Global EV sales surge during the third quarter of 2017

In the third quarter of 2017 electric vehicle (EV) sales soared 63 percent higher than the same period last year setting a record. The uptick was mainly fueled by rising demand in China.

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China is making the transition to EV's a priority. EV powerhouse Tesla has recently partnered with a local manufacturer in China to further the popularity of electric cars in this booming market.

EV sales increase year by year

A sales record was set in 2016. The International Energy Agency (IEA) claimed that more than 750,000 EVs were sold worldwide last year. In 2015 only 547,000 were sold.

By June of this year there were more than 2 million EVs on the road globally. However, this makes up only a minuscule 0.2 percent of the total light-duty vehicles in use around the world.

In the U.S. only 30 percent of buyers consider purchasing an EV and of those only three percent actually buy one.

Sales for EVs and hybrids in third quarter of this year

The sales of EVs and plug-in hybrids was more than 287,000 units in the quarter ending this September. This was up 63 percent from last year and 23 percent from the previous quarter according to a Bloomberg New Energy Finance (BNEF) report.

More than half of these global sales were in China.

China encouraging EV purchases

Aleksandra O'Donovan, an advanced transport analyst, and one of the authors of the BNEF report, said: “The Chinese government is very focused on pushing up EV sales. One reason for that is the local pollution levels in the cities, and a second is for China to build domestic heroes to compete internationally in this market.”

Xin Guobin, vice-minister of the Industry and Information Technology Ministry said that the country had started research on a timetable to phase out production and sales of vehicles that run on fossil fuels. Although he noted that the new measures would bring profound changes to the automotive sector he gave no indication as to when they might come out. Experts believe the ban will not take effect until 2040 at the earliest.

China has over 60 million cars on the road now. To help create an infrastructure to serve EVs the government has pledged to build 12,000 new charging stations by 2020

China is now the world's largest EV market. Its own manufacturer BYD is larger than Tesla.

China has tax exemptions, discounts for purchases, and government mandates to buy EVs. O'Donovan said: "The national subsidies can make EVs up to 40 percent cheaper than regular internal combustion cars.”

Chinese sales of EVs have been increasing year by year. In 2016 China sold 507,000 commercial and passenger EV's including hybrids. This was 53 percent higher than in 2015. Pure EV sales rose even more by 65 percent to 409,000 accounting for 80 per cent of EV sales.

North America lags behind China and Europe in EV sales

Europe was the second biggest EV market in the third quarter with 24 percent of sales. North America was third.

Both France and the U.K. claim they will ban sale of new gasoline and diesel cars by 2040. Netherlands is setting a target of just 2030 for all new cars sold to be emissions free.

In North America, California is also considering a ban on new fossil fuel cars being sold there.

In Canada sales of EVs are also on an upward trend, but they are still a minuscule part of the global market.

Previously published in Digital Journal

In spite of more EVs on the road peak oil production not yet reached

In a new report the Paris-based International Energy Agency (IEA) says that the demand for oil will decline only modestly in spite of the increasing use of electric vehicles (EVs) over the next two decades.

The IEA report "World Energy Outlook 2017" claims the global energy scene is in a state of flux. There is a rapid deployment of renewable technologies as there is a steep decline in their costs. Electricity is of growing importance as electric vehicles become more common.

The report notes that there are profound changes taking place in China's economy and energy policy with moves away from the use of coal. In the US there is a continued surge in shale gas and light oil production.

A recent update report released just this week points out that consumption of petrochemicals is still growing even as oil is facing competition from cheaper and more environmentally friendly energy sources.

Oil prices will continue to rise over next decade

Although the IEA has cut its longer term projection for oil prices, due to lower costs of renewable and conventional sources of energy as well as global attempts to mitigate climate warming, the price of oil is predicted to continue to rise toward $83 a barrel by the mid-2020s.

Over the longer term the IEA expect oil prices to settle within a range of $50 to $70 a barrel.

Oregon Department of Transportation

A huge increase in number of EV's

By 2025 the IEA estimates that there will be about 50 million EV's in use. By 2040 this should climb to 300 million.

As of now there are only close to 2 million EVs on the road.

However even by 2040, EV use will cut only 2.5 million bpd or a mere 2 percent of global oil demand.

Laura Cozzi head of the Energy Demand Outlook division of the IEA said: "It's quite spectacular, because you're going to see the number of cars on the road (globally) double from 1 billion to 2 billion, thanks to electric vehicles and fuel economy standards. Many commentators say we are writing the obituary for oil demand ... it is certainly true in the passenger car segment and in power generation, but it is not true in the other two elements of oil demand: transportation and petrochemicals."

More power generation to come from renewables

Power generation will increasingly rely on renewables rather than on coal and oil.

The IEA estimates that more solar power capacity will be added each year than any other energy source, with an annual average increase of almost 70 gigawatts.

