TPT November 2024
INDUSTRY 360
as tax credits and rebates, are encouraging consumers to make the switch. The lower maintenance expenditure can be significant. According to a US publication, Consumer Reports, the average annual maintenance for a traditional vehicle is around $1,200. For an EV, it’s close to $900. Social changes. Consumer attitudes toward vehicles are also shifting. As younger generations become more environmentally conscious, the demand for sustainable transportation options has increased. The appeal of EVs extends beyond ecological benefits; they are often viewed as a cutting-edge technology, incorporating smart features and connectivity that resonate with tech-savvy consumers. Perhaps more important are changes in how people view transportation. The rise of car-sharing and ride-hailing services is driving a change in preferences. Urbanisation and increased traffic congestion are leading people to rethink car ownership altogether, with a growing inclination toward shared, electric and autonomous transportation solutions. Policy and regulation. Government policies play a critical role in facilitating the transition. Many countries are setting deadlines to phase out the sale of ICE vehicles. Such legislation provides clear direction for consumers and manufacturers. Likewise, subsidies contribute to a favourable environment for EV adoption. A bright future for petroleum Looking at every factor related to EV technology, and formulating a comprehensive view, seems to indicate a bleak outlook for the traditional automobile industry, especially as it relates to petroleum. The International Energy Agency estimates that transportation is responsible for 65 per cent of petroleum consumption, and of course the bulk of transportation is by road, which is dominated by automobiles. By extension, the transition to EV technology seems to cast a long shadow over the tube and pipe industry, starting with the vehicles themselves. Fuel lines, exhaust systems and many other tube and pipe components simply aren’t needed in battery-powered vehicles. Another conclusion is that the petroleum industry is doomed, as are the tube and pipe producers that cater to this market. Tube and pipe products are used throughout the entire petroleum process, from oil rig construction to petroleum exploration and extraction. But is the future really that bleak for tube and pipe? No. It might seem hard to believe, but petroleum has a bright future. The various projections issued by industry insiders indicate that the demand for petroleum is destined to grow for at least another decade, and perhaps more than two decades. The International Energy Agency has a relatively conservative view, estimating that demand for petroleum will cease to grow around 2030. Its latest report, issued in 2024, expects worldwide oil production capacity to exceed demand, and by a wide margin, by that time: 114 million barrels per day of capacity versus 105 million barrels per day of demand. The Energy Information Administration (EIA), which is part of the US government’s Department of Energy, has a brighter outlook. Its Annual Energy Outlook 2023 predicts that the growth in petroleum demand will continue well past 2030. In its baseline case, it lasts until 2045 or so. A report issued by Goldman Sachs in the middle of 2024 essentially concurred with the Energy Information Administration. Goldman Sachs predicts that oil demand will increase through 2034, and possibly 2040. The Organization of the Petroleum Exporting Countries
(OPEC) has an ambitious projection, estimating that demand will peak around 2050 at 120 million barrels per day. Although some OPEC members have doubts, the OPEC prediction isn’t far from those of the EIA and Goldman Sachs. In most such reports, the researchers build a benchmark projection based on modest economic growth, stable prices and so on. From there, they create a variety of other scenarios to cover assorted variables. Researchers usually build a variety of cases based on slower or faster economic growth, changes in commodity prices and so on. The EIA’s Annual Energy Outlook has an interactive graph with 16 variables. Only two variables – Low Oil Price and Low Oil and Gas Supply – result in decreasing output. Also noteworthy is the use of the term “peak oil” by Goldman Sachs. This wording normally elicits anything from a raised eyebrow to resounding laughter among petroleum industry veterans. The peak of oil production has been predicted by geologists and other specialists since the 1880s. Despite the large number of predictions the peak of oil extraction relentlessly slips into the future. The authors of the Goldman Sachs report are savvy and don’t predict a timeframe for peak oil demand. The report states that Goldman Sachs thinks that oil demand will increase through 2034, whereas a prevailing opinion is that oil demand will peak around 2030. If the transition to EV technology slows, the report states that the demand for petroleum might grow until 2040. Cleverly, they mention peak oil without citing a timeframe. The petroleum industry hits new peaks in oil production all the time. It peaked in 2000, followed by two less productive years. It peaked every year from 2004 to 2006, and every year from 2012 to 2019. We won’t actually know when we have hit the absolute peak until it’s many years behind us. Even then, the petroleum industry isn’t going to collapse. The most likely scenario is that it will peak, remain at a plateau that will last for many years, and then taper off gradually. In summary, the energy market is changing, but it is changing gradually, and the conclusion is clear: the petroleum industry’s most productive years are still to come, and the sun won’t set on this industry for decades. in 2020, rising to 8.7 percent in 2021 and 14 percent in 2022. Despite this rate of growth and the potential for much more of the same, forecasts for petroleum demand and production don’t show much of an impact Source: Statista Inc Figure 3: Electric vehicle sales throughout the world increased rapidly from 2020 to 2022. EVs comprised 4.2 percent of new vehicle sales
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NOVEMBER 2024
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