More net oil refinery capacity worldwide is not likely to be built and there has even been capacity loss due to Covid.
#MASS CHANGE EASING WITH HYPE PRO DRIVERS#
There might be some changes, a renewed deal with Iran could add to world supply, but crude oil production will likely only rise marginally, OPEC likely cannot increase production beyond the mid 2022 peak because they don’t have the extra supply to offer, and refining of oil is another bottleneck - the world has not seen refinery capacity keep up with demand, which is actually the lion’s share of the 2022 price spikes as oil only rose to about $120, which would have been about half of the prices drivers were paying at the pumps. Next year we will likely be right back where we started. The ~7-10% of world supply that Russia was supplying is not fully offset. For the moment, oil (and gasoline/diesel) prices have fallen from their early-mid 2022 highs, but the fundamentals have not changed. This was a conscious decision by major oil companies. Oil exploration did not rise much in 2022. And of course traditionally lower demand over an entire year leads to even less exploration for new oil, which causes a supply crunch and higher prices a few years later. That said, oil prices being cyclical work both for and against it, the current drop is due to the end of the 2022 driving season (oil demand is always lower in the winter months), and demand destruction from record high fuel prices.
#MASS CHANGE EASING WITH HYPE PRO FREE#
At parity or less, ICE is dead unless oil becomes virtually free long term irrespective of climate change concerns. Once it is within say 10-20%, ICE demand drops even at low oil prices because of the huge electric fuel savings. But as EV prices come down through learning curves they will sooner or later get close to price parity with ICE. It would still be decent, as it has been growing well before 2022 so probably still enough to absorb current supply and slowly growing, but it would not be as supercharged as it was this summer and still is. Both learning curves accelerating will lower prices.įrankly, if oil dropped to $40 a barrel today, EV demand would fall a great deal. As more minerals come online, prices and manufacturing costs are reduced, and as factories are built more EVs can be made. So to scale EVs you need the minerals and you need the automakers to do their jobs of building automobiles (and dealing with chip shortages).Īll that said, oil prices are cyclical as we are now seeing, but then again EV costs will also fall. These minerals are not all that rare, but increasing production always has a lag time. Of course to scale EV production mineral production will have to be scaled - lithium, cobalt, nickel, etc. We also can’t forget Tesla, BYD, and so many more. GM being an excellent example of the many new models on the drawing board. 2022 has seen some of them come to fruition (Ford Lightning being a prominent example) and more are coming. Frankly, 2021 was the breakout year, production plans were made, and production started scaling. And this is despite the recent cooling in oil prices, which are probably temporary, more on that below.įrankly there are a few moving parts here, right now EVs are supply constrained and it takes time to scale mass production, but companies have been catching on to the new paradigm of electrification.
It has supercharged EV demand, which is ultimately due to the economics of high oil prices, yet does help the climate. The oil price shock of 2022 has driven a great deal of new interest in EVs, which has just served to help answer the question of what happens to EV adoption rates when oil and gas prices fluctuate.
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