Oil output (crude plus condensate or C+C) is likely to peak by 2020 (or may have peaked already in 2015 or 2016). Electric Vehicles (EVs) and Plugin hybrid electric vehicles (PHEVs) may allow about 40 percent of current oil consumption to be substituted with electricity, under the simplifying assumption that the use of oil based fuels in PHEVs is minimal due to high oil prices. It is assumed here that high oil prices are the likely result of the decline in oil output. I have modified my medium oil scenario with slightly higher extraction rates.
An important question is how quickly Plug-in vehicle sales can be ramped up. Data from Inside EVs for Worldwide plug in vehicle sales from 2014 to 2016 shows an average growth rate of 44 percent per year in annual sales. I create two scenarios one based on sales growth of personal computers (PC) from 1980 to 2009 (low scenario) and sales growth of smart phones (SP) from 2001 to 2015 (high scenario), my expectation is that a realistic scenario would be between these two scenarios.
PC sales grew at 27 percent/year from 1980-1989, 23 percent/year from 1990-1999, and 12 percent/year from 2000-2009. SP sales grew at 67 percent/year from 2001-2007 and 36 percent/year from 2008-2015. The high scenario growth rates are lower than the smart phone growth rates at 47 percent/year for 7 years and 20 percent for 8 years and falls to 3.2 percent per year until most internal combustion engine vehicles (ICEV) are replaced. The low scenario is nearly identical to the PC sales growth rates from 1980-2009, with the final decade being slightly lower (11 percent).
In this analysis, I ignore fuel used by commercial vehicles (trucks and buses), ships, and aircraft. In the U.S., about 55 barrels of gasoline are produced for every 100 barrels of C+C input into refineries, I have assumed for the World about 40 percent of C+C output is consumed by personal vehicle transportation. The share is lower in the developing World relative to the OECD, but I do not have good data so 40 percent is a rough estimate.
The growth in commercial vehicle fuel use will slow as rail is used more for transport and as oil becomes scarce some rail will be electrified, also the truck fleet will become more efficient as oil prices increase and trucks can slow down to save fuel as oil prices rise. In 2025 (high scenario) to 2035 (low scenario) less fuel will be needed for personal transportation and there may be adequate fuel for commercial vehicles, though cheaper batteries and higher rail use may lead to very low demand for oil as trucks may be mostly used for the last few miles from the rail terminal and batteries might suffice for that use.
Oil prices can only fall so far before supply is affected by lack of profits. At some point after 2040 oil supply may be limited by oil demand. Note that both commercial vehicles and personal vehicles may double in number by 2035 (assuming no major recession or depression), if commercial vehicles used roughly the same amount of fuel as personal vehicles worldwide in 2016, a rapid increase in efficiency will be needed in the commercial transport sector as oil output declines, especially from 2020 to 2035 (or 2025 in the optimistic case).
2006-2014 average growth rate in number of registered personal vehicles was 3.6 percent/year.
Low Scenario
The 3.6 percent growth rate continues until 2020 and then decreases by 0.1 percent each year until 2048 when the growth rate has fallen to 1 percent per year and it remains 1 percent until 2060. Slower population growth, development of autonomous vehicles, more densely populated cities, and higher oil prices is assumed to lead to slower growth in the personal vehicle fleet over time.
I have assumed for simplicity that after 16 years a vehicle is scrapped so that from 2016 to 2032 the registered plugin vehicles are equal to cumulative sales and for every year from 2033-2060 the cumulative sales from 16 years earlier is deducted from current cumulative sales to arrive at registered plugin vehicles.
I assume no fuel use by PHEVs as a simplification, as oil prices rise I expect the share of PHEVs will fall relative to EVs and this assumption may become more accurate. The MPG (miles per gallon) of the ICE vehicle fleet (in U.S. gallons) can be calculated using the assumption above and assuming the average personal vehicle travels 12,000 miles per year and 40 percent of total C+C output is the number of barrels of fuel used by personal vehicles. There are 42 U.S. gallons per barrel.
Note that I have assumed no changes in behavior as far as combining trips, slowing down, carpooling, less driving, or increased use of public transportation. All of these changes in behavior in response to high oil prices are likely as oil output declines and would reduce the miles travelled per vehicle and reduce the overall average MPG. Note that a Toyota Camry hybrid averages about 40 MPG and 50 MPG is a fairly common average fuel efficiency in a Toyota Prius (non-plugin).
High Scenario
Note that although MPG levels off in this scenario earlier than the low scenario, this is simply because I assume the share of oil used by personal vehicles is fixed. In reality, oil is likely to remain scarce due to the growth of commercial land transport as well as shipping by sea, and growth in air travel and shipping. Thus, the MPG chart from the “low scenario” is likely to be more realistic than the MPG shown above from the high scenario.
The reality is likely to fall somewhere between these two scenarios in my view. If we are closer to the low plug-in vehicle (EVs and PHEVs) growth scenario, then constrained oil supply may lead to severe disruption as oil prices spike due to competition between various uses for oil (personal transport, trucking, rail, sea shipping, and airline travel and transport) and a depression is likely between 2025 and 2035. If the higher scenario is closer to reality the chances are better that a severe recession might be avoided.
Dennis Coyne
