EV general discussion

[skookum]

I still think there is a long way to go.

Plus we haven't seen much from the oil giants yet. I very much doubt they are going to just lie down and except in 20-30 years time they are defunct.

Obviously one way or another the future isn't in oil. But when profits face a squeeze we will see all kinds of new ideas and technologies emerge as they transition to energy providers.

Sadly I don't think the UK has enough clout to pressure profits as demand for oil in developing countries continues to rise.

What we need to be careful of is we don't put ourselves at severe disadvantage using expensive restricted solutions.

I understand the environmental concern but the truth is the UK is just too small to have an impact on global emissions. Even if we turned to cavemen tomorrow the C02 saving would quickly be absorbed by increasing fossil fuel usage in the developing world.

 

[Jonnycoupe]

Petrol will get cheaper as demand drops.

The only thing which makes it expensive even now is the tax. That tax will start getgin shifted to EVs as they get more popular though...

then to meet all sorts of emission criteria, zones and pledges tax on combustion cars will rise at an even greater rate.

 

[jpaul]

you'll then get the UK equivalent of the gilet jaunes protests/riots (or, will we roll over) ... following their taxes on diesel ....
I'm not sure if they/French are yet adopting additional scrappage schemes.

 

[Amp34]

No it won't.

When does this ever happen? Conventional fuels are going to be targeted more and more heavily over time with tax, until they become almost unviable in the long term.

I guess eventually we'll migrate to a VED system of charging per mile.

It happens every time oil price drops.

Lower demand for will result in lower oil prices, which in turn will result in lower petrol prices.

Conversely lower demand at the pump and fewer fuel stations may mean less competition and higher profits for the stations.

As you say though, the overall decider will be tax placed on fuel. It’s going to be a major driver in EV adoption and will probably be the main way the UK government deals with the transition speed, rather than some hard cap in 2040 etc.

 

[Mercenary Keyboard Warrior]

well there are 3 factors in the future price of petrol
1) tax
2) the actual cost from the oil company
3) the costs of the petrol stations

tax will go up, probably really quickly once EVs are properly viable for most
the cost from the oil company could go down short term if they have excess capacity AND they decide to fight for the dwindling volume, medium to long it will go up faster and faster as it becomes more niche and lower volume
petrol stations costs, and distributors, (per litre) will go up as demand goes down, they will start to close as having so many becomes less viable, and those that stay will have to start charging more per litre

So there is a possible very short term window of reduced cost, but the real impact is going to be up, and potentially a lot and quickly

 

[Amp34]

Oil companies don’t have a hand in oil price. It’s market driven.

This also depends on what you consider short term and long term. Short term for me will be the next 20-30 years, longer term is after that.

I really don’t see it going up quickly solely due to market forces. You have to remember that most of the cost of production of oil is up front costs (Capex). Once the wells and development is complete the operating costs (Opex) are relatively minimal (generally a few $ a barrel). Reduced demand and price will reduce the amount of exploration and development, but those wells already producing may well be doing so for the next few decades. As long as prices don’t go below $10-20 a barrel most companies will still continue selling that oil. The reduced exploration/development won’t affect the market as much due to a reduction in demand. If it does, oil prices will rise and new wells will be put online.

Tax is going to be the main driver of price.

Demand for petrol is going to be high for at least the next few decades. Even when sales of BEVs reach 50%+ it’s still going to take a decade or two for the majority of cars on the road to be BEV.

 

[Fusion]

I wonder whether the decline of oil demand in highly developed countries will be offset by rising demand in developing countries? Would be interesting to crunch the numbers (extrapolated from current trends) and see.

 

[Dis86]

I still think there is a long way to go.

Plus we haven't seen much from the oil giants yet. I very much doubt they are going to just lie down and except in 20-30 years time they are defunct.

I think you need to look harder then...

 

[Amp34]

