What is the importance of changes in market demand for oil prices? It is worth noting that a new change in the global oil market is happening quietly – electric cars are gradually replacing traditional cars. What impact does this have on oil prices?
At the end of the 19th century American oil production, gasoline was considered a useless by-product of oil refining, when gasoline prices were very cheap, or even burned or dumped in rivers. When the first batch of large-scale production of traditional cars appeared, the demand for gasoline was greatly improved, gasoline prices also led to rising crude oil prices.
From the above historical facts, we can find that the change in market demand is important for oil prices. It is worth noting that, just over a century later, a new change in the global oil market is taking place – electric cars are gradually replacing traditional cars.
First, the emergence of electric locomotives become a major challenge in the oil industry
Britain and France recently announced a plan. The plan is to ban the sale of gasoline and diesel vehicles by 2040. The plan has been the key issue for the oil industry: the emergence of a large number of electric vehicles is leading to a decline in oil demand?
1, oil producers began to pay attention to the impact of electric vehicles on oil prices
Some of the world’s oil company executives in the status quo, but also did not realize the importance of the problem. These executives take for granted that the current oil company’s overall performance in the second quarter is generally strong, even in the long run, the global oil demand slowed, but the recent outlook is still optimistic.
However, Ben van Beurden, chief executive of Royal Dutch Shell, did not try to cover up the challenges facing the oil industry. “Our company must reduce the development of oil fields, and only the lowest cost and most likely to remain competitive will be mined.”
Ben van Beurden said, “We must objectively face the resilience of the oil market, the current strong demand in the oil market, but there will be demand when the downturn, when the specific demand will decline, we do not know, but sooner or later will happen We are sure. ”
Ben van Beurden said, “oil peak demand may be in the late twenties and thirties, that is, electric cars began to appear in a large number of optimistic circumstances, after the oil demand will gradually reduce.However, now look at the electric car industry also Need more innovation in battery technology, and more policy support, it is possible to compete with the oil car.
2, electric vehicle policy advantage can not be ignored
Britain and France plan to phase out gasoline and diesel vehicles over the next two decades, increasing the policy advantage of electric vehicles. Equally important, car manufacturers have also made their promises for this.
Volvo said last month that all new models will be converted from 2019 to electric or hybrid. At the same time, Tesla (365.22, 10.05, 2.83%) increased the effort of the new electric car launched last month.
Figure 2: growth expectations of electric vehicle sales (dark blue for the growth of China’s electric car is expected, light blue for the global growth of electric vehicles is expected) Figure 2: electric vehicle sales growth expectations (dark blue for China’s electric vehicle growth is expected, light blue for the global electric Car growth is expected)
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3, China and India are expected to vigorously develop battery technology
China and India are ambitious in battery technology, and these two countries are likely to promote the development of electric vehicles.
At present, China is already the world’s largest electric car market, Chinese companies have begun to dominate the battery manufacturing industry.
Research firm Trusted Sources analyst Kingsmill Bond predicts that “with the cost of electric vehicles and traditional vehicles parity, there will be a turning point in early 2020. The rise of electric vehicles is another indicator of systemic changes in the energy market, but also the oil investors Early warning. ”
Second, the transformation of market demand still takes a long time
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Many oil industry analysts believe that the transformation of market demand takes a long time. ExxonMobil (79.96, -0.20, -0.25%) the company expects the current growth of electric vehicles on the global oil demand is relatively small. The company also believes that despite the slowdown in oil demand growth, but oil demand will continue to grow until the twenty seventies of the twenty-first century.
1, the traditional vehicle replacement in developing countries is relatively slow
It is worth mentioning that the UK and France may be on the new electric vehicle policy advantage and will not determine the fate of the oil industry.
According to the International Energy Agency, non-OECD countries will grow by 19 per cent, although oil demand is expected to decline by nearly 12 per cent in the more affluent OECD countries between 2015 and 2040. By the end of 2040, 60% of the demand will come from outside the OECD.
“The growth of internal combustion engines in developing countries is still strong because they do not have electrical infrastructure and electric cars do not simply replace traditional cars,” explains Ben van Beurden.
Bob Dudley, CEO of BP, said, “Although the rise of electric vehicles is inevitable, but the traditional car will last for several decades.We predicted that by 2035, electric vehicles will reach 1 million.Even if the electric car growth rate turned Fan, the road is still a lot of traditional vehicles.
2, gasoline demand decline may also be offset by other industry demand growth
Gasoline’s declining demand for oil is also likely to be offset by growth in air and heavy freight, and freight is harder to turn to alternative fuels. Petrochemical is also another source of long-term demand.
According to the International Energy Agency statistics, 2015 passenger cars accounted for 26% of global oil demand, more than aviation, shipping and petrochemicals. But then, with the conversion of passenger cars to electric cars, oil demand will turn to the head of shipping and petrochemicals.
Saudi oil chief executive Amin Nasser said last month that even if the traditional fuel began to lose market share, history tells us that the demand for oil will continue to rise.
Amin Nasser believes that even in the 20th century, coal growth, it is difficult to reduce the global market demand for oil.
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In summary, the current global oil industry is still in the early stages of solving the problem of electric vehicles affecting the oil market. Some companies have begun to take precautions, some companies do not agree. Among them, Shell plans to spend billions of dollars a year to develop alternative energy, but this is still a small part of the overall capital expenditure.
“We are a $ 280 billion company, and we invest $ 25 billion to $ 30 billion a year, so ten years only, we will build a new shell, which gives us a lot of flexibility to adapt,” Shell executives said. Changes in global market demand. ”
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