Unless you’ve been hiding under a rock or have been living as a hermit in a cave for the past 20 years or so, one thing you’ve surely heard being beaten to death is that the actions of man throughout the world are collectively responsible for global warming climate change. Without chasing down the rabbit trails or going neck-deep into the thickets about global warming climate change, the reasoning goes something like this: through Man’s economic activities, there are greenhouse gases, produced as a negative externality of all this activity, which are released into the atmosphere, which cause the trapping of heat. In turn, it so goes, the atmosphere of the planet is warming to a point to where we figuratively have put ourselves into a hot baking oven. This is going to catastrophically threaten all life on Earth, including that of man. Ergo, it so follows that man has to do everything possible to avoid this awful future. At or near the top of those everything possible actions includes substantially cutting down on the use of fossil fuels, the burning and use of which is a top driver of more greenhouse gases being put into the atmosphere.
The reasoning goes from here that one big driver of fossil fuel consumption is the use of gasoline, which is refined and derived from crude oil. Therefore, one big way in which crude oil consumption can be cut down is by employing battery-powered motor vehicles, rather than vehicles that run on gasoline or diesel fuel. After roughly a century in which our ancestors discovered that gas or diesel powered vehicles were far superior in nearly every way to battery-powered ones (because of the energy density of oil and gas), the pendulum has swung back towards battery-powered ones. Lithium batteries offer large increases in energy density over older types of battery storage, offering the prospect that a suitable replacement has been found for gas-powered vehicles.
Then out of nowhere comes a bombshell
So goes the story until this past week. The Globe and Mail, a Canadian newspaper, published a story which mentioned that Morgan Stanley energy analyst Martin Rats had published a finding that 72% of new vehicles being purchased in Norway were electric-powered vehicles. There are a number of news outlets out there covering this, including this story from NPR (which says that 90% of new vehicle sales are electric vehicles). Engadget put the number at 65 percent, while Time magazine also ran a story putting the numbers at 80 percent.
So, what did Martin Rats say about what this rapid adoption of electric vehicles had done to crude oil consumption in Norway? He said that oil consumption in the country hasn’t changed! So, an obvious question to ask is, why? The answer being offered by the Globe and Mail is that, in Norway’s case, basic GDP growth and population increases raised oil demand more than electric vehicles reduced it. Moreover, rising living standards in the developing world along with a rising population result in higher energy use, including crude oil.
These findings are troubling for the adherents of global warming climate change. They show that perhaps switching to electric vehicles might help mitigate the decarbonizing of the atmosphere, but that they certainly aren’t going to be the silver bullet that was hoped for. Meanwhile, the oil and gas industry can rest assured that there will be plenty of demand for the industry’s products for a long time to come.