Electric Cars Might Not Have Medium Term Effect on Oil Industry

Environmentalists have a cosy notion that you could ditch all the old and dirty and carry on into the sunset powered by water or wind generated electric. One day maybe, but now or even soon? Well we are learning that just because lots of people say a thing is certain that does not make it so. A Russian oil expert makes some good points to support the argument that electric cars might not have a medium term effect on the oil industry.

I’ll state my interest in this. I am a HSE adviser. In some regards it makes no difference if I work on a project constructing windmills, nuclear reactors or an industrial worm farm. I started out in the North Sea on the rigs and many of my friends still work there. It is important to them, their families and the economy that predictions for oil production are as accurate as they can be.

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If the Western world turned to electrically  powered vehicles in the medium term the oil industry would take a hit it can ill afford. I am not talking about the giants, I am talking about the people putting bread on their family table. If predictions are wrong and oil companies diversify, particularly into developing regions, as a result it is bad for Western oil workers and Western economies.

Tesla Criticised for Uncertain Sales Predictions

Igor Sechin, CEO of Russia’s oil giant Rosneft is quoted in Bloomberg as saying: ‘The unconditional truth remains in the fact that the hydrocarbon power industry has been and will be in demand. The market’s assessment of the prospects of electric car producers, in our view, is significantly overestimated.Until the electric transport industry becomes as user-friendly and attractive for consumers as the cars with internal combustion engines, the prospects for electric vehicles remain largely uncertain.’

Sechin was talking to the St. Petersburg International Economic Forum recently.

The logic behind this seems sound to me. Electric cars are impressive in comparison to only a few years ago, no doubt. What Sechin doubts is that they can compete with combustion driven vehicles. The infrastructure supports traditional cars, the advances in performance and economy have been equally impressive. The combustion engine allows for greater diversity in design, size and range.  That is of course now, not in the future. So could an aggressive sales campaign globally force adaption of support services so that electric is just as convenient as oil powered?

I don’t think so and Tesla was singled out as not having the best future business model when it comes to sales predictions. Sechin pointed out that sales are still relatively small with only Norway showing an increase of any note. To balance this it has to be noted that Norway subsidises electric car ownership to a significant degree. Sechin says, and I agree, that for the electric car to make up ground on the internal combustion energy these subsidies have to continue.

If I look at the UK. If I put the current demands for public funding on the table and think of the issue of electric cars one thing is clear. Increased subsidies and increasing financial support for companies to provide recharging stations etc! I’m very doubtful of Tesla achieving the success they desire. It will be interesting to see how things develop but government coffers need filling, especially now. I cannot see masses of people taking on the inconvenience of electric transport in the hope that soon it will be as easy to use as their old car.

Take Care

Chris Hodge

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