Big Oil Already Planning Ahead For Its Demise


MAY 25 2017 BY EVANNEX 47

Big Oil

The Big Oil vs. Electric Vehicle battle has even spawned some welcome satire!


The end of the Oil Age is within sight. Everyone who follows the news should be able to see this by now, although people have vastly different ideas about the timeline. People also disagree about whether it’s good or bad news – greenies see a brave new energy economy, while those whose livelihoods lie in the oil industry are more likely to characterize the coming shift as a historic tragedy that needs to be delayed as long as possible.

Consultancies, investment analysts and think tanks around the world produce a constant stream of predictions about the future impact of new technologies on the auto and oil industries. Despite the pundits’ painstaking perusal of primary sources, including economic data and interviews with industry insiders, their conclusions do not agree, to say the least.

*This article comes to us courtesy of Evannex (which also makes aftermarket Tesla accessories). Authored by Charles Morris.

Big Oil

Sign of the times: Emirates National Oil Company just opened the first solar-powered gas station in Dubai (Source: Emirates 24/7)

The oil industry itself, along with mainstream investment banks, tends to foresee a gradual, decades-long transition. BP’s 2017 Energy Outlook predicts that electric vehicle (EV) sales will grow to a mere 6% of the global auto market by 2035 (from around 1% today). A recent report by Goldman Sachs is a bit more adventurous, predicting that pure EVs will capture 5% of the market by 2025. The US Department of Energy’s Energy Information Administration (EIA) has doubled its forecast from last year, but still predicts that EVs will account for only 8% of the US market in 2025.

Organizations of a more greenish hue are more sanguine: Greentech Media Research expects EVs to score 12% of the US market in 2025, and Bloomberg New Energy Finance predicts 35% globally by 2040. A study from the Carbon Tracker Initiative argues that EVs could capture 33% of the global market by 2035, and that reductions in battery costs “could halt growth in global demand for oil from 2020.”

To those who follow the EV industry, none of this is really news. Lately, however, there have been signs that at least some in the oil industry are reassessing the threat to their empire, and preparing for a “peak oil” scenario that may come much sooner than they have been predicting.

Another sign of the times: RWE, Germany’s biggest gas and energy provider, just launched hundreds of electric vehicle charging stations (Source: flickr via Tony Webster)

Speaking at the recent Bloomberg New Energy Finance conference, Joel Couse, Chief Energy Economist for European oil giant Total, predicted that EVs could make up between 15 and 30 percent of global new vehicle sales by 2030. Demand for oil will “flatten out,” and “maybe even decline,” he said. According to Colin McKerracher, an analyst with Bloomberg New Energy Finance, Couse’s forecast is the most EV-optimistic yet heard from an oil exec. “That’s by far the most aggressive we’ve seen by any of the majors.”

However, when it comes to peak oil, other industry leaders also see it looming in the not-too-distant future. Writing in, Jon LeSage notes that Royal Dutch Shell CEO Ben van Beurden recently said that oil demand may peak in the late 2020s, and Shell CFO Simon Henry said that it is expected to peak in about five years.

Yet another sign of the times: Shell Oil will begin adding electric vehicle charging stations in the UK and Netherlands later this year (Source: flickr via Circled Thrice)

Both Shell and Total are looking to hedge their bets with hydrogen – in January, both companies joined automakers and hydrogen suppliers in a new Hydrogen Council. The two oil companies plan to invest some $10.7 billion in hydrogen products over the next five years.

Some really scary reading for anyone receiving a paycheck from the oil industry is to be found in a new report called “Rethinking Transportation 2020-2030,” from Stanford economist Tony Seba. The paper presents a detailed blueprint for the end of an industry, predicting that growth in oil demand will end around 2021, and that the transition away from oil will be all over by 2030. Car dealerships will cease to exist, repair shops and insurance companies will be decimated, and automakers will either convert to new business models or perish. The paper extends and updates concepts introduced in Seba’s 2014 book Clean Disruption.

Comparing internal combustion engine and electric vehicle upfront costs over time (Source: Renew Economy via RethinkX)

The most interesting thing (and the scariest for oil-patch denizens) about Seba’s argument is that, unlike most of the forecasts mentioned above, it does not see electrification or climate change as the main drivers of oil’s downfall. His new paper says little about EVs, and barely mentions climate change or environmental regulations. The big disruptor is vehicle autonomy, and a new business model that it enables: Transport as a Service (TaaS).