The IEA claims: "There are many possible pathways ahead and many potential pitfalls if governments or industry misread the signs of change."

United States appears poised to become leader in oil and gas production

The U.S. may become the most disruptive force on the supply of fossil fuels with its huge growth in shale oil production. By 2040 it may be the clear leader in oil and gas production.

Tim Gould head of the Energy Supply Outlook division of IEA said: "We are now witnessing a period of expansion in U.S. oil and gas production that matches or exceeds any historical records ever achieved by the oil and gas industry."

The IEA estimates the peak of US oil production will reach about 17 million bpd and will be reached during the 2020's.

The military as energy consumer

The U.S. Department of Defense (DoD) is one of the largest energy consumers on the globe and is responsible for 93 percent of all U.S. government fuel consumption.

In 2006 the DoD used almost 30,000 gigawatt hours of electricity at a cost of close to $2.2 billion. This would be enough to supply about 2.6 million average US homes.

If the DoD were a country it uses slightly less than Denmark and a bit more than Syria.

Annually the DoD uses a humongous 4,600,000,000 of fuel annually. This is an average of 12,600,000 gallons or 48,000,000 liters a day. As a country the DoD would come just ahead of Sweden in daily oil usage.

The U.S. armed forces are making some attempts to become more green. The U.S. Air Force in particular is changing its planes to run on liquid synthetic fuel blends and also to use Hydrotreated Renewable jet fuel.

Previously published in Digital Journal

International Energy Agency predicts oil prices to continue low in 2016

Experts at the International Energy Agency (IEA) said a continuing glut of oil will keep prices low and prevent them from rebounding until next year.

Just a year ago the IEA, the Paris-based group of 29 major oil importing nations, had projected a relatively fast recovery. Instead, prices have continued falling even below $30 a barrel, the lowest level since 2003. Today the price is up somewhat but still just about $33 a barrel, with Canadian oil being even lower.

The head of the IEA, Faith Birol, said "extraordinary volatility" in oil markets make forecasting what will happen quite difficult. Legendary predictor Jim Gray predicted last December that oil would fall below $30 a barrel and stay there. He was right that it fell below $30, but for now it is above that level. However, Birol said, in the IEA report released Monday: "Our analysis of the oil market fundamentals at the start of 2016 is clear that in the short term there is unlikely to be a significant increase in prices."

Birol expects Canadian output to be more than 5 million barrels a day, as projects approved years ago still continue to come online. Even though some companies are operating at a loss on each barrel produced, no major shut-downs or closures have been announced yet. However, expansion is quite another matter. In the oil sands in particular, companies are in no mood to expand given the low prices of oil. The IEA expects crude output to slow considerably once approved expansions are complete.

Given the increasing production, oil supplies have grown over the last three years. Oil prices have dropped by 70 percent since 2014. As a result, gasoline prices have also declined. In the U.S., the U.S. Energy Information Center forecasts an average price of just $1.98 a gallon on average for the year. This is the lowest average price since 2004.

The IEA reported capital expenditures on exploration and production declined by 24 percent last year and was expected to drop another 17 percent this year. This will be the first decline of two years in a row since 1986. Alberta has been worst hit by the decline in oil prices.

Last year alone, Alberta lost 19,600 jobs, the most since 1982. Cold Lake is a prominent oil sands hub, where as much as 500,000 barrels a day is produced. Oil majors such as Cenovus, Imperial Oil, Husky Energy, and Canadian Natural Resources have operations in the area, which also features a Canadian Air Force base. The town has been hard hit by the postponement of many oil sands projects.

The mayor of Cold Lake, Craig Copeland, estimates 1,000 out of 5,000 working directly in the oil fields are out of work in the Lakeland area of 40,000 people. Copeland noted that there was a time from 2012-2014, when you were unable to get a room in Cold Lake, but now parking lots are empty. The decline hurts local business serving the oil industry. Construction workers from across Canada are sent home. Restaurants and hotels lose more and more business. Statscan reports that the unemployment rate in the Wood Buffalo/ Cold Lake are went from a high 8.6 percent in December to 9 percent in January this year. Even a year ago the rate was 5.4 percent. Copeland worries that because of the decline in oil prices, lack of pipeline capacity and climate-change policy, that the oil sands production will no longer grow. He is concerned that oil sands production could freeze at present levels causing the Cold Lake area to decline further.

A Petroleum Labour Market Information labour demand report for the area projects a 92 percent lower demand for onsite construction workers by 2018, or 20,000 fewer jobs compared to 2014. Operations jobs will improve modestly but still far below 2014 levels. While the decline in oil prices has hurt Alberta the most, Saskatchewan too has been hard hit as described in this article about Estevan billed as the Energy Capital of Saskatchewan, south of the actual capital Regina,