Can oil recover?

Category: 2040s 2016 Blog
Published Date
Written by Tony Dickey Hits: 3735

 Petroleum and fossil fuels will be around for some time. People still use wood to cook and heat. The question draws attention with crude recently falling into the $20 range and dropping, the petroleum industry has entered an existential crisis. At this price level much must remain in the ground for longer due to lower profits potential. From another side of the energy spectrum, solar and wind renewables fall to equal to or less than coal. The price for the latter will only continue to drop, even as efficiency improves. Can petroleum have enough time to recover before renewable energy reaches critical mass?

A matter of timing?

What I am asking comes down to timing. Oil and gas is still a potent industry. Many of the larger firms have reserves to outlast market disruption. Nonetheless, with wind and solar expected to drop to 2 to cents/kWh in the next five years, they will displace some fossil fuels. The question is, how much?

Exponential EVs

I am going to make an educated leap in logic, skipping a few steps. Electric vehicles will end the dominance of fossil fuels. Their market will grow exponentially in the next decade. With EVs selling at a fraction of fossil-powered ones in 2015, it is quite the leap to declare they will sell exponentially in a decade. A body of evidence backs the assumption. Like their gas-powered predecessors, EVs will benefit from economy of scale. They are expensive now because of high battery costs. These are expected to drop dramatically because of their potential multiple functions. The same batteries that work for vehicles work for stationary storage, peak processing and back up. Because they will be used in more ways, their market will grow more quickly. Greater market share leads to lower prices, a self-enforcing effect.



Can I get it for free?

The next leap of logic is smaller. Can batteries hold enough solar and wind power to overcome their intermittency? The answer depends on a few factors. One is that in sufficient numbers EVs will serve as storage (V2G). Another factor is how utility grids will change to meet the different energy sources on it. Most important to know is German and Danish grids are adapting wind and solar  renewables quite sufficiently to meet demand. By extension, storage capacity will probably grow enough to accommodate 80 to 100% of residential demand. Steel and cement production will probably use fossil fuels for quite some time, but do not contribute as much to global emissions as electricity or transportation.


People are talking

This is an article on how the petroleum industry survives. I spent most of it talking about renewables. That's the challenge petroleum and other fossil fuels face. There's not enough room at the table for everyone.