Electric cars and the Oil industry

The era of Electric cars is here. The success of the Model S has started an electric car race. Now we have the Chevy Bolt & the Model 3 on the way.  The beauty of oil is that it enabled humans to store and transport energy easily. We could however see the internal combustion engines becoming relics of the past very soon. This is with major economies mandating stricter emission standards for automobiles. Where does this leave big oil?

Lets look at oil consumption per product for 2014 in the USAoil_consumption_2014.png


Motor Gasoline is almost 50% of all consumption. A plummeting gas consumption for automobiles is inevitable in the next decade or two. If I were an Oil executive, I’d be up at night trying  to plug that gap. One answer is moving base to emerging economies. But thats just band aid, since there is a possibility that they will leapfrog to the electric car era. This has happened in India with consumers moving to cell phones without ever having experienced fixed lines. The answer according to me is not on land.

Between Aviation gasoline & kerosene type jet fuel we have just over 1% of consumption. A major reason why the Concorde failed was that it was a gas guzzler . In the electric car era that wouldn’t matter. Enter a potential growth driver. The other reason the Concorde failed was unfriendly legislation and limited routes. Big oil almost never has legislation as a problem.

Long distance battery operated or Solar planes are still a pipe dream. The time  is ripe to revive supersonic flights. I foresee a future with a 6 hour flight connecting SFO to Mumbai. If I were an oil executive, I would seriously consider investing in building supersonic airplanes. A future where majority of planes are supersonic and run on aviation fuel can save the oil industry.  The future of big oil is up in the air.

3 thoughts on “Electric cars and the Oil industry

  1. Dear Mr Kelkar.
    (1)Electric cars are being promoted for a reason and at great expense to reduce CO2 emmisions and that too just about in time. Why offset this progress by finding one more reason to burn gas? Good riddance to big oil.

    (2)As you mentioned the Concorde was a gas guzzler as Supercruize is extremely energy intensive. One side effect of this was reduced range so the trans-atlantic was probably its limit. You could probably go SFO to Mumbai and some military aircraft like SR 71 but the payload was gas, a camera and one pilot.

    (3)If global warming does not get under control Mumbai will be underwater by 4 meters and so it will not be a useful destination.

    (4)Let people get some sleep. Concorde was OK over the ocean but no reason to needlessly subject people to sonic booms.

    (5)Technology must progress but if you want really revolutionary breakthroughs – here is my favorite man’s idea on Supersonic Aircraft. Hint: Its battery electric. https://www.youtube.com/watch?v=yx3auTD85Fw .Funny video, he is lecturing the head of MIT Aero Astro dept. who is clueless about what Elon may be talking about. Good thing Elon did not have any formal training in Rockets, Auto’s and Aeronautics or he would not be reinventing all these industries.

    Anyway, I hope I was not too critical.

    loving regards,

    • Vikram:
      I think the new generation of supersonic planes will be better than the concorde even if they run on gas.

      Surely Boeing & Airbus can apply the fuel efficient principles discovered while building the 777 & A350 to supersonic flight. As for sonic booms, there is technology today to reduce it to acceptable levels.

      I’d love for battery operated planes to be a reality however nothing like that is even close to even regular long distance flights today.

  2. Good article, thanks for sharing. Couple of points:
    – “This has happened in India with consumers moving to cell phones without ever having experienced fixed lines” – I believe this is because there are no large infrastructural setup costs involved. That is not true for electric cars where we need charging stations to be setup all over the country prior to use. I’m not going to use an electric car if I’m going to be stuck in the middle of nowhere even if the government gives me a credit for doing so.
    – “A major reason why the Concorde failed was that it was a gas guzzler” – I guessing this had also to do with oil prices in the 1970’s and stability in the middle east. Prices are set by both demand and supply. Just plugging the demand drop is not going to help, if Saudi Arabia is engaging in a short term glut to force shale oil businesses in North America to go out of business. Any strategy developed with a view that low prices are as a result of dropping demand is going to go bust as soon as OPEC starts raising prices again.

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