News

More than half of the world’s oil use comes from cars, and the oil industry is already reeling from an oil glut.  While the price of oil has drastically fluctuated in 2016, the Fitch report,  the industry faces a longer-term threat. If battery technology makes an unexpected leap forward,  the industry will feel the effects before the adoption of electric cars spike, with global oil demand peak sooner than the 2030s, as many analysts predict. In addition to making electric cars more practical and attractive to consumers, advances in battery technology could expand the role of intermittent renewable sources, such as wind and solar, in the power grid.

The report predicts that the number of electric vehicles on the road will increase slowly, in part because today’s cars  can last up to 20 years. Even if global electric car sales were to grow by more than 30 percent a year,  it would still take 20 years for the vehicles to to account for a quarter of the world’s cars, according to Fitch. Nonetheless, Fitch said, the adoption of electric cars could affect oil companies sooner than expected, although the report did not give a timeline.

The solution is for oil and gas companies is to diversify their energy businesses,  which some firms are already doing. In the report, Fitch urged companies to invest in battery technology and renewables or  focus more on natural gas.

Fitch Ratings is owned by Hearst Corp., which owns the Houston Chronicle.

Comments

comments