In Seba’s future world, more and more people will give up owning their own cars in favor of summoning self-driving EVs on demand from Uberesque TaaS providers. They will do so for one simple reason: it will be two to four times cheaper than driving an existing vehicle by 2021, and cheaper still as the market matures. Under the new business model, the most important metric is “cost per passenger-mile,” and vehicle autonomy will reduce that cost so much that owning a vehicle, especially an old-fashioned gas-burner, will come to seem ridiculously expensive.

Contrasting individual auto ownership vs. Transportation-as-a-Service (Source: Renew Economy via RethinkX)

“We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history,” says Seba. Indeed, if his predictions are even close to accurate, the economic and social implications will be revolutionary, much more than we can even mention here (the report is worth reading in its entirety). The salient point for the oil and auto industries is that, as fewer cars travel more miles, the number of passenger vehicles on US roads will drop from 247 million in 2020 to 44 million in 2030.

The new study has caught the attention of at least one oil-patch writer. Markham Hislop writes in North American Energy News, “If Tony Seba is correct, the Texas and Alberta economies just took a metaphorical bullet to the head.” Hislop interviewed Seba, as well as several economists and analysts, who generally agree with his conclusions.

A forecast for individually-owned internal combustion vehicle sales compared with TaaS (Source: Renew Economy via RethinkX)

Seba sees nothing less than catastrophe ahead for the oil industry. “Global oil demand will peak at 100 million barrels per day by 2020, dropping to 70 million barrels per day by 2030,” he writes. “This will impact different companies and countries disproportionately, depending on their exposure to high-cost oil.”

If oil prices drop substantially, then hard-to-get-at, high-cost oil will no longer be profitable. As it happens, the highest-cost oil sources also tend to be the most environmentally damaging ones, such as offshore oil fields – or the Alberta oil sands, “If Seba is correct,” writes Hislop, “the Alberta economy just suffered a mortal blow. Northern Alberta facilities and infrastructure worth hundreds of billions could be stranded. Calgary and Edmonton will be ghost towns.” The controversial Dakota Access and Keystone XL pipelines will be unneeded.

Above: A look back at Tony Seba’s prescient “Clean Disruption” predictions which showcase Tesla as a prime disruptor (Youtube: Tony Seba)

So, if anything like the world Seba envisions comes to be, the losers will include just about everyone in the oil and auto industries’ food chains, plus taxi and truck drivers, and probably others that no one has thought about yet. Job losses will be enormous, and governments would do well to think about how to try to help those who will be left behind (but the record so far on that score is not encouraging).

And who will be the winners? Why, Tesla for one. Seba believes that, as the business model of transportation shifts, manufacturing vehicles will become a low-margin commodity business, and the real value will be in “TaaS providers” – firms that run the networks that get people around, such as Uber, Lyft, etc. – and in companies that provide vehicle operating systems and software. Tesla, of course, has all the bases covered – it builds the cars, the solar panels to power them, and the software that makes them go. And, although it isn’t talking about it much yet, our favorite company also plans to be the Taas provider that operates a toll booth at the entrance to the whole ecosystem. That’s right, Tony Seba isn’t the only one who has been following the implications of self-driving technology to their logical ends. The TaaS economy that Seba envisions is pretty much the same one that Elon Musk described when he outlined plans for the Tesla Network.

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

Categories: General

Tags: , , ,

Leave a Reply

47 Comments on "Big Oil Already Planning Ahead For Its Demise"

newest oldest most voted

The chart is for new ICE cars going to zero in 2024, not all privately owned cars.

Those would presumably be around for decades and privately owed EVs could keep the numbers growing.

The guy also projects a 10x drop in cost in autonomous car services, meaning the vast majority of people will find it cheaper to simply abandon their car and take some service that will replace Uber.

But the real issue is, if you hold oil stock, SELL NOW.
Because oil stocks won’t just slowly drop 5% a year.
Once future prospect turn dim, they’ll drop 50% in year one, and 50% more in year two. Because the market is Future Looking.

Then get into ETHO, a No-Carbon ETF.

Agree on the behavior of the collapse of oil stocks. Especially for drillers and refiners.

It won’t happen until EVs take demonstrably stronger market share. Moving from .5% to 1% isn’t going to trigger the collapse. But if it’s 2% next year (Model 3) and established carmakers are hurt enough by it to respond with more EVs, and we go to 4-6% the following year, like 2019-2020 (when all those new models should be out) and then 8%+ in 2020 with those new models, it will be real. Crash will happen around then.

I’ll be buying puts on the worst drillers and refiners. It’s all about the timing. It needs to be real to the common person by then, not just us EV enthusiasts.

Companies like Exxon will survive. They will just be smaller than they are today. The world will still be using 25-50 million barrels a day. The big will survive and produce it.

