It’s a resource that has started wars
and caused global market turmoil.
Oil fuels more than half of the world’s
transportation like cars, planes, and trucks.
But in the age of electric vehicles and
renewable energy - is the oil era over?
Well, it all depends who you ask.
This chart from the International
Energy Agency lays out the debate.
One scenario has oil
peaking in the mid-2020s.
And the other shows oil
demand growing until 2040.
So, why the difference?
Well, on one hand, climate
policies are getting stricter.
So, here in the EU, renewable energy
sources account for 80% of new capacity
and wind will become the number one
source of electricity soon after 2030.
China, the world’s largest polluter, is now
leading the way in the push for clean power.
Just take a look at the streets -
It’s predicted one out of every four vehicles on
the road in China will be electric by 2040.
And the total number of electric
vehicles on the road worldwide
is expected to reach nearly 300 million in just over
two decades - there’s only around 2 million today.
More electric cars
equals less gas guzzling.
Okay, but let’s not get
ahead of ourselves.
The International Energy Agency says
it’s too soon to write oil’s obituary.
Oil and gas still received two-fifths of
global energy supply investment in 2016.
That was less than electricity
got for the first time ever -
but still much higher than
investment in energy efficiency,
and renewables in
transportation and heating.
Experts say it'll be a long time before the infrastructure
is in place for electric cars to overtake the streets.
And even then, there will
still be demand for oil.
Oil will be a dominant energy source
for emerging markets like India,
and for industries like trucking,
petrochemicals, shipping, and aviation.
One reason why these industries
haven’t backed off oil yet?
Well, prices are pretty low historically.
Back in 2014, the price for a barrel
of crude oil traded above $100.
Today it’s around $60 - where
it’s expected to stay for a while.
So how did this happen?
Put very simply, too much
supply and not enough demand.
In 2014, economic growth slowed in countries like
China and Brazil - which made oil demand go down.
At the same time, global
oil supply was going up, fast.
The U.S. experienced an oil boom thanks
to new technology -- shale drilling.
Meanwhile OPEC, which is a cartel of oil-producing
countries, decided not to cut their own supply.
And despite geopolitical tensions
in countries like Iraq and Russia,
oil production didn’t go
down in those regions either.
It was good for consumers
who pay less at the pump.
But low prices hit oil producers
and exporters hard.
Big oil companies like Shell and
BP have responded to low oil prices
and increased regulations by trying
to “diversify” their businesses.
That’s a fancy way of saying they’re
investing in other things besides oil.
Some of that investment is going toward solar
or wind - but most of it is going toward gas.
Exxon predicts demand for natural gas will
grown more than any other energy source
and by 2040, will make up a
quarter of the global energy mix.
Some analysts say it'll take a long time
for us to switch to alternative power sources,
especially when oil
prices are so low.
But whether the oil era ends or not, a new
era of alternative energy has already begun.
Hey everyone, it’s Elizabeth.
Thanks so much for watching!
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