn will eventually need to be heated to keep these battery’s from freezing. Or have them plugged in all the time I suppose if they have heaters. Will be interesting.
Right, some with Cattle keep the barn warm already.
My EV trucks starts just fine at -40, not plugged in overnight. I am not worried.
Farming equipment for field work is surprisingly hard to electrify. In cars you can have your aerodynamic blob slip through the air almost unimpeded. Farming generally requires plowing stuff through soil and that’s very energy intensive process.
You can also think of it in the way how passenger cars generally use just a small fraction of their max power for vast majority of the time (when they are cruising at set speed). Farm tractors and such tend to work for hours on end at 80%-100% of their rated power. So a moderately sized 100kW tractor will need a 1MWh battery to go through a day of work. That’s basically an engineering impossibility without some extreme compromises. Eventually we will have to figure out something (easily swappable batteries automatically ferried between charging station and the tractor? or something), but right now it’s a huge problem.
short distance is meaningless.
what matters is how much energy is being used and the energy used by farming equipment is huge.
especially large equipment like combines is standing around for months at a time only to be operated 24/7 for a few weeks during harvesting season.
this vehicle category will take many more decades to be realistically switched to EVs.
small tractors could work but even these are operating at high load for days on end and you would need multiple of them so you can switch them out during operation.
short distance is meaningless.
I think you mean “short distance is not enough to overcome the other challenges to electrifying farming equipment.”
Short distance is actually hugely meaningful when talking about electrification. Local fleets tied to a base station are much easier to electrify because the base station can be equipped to provide them with power, and you don’t need a distributed charging network.
No. While some equipment stays near a home area, that’s not always the case.
Regardless the energy density of batteries isn’t there yet. A combine can run through 20 gallons of diesel fuel an hour and run for 12+ hours straight. That’s 240 gallons of diesel… and equivalent to 8,904 kWh of fuel used.
There are plenty of carbon neutral alternatives: https://arstechnica.com/cars/2022/06/worlds-first-ammonia-powered-zero-emissions-tractor-starts-testing/. Diesel and gas tractors will be a thing of the past regardless of how fast energy density in batteries improves.
Diesel is more expensive than gas, although less refined. Why’s that?
The same will happen with gas as its demand dwindles.
Diesel is more expensive than gas, although less refined. Why’s that?
less refined just means that it comes out as a lower fraction during distillation as it has longer carbon chains and a higher boiling point, it has no meaning regarding cost of the fuel.
and the article seems to have no idea what they are talking about as they make it seem like a refinery can choose what they produce while in reality they only separate whats already in the crude oil.
so if a refiner “chooses” to not produce diesel fuel all that means is they dont separate it out but simply sell it as lower grade fuel/heating oil.
for the NA market its simply the hen and egg problem, people dont like buying diesels a lot because of the availability in prices and that means refineries will just sell it as fuel/heating oil instead.
thats not the same problem as having a shrinking market as the market will shrink slowly and refineries can simply adjust what they sell the individual fractions as whenever they feel like it.
they will need to keep the refineries running anyways for kerosene and gasoline for many more decades so what name they give their diesel doesnt really matter much.
Yes and no. Overall demand falling will lower prices initially, but at some point it will become much less profitable to make gas and the supply chain will condense and consolidate in turn increasing prices. Basically, supply should scale to demand.
The price of gas isn’t determined by supply availability, it’s determined by the amount opec lets into the market. They’ll just ration it out to keep market supply low to artificially keep prices high so they get even richer. In fact, that’s literally what they’ve been doing for 3 years now. The US government has been using the strategic oil reserves to artificially keep them lower. We have already gone through HALF of our oil supply in just 3 years. Once they use it all up, that’s it. Get ready for $6+ a gallon gas.
We have less than 1% EV adoption
Still A long way to go before it is at a scale that makes a meaningful dent in things
This really depends on what you mean by “long term”. Like the effects of EVs aren’t being felt now, or next year, pretty much at all. Right now consumption is still stable enough that producers can affect the price more than changing demand does.
In the medium term, significant demand drop will put downward pressure on pricing. The problem is that you can’t drop the price much lower before parts of the supply chain start having issues. There’s a lot less truly cheap oil than there used to be, extracting using oil rigs costs a lot for example. So expect it to fluctuate more, but not really cheaper.
And in the truly long term, several decades, it’ll start getting more expensive not just because of the economies of scale mentioned, but as certain current producers start running out of oil. Many Russian wells are already scraping the bottom. Saudi Arabia’a shallowest wells will run dry. So even with significant consumption, it’ll start costing a lot more just to produce a barrel.
Running out of oil isn’t going to be a thing though. Just higher extraction costs. In general oil doesn’t behave like a regular market though, the supply is just too elastic. Can always leave it in the ground.
The oil industry is essentially a cartel. The producers set the price and they all collude to keep the prices at a level that makes them very wealthy. There’s no competition in that market so they’ll lower and raise prices as needed to kill competition from EVs.
Not in the short term. OPEC will restrict supply to keep prices up.
Demand destruction will increase price by limiting availability as gas stations stop being built and get closed down.
Supply and demand.
Demands going down would mean… cheaper gasoline. Cheaper plastic, cheaper diesel, lots of things.
With EV battery replacement costs ranging between 7-50k, oil vehicles and demand for oil will always be there…