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 USA
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.