Just a random musing. As EV’s become more popular, means less gas being used, means potentially lower prices since supply of gas should increase? Or do they just cut production and keep prices the same.
Wondering what will happen in the long term.
All of the oil producing nations plan on increasing their production over the next few years to increase their wealth. I doubt Opec can stop it this time. At some point that wealth generation thing fails. Oil won’t be sold at a loss for long though, so owning an electric car when it goes back up would be nice. Regardless of what gas prices do, I want to own an electric car.
Not really, they’ll just reduce output and undo the changes they’ve made to the cracking process to enhance gasoline output and get more of the other useful petro-chemicals out of it instead.
As long as the US exports either gas or oil, then no. see below:.
Characteristic Exports in thousand barrels per day
2018 7,601
2017 6,376
2016 5,261
2015 4,738
now if that were turned into gasoline and sold here…
Quite the opposite, I’m afraid.
As economies of scale for producing and delivering to local stations begin to decline, prices will begin to rise.
Nope. The peak fuel consumption (at least in the US) was in 2019. Gas prices have only gone up since.
Thank Biden & Co for that.
The price of gas isn’t determined by supply availability, it’s determined by the amount opec lets into the market. They’ll just ration it out to keep market supply low to artificially keep prices high so they get even richer. In fact, that’s literally what they’ve been doing for 3 years now. The US government has been using the strategic oil reserves to artificially keep them lower. We have already gone through HALF of our oil supply in just 3 years. Once they use it all up, that’s it. Get ready for $6+ a gallon gas.
This really depends on what you mean by “long term”. Like the effects of EVs aren’t being felt now, or next year, pretty much at all. Right now consumption is still stable enough that producers can affect the price more than changing demand does.
In the medium term, significant demand drop will put downward pressure on pricing. The problem is that you can’t drop the price much lower before parts of the supply chain start having issues. There’s a lot less truly cheap oil than there used to be, extracting using oil rigs costs a lot for example. So expect it to fluctuate more, but not really cheaper.
And in the truly long term, several decades, it’ll start getting more expensive not just because of the economies of scale mentioned, but as certain current producers start running out of oil. Many Russian wells are already scraping the bottom. Saudi Arabia’a shallowest wells will run dry. So even with significant consumption, it’ll start costing a lot more just to produce a barrel.
Running out of oil isn’t going to be a thing though. Just higher extraction costs. In general oil doesn’t behave like a regular market though, the supply is just too elastic. Can always leave it in the ground.
The oil industry is essentially a cartel. The producers set the price and they all collude to keep the prices at a level that makes them very wealthy. There’s no competition in that market so they’ll lower and raise prices as needed to kill competition from EVs.
Not in the short term. OPEC will restrict supply to keep prices up.
Supply and demand.
Demands going down would mean… cheaper gasoline. Cheaper plastic, cheaper diesel, lots of things.
With EV battery replacement costs ranging between 7-50k, oil vehicles and demand for oil will always be there…
No, our silly-ass government will tax EV’s to death.
Gas prices go down? Lol no
Oil companies notoriously don’t obey the laws of supply and demand.
I think eventually we’ll reach a tipping point where they’ll have to, but I don’t think we’re anywhere near that point.
OPEC controls is all, they will cut production substantially…but rig workers will get laid off for sure, there will be unemployment associated with a 50% market penetrance.
But we’re a long way from that…Ike long.