People think electric cars will reduce oil demand, but they won’t.
If every car in the US were electric tomorrow, oil demand would likely increase.
Here’s why:🧵
2/ Oil plays a critical role in:
Fueling 97% of all global transportation: trucks, trains, planes, ships.
Enabling modern agriculture practices—from equipment to chemicals.
Producing clothing, housing, computers, phones, medical equipment, & millions of other products.
3/ People wrongly reason as follows:
Gasoline is 43% of a barrel of oil.
Therefore cutting gas use will cut oil demand by 43%.
But they misunderstand how we get gasoline, asphalt, etc. from that barrel.
4/ Each product made from a barrel of oil is separated by heat.
Lighter products like gasoline get separated at lower temps.
Heavier products like asphalt & diesel get separated at higher temps.
You can’t make heavier products without making lighter products like gasoline.
5/ Even if the US stops using gasoline, we’ll still need oil to make diesel fuel, fuel oil, jet fuel & other heavy petroleum products.
In fact, we will need more oil, not less…
6/ An electric car requires 6X more minerals than a gas car.
bit.ly/3mEbCJR
7/ The more minerals it takes to make a car, the more mining is needed.
And the more mining is needed, the more diesel fuel is needed to power the machines that dig, process, and transport the materials.
The more diesel fuel we need, the more oil we need.
8/ Can’t we replace diesel fuel, jet fuel, fuel oil, & asphalt with something else?
Right now we don’t have any alternatives that are scalable and economically viable.
9/ Can’t we make petroleum products without making gasoline?
It’s possible, but it’s not going to happen anytime soon.
Right now refineries are built to separate out gasoline.
Existing refineries would have to be replaced.
That’s unlikely to happen in the next 20 years.
10/ In the meantime, what’s the US going to do with the ~135 billion gallons of gasoline it consumes yearly?
It will flood the market.
Surplus supply will drop the price of gasoline.
11/ That means people who couldn’t afford gasoline before will be able to.
Surplus gas will get used in the developing world.
Most countries in the developing world lack environmental laws to curb emissions.
So more gas use in the developing world will mean more emissions.
12/ People who promote EVs have good intentions.
But the road to higher emissions will likely be paved with those intentions.
Scaling EVs will not change the amount of oil the US consumes, and it will likely lead to increased emissions in the developing world.
13/ Is there an alternative to scaling EVs in the US?
-Use technology to reduce emissions (like catalytic converters)
-Invest in hybrids
-Design more efficient internal combustion engines
-Continue R&D in synthetic fuels
14/ Stay informed, follow me @BrianGitt.
And subscribe on to read my articles on energy & investing.briangitt.com
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