On the same token a lot of the renewable industry is owned by big oil, and they have to money to buy it all.
Just saying I wouldn’t be so quick to discount the stability of these guys. They might be hard headed, but this world revolves around money.

The re is one fundamental omission in my opinion. To build such a number of ev cars (even considering declining Total number due to car sharing) there is insanely big battery production capacity problem to be tackled. Elon himself estimated at last 100 gigafactories needed to be built globaly. And building such a capacity takes longer. Especially if there are incoming technologies that might need different production techniques. For instance solid state may need different form factors. And we are still quite far from theoretic limits of energy density hence significant technology changes are expected.

Tesla’s asset growth “Plant and Equipment” has also been geometric.

From 1 Billion in 2013, to 16 Billion in 2017.

as of february lithium ion battery production was already set to increase by 521% by 2020

I like driving.

Me neither.


Me too. This guy Seba is trying to promote a future he’d like to see, not necessarily what the majority of others would like to see. He is a wild optimist. There are so many wildly optimistic assumptions in this that it’s hard to number them all.

In just four years time or so, the whole world will change because of robot cars. Sure, if he says so… It’s as though he believes that everyone is sitting around, wishing and dreaming that somehow there must be a way to get rid of that annoying Uber driver, then life would be perfect.

You can summon a car right now with your phone and it will take you wherever you want to go. Why isn’t Uber and Lyft shutting down private car ownership right now?? What is the practical difference between the Uber car and the autonomous car from the consumer perspective?

Oil will be in decline for sure, but the demise of privately owned vehicles?? He needs to get over his urban hipster self.

Ride sharing is already killing individual car ownership. Anyone who drives for one of these ride sharing companies already realizes that a large portion of the University student population does not own a vehicle. Why would they? It’s cheaper to just call a driver on your phone when you need it. Cars are too expensive and seen as a burden for this younger generation. As the cities grow, so too will ride sharing, and this begins the slow downward spiral of big oil and car ownership.

Bull crap. University students don’t buy all the new cars. There is nothing being “killed”. Once you actually graduate from college, get a job and start a family, you will discover the genius that is the privately owned vehicle and out grow riding around in taxi cabs.

Once you’ve gone carless in University, getting a car is a bummer.

Many (most?) In the current generation see driving as a chore. They pawn it off on their friends or use Uber and the like.

Wait…. not so fast there.

Read this article before concluding that the number of vehicles on U.S. roads will actually decline.

I have read it and I think the future will be closer to Seba’s predictions. Don’t confuse “total cars” with “cars on the road”. TaaS increases utilization by 5-10x so total cars will decline but cars on the roads will be the same or more.

But with TaaS, the type of vehicles on the roads will change. A simple 1 seat commuter autonomous vehicle could be the norm during rush hour. Many more of these could pack onto existing roads than existing cars can, so road utilization also goes up.

I think a lot of people will keep a private vehicle for a while, thinking they will need it. After a few years, many will determine that they don’t.

I disagree with their hypothesis. Affordable autonomy implies cheap point-to-point public transportation. Car ownership is significantly driven by the combination of the benefits of point-to-point transportation and the high cost and inconveniences of taxis. Once people feel the need to own their own vehicle, then the additional cost inefficiencies are marginal. But autonomy would lower the cost of, and improve the efficiency of the taxi network as well as making rental more convenient (no need to pick up and drop off the rental). In doing so it would move many people out of the hub model of mass transit, but it’s worth remembering that it’s solo commuters that are the main traffic. Autonomous ride-sharing (already popular where offered by services like Uber and Lyft) would offer obvious cost-savings over solo travel, but in a way that’s more convenient than current car pooling. In my opinion, autonomous ride-sharing would more than balance any shift away from mass transit. The other important impact of autonomous taxis is that if adopted, we’d see a significant shrinking of vehicles per VMT in the USA. If people are no longer driving, vehicle size would be appropriate for use, and for almost all use that would… Read more »

Built-in Child seats have been around for a while:

Second picture from the bottom.

I take it you don’t have children.

For the first several years, a child needs to face backwards with full back support.

The seat in that picture is for like an 8 year old. It won’t work for a 0-4 year old.

“I can foresee autonomous cars being manufactured with built-in child seats”

I can foresee that child seats or even seat belts are not mandatory anymore in autonomous cars.

‘but it’s worth remembering that it’s solo commuters that are the main traffic’
Yep- there’s the major flaw in personal transportation- inefficiencies abound & this is just one of them.
I like his enthusiasm but like many here doubt his projections- but that’s the normal human response and the whole point of his presentation. “Never happen” is the norm- until, shockingly, it does…

It would be nice not going to gasoline stations, but no new ICE cars sold in a few years is absurd.

Maybe there is some symbiotic stuff going on too. Like the death of malls. So people shop less at malls, so they don’t drive as much, use less gas etc..
I only spend 2k a year or so on my car, though I’m retired.

Speaking as a card-carrying economist, let me offer an opinion: Predicting how the transportation arena will shake out over the next 25 years, whether globally or “only” in the US, is insanely difficult. EVs, batteries, climate issues, TaaS, infrastructure, social/cultural factors — it’s a nightmarish mix of intertwined factors, with more than a few non-linearities at play. I’ve believed for some time that mainstream consumers in the US were, on the whole, vastly more spooked by “range anxiety” than was warranted. If you look at the subset of households in the US that have more than one car and have a garage and a 110 volt outlet, you have a potential market of literally millions of EVs that can be used for local errands and charged at night, with no need for long range, a 220 volt station, or public chargers. This is exactly how my wife and I have been using our 2013 Leaf since we got it in 3/2013, and it’s worked out fantastically well for us. But the bottom line is that market psychology always trumps reality. And now that we’re making the transition from (roughly) 100 mile affordable EVs to 200 mile affordable EVs, we will… Read more »


My wife and I have similar driving habits as you. We are lucky enough to carpool as well. Our gas car sits for weeks at a time – until we need to be two different places at the same time or road trip out of town.

Model 3 will replace the gas car.

> is insanely difficult.

It’s like trying to predict the US Presidential election, where you even have Poll companies, and almost all the mainstream media telling you that one candidate is going to win, and the other wins. I’m still laughing over it.

So I don’t see how anyone can comfortably predict the auto market.

Totally agree. Same situation here. Now we own two model S cars and have made reservation for two of model 3. Never a ICE again.
If you have solarpanels (soon Powerwall) and produce your own electricity instead of buying gas your ROI is even faster. In the long run early adapters will be the great winners here.

Big Oil in the US is TOTALLY BLIND, and has done NOTHING to divest and re-invest into wind or solar.

So, watch for the biggest crash in the industry in the US.

This article is, at best, decades early. Oil demand worldwide is at an all time high of 97 million barrels PER DAY, and rising. That’s not my opinion, that’s a fact. Last year, the most popular segments of the auto industry were SUVs and light trucks. Again, that’s a fact. If/when oil demand does finally start to significantly decline, the oil companies will simply buy renewable companies and add their energy production to their portfolio. “Big Oil” isn’t going anywhere.


EVs will replace the growth in ICE sales but will not make a dent in the TAM in the next decade. After that, a slow decline in ICE sales will happen.

It is total BS to think that people will not own vehicles. Trucks for recreational use, customization of vehicles, etc make vehicles FAAAAAAR more just transportation. Sure many people may give them up but that chart that shows the number dropping to zero is based on pure ignorance of the buying population.

In the US. Globally, societies do not have the love affair, or need for, vehicles, particularly big ones.

“the oil companies will simply buy renewable companies “

With which money? They are already debt-laden and their stock price will collapse. This is a pipe dream.

I had no qualms about waving goodbye to petrol stations, It’s the cheapest it’s been in years here but it’s still over $7.00 for a UK gallon here.

The TaaS expectations are completely overblown. I hope no one is investing based on them. They will be sorely disappointed.

Rush hour is a thing. It will still be a thing. People will still own cars.

Parents with children won’t load/unload child safety seats on every trip.

Most people other than adult men aren’t going to want to ride with random strangers in a confined situation like a car.

TaaS will eat into the taxi market, but people who need personal assistance (elderly with luggage, disabled, etc.) will still need a driver.

TaaS will nibble at the broader car market for households that maybe have two cars but usually only need one car. Or households with car(s) that don’t work traditional rush hour schedule. Maybe 5-10% of cars?

TaaS will lead to MORE VEHICLE MILES DRIVEN – cars will be higher mileage faster, meaning an individual car is likely to be replaced sooner. This will negate the silly projections of there being fewer cars produced/sold per year. If anything, it will be steady or increase.

TaaS hype – brought to you by the same people who said you would be printing everything at home by now and that AI is about to take over.

Well said!!

Tell that to all these 20-somethings with mortgage-sized college debt. And with the populations shifting to cities…ride-sharing has a solid foundation and will continue to grow. It’s amazing how universal Uber is already here in the DC area. From middle-aged to teenagers, male and female, all use the service and/or drive for Uber on a routine basis.

Plus, cars are expensive, and the insurance is high, particularly in and around cities. Parking availability and cost is prohibitive in and around a lot of cities, and those issues have only been getting worse, not better.

Also, the study does not say that private vehicle ownership will end…just that ICE sales will end.

I expect vehicle miles per year to follow population growth, regardless of whether the cars are driven or autonomous.

On a global scale, I expect the transition to happen much faster everywhere but here in the US. Although the love affair is fading in the new generations, we still love our cars and love driving, and we still have massive, sprawling suburban communities radiating from every city in every possible direction.

I think these studies are very close to the mark. Regardless, it should be interesting.

Completely agree…

I will always own a vehicle, just as a personal choice, but the next generation may not see the “freedom” in owning a car.

Rush hour, say from 6 to 9.
One car can replace 3 to 6 cars by doing the transport.
If those cars are autonomous and electric, that’s a big effect on the system.

The driver is the 10x drop in cost of Uber like services.
If that happens you’re talking about a $25 dollar trip dropping to $2.5 dollars. Maybe you won’t jump on that, but many other people will, as that’s as cheap as bus service.

If the Autonomous vehicle is a Van that acts like a mini-bus with 2 more more passengers, it has a bigger effect, with a bigger price drop.

“Brought to you by the same people who said their would be a need for no more than 5 computers globally”

That is quite correct.
I also think the passion value of cars is completely neglected. If people long for ubber type transport why are the buying cars with specific colors, with specific wheels, with specific shapes they like?
The communisation of cars wont happen just as the hippy dream of communisation of women didn’t happen. People just don’t like to share private things. It is the same for houses and many other things, sometimes even for toothbrushes. We just like the sense of having our very own and knowing that we precisely don’t have to share it.
EV won’t change that and AD neither, all it will do is make better cars that don’t pollute and can provide some convenience for meeting us at the airport, park or go to the maintenance shop.

I don’t see how 20% of the number of cars needed now are going to get everybody to work in the morning and back in the evening. There is a reason traffic jams are so popular: we all need our cars at the same time which IMO greatly reduces the scope of reducing the fleet.

Sure carsharing is an option but it will add a lot of time to people’s commute making it a pretty marginal phenomenon now and I don’t see that change very quickly. Cars are about convenience and people will pay for that.

Computer scheduling, multi-passengers with similar destinations and a large price drop will do it all.

Folks are not thinking far enough down the road IMHO: Once TaaS proves autonomous cars are safer, it will eventually be mandated for safety reasons. Accidents will drop to zero. Then, passive safety features are no longer needed, including car seats so that hassle is gone. Cars can get much lighter, increasing range and efficiency. Spacing between cars can be greatly reduced increasing utilization of existing roads. Also small 1 passenger vehicles take up much less road space. Half-width lanes could accommodate these smaller cars and so extra lanes are added to existing roads for the cost of paint. Carpooling becomes viable because reduced congestion due to the above mentioned factors lowers commute time more than dropping off another passenger raises it. And since I’m watching Netflix anyway instead of driving, why do I care about an extra few minutes? Elimination of massive parking lots and garages means that businesses can be located closer together eliminating even more driving. Electric drive trains can go many more miles than ICE engines which reduces replacement costs. Sure more miles driven, but not by humans so who cares? Also, yes AI is starting to eat the world and 3D printing is commonplace now.… Read more »

Recently Saudi Aramco took over America’s largest refinery in Texas and along with it, the distributing terminals and Shell branded gas stations in certain places.

The main objective is to refine the Oil produced in Arabia and sell it directly to the end customer in USA. And they are attempting similar moves in China, India, Indonesia.

They will elimininate middlemen, price the oil low enough to prevent the rise of Electric vehicles.

And with most of the oil fired power stations being retired, most of the fuel oil is refined into motor fuels and ends up in transport sector. So don’t write off Oil yet. They will fight to the finish.

Many writing confidently about the future of energy act as if they are wearing blinders. Low Energy Nuclear Reactions (LENR aka cold fusion) has been proven beyond all doubt. The race is now who will be first with a commercial unit. Solar and wind power will die faster than fossil fuel as they are more expensive. The history of this goes back to two well known electrochemists Fleischmann and Pons (F&P), who announced the discovery of Cold Fusion at a press conference in 1989. Several groups, notably MIT and Caltech, tried to replicate their experiment and failed. They announced their results at a major physics conference and went on to state F & P had got it wrong. It turned out later that the hot fusion scientists at MIT and Caltech didn’t know what they were doing, failing to load the Palladium sufficiently with Deuterium for the process to work and had failed to talk to the discoverers to find out what to do. A little more than a year later two competent electrochemists did duplicate it and dozens of others have done so since. It didn’t matter, the damage had been done with the whole field dismissed as pseudo… Read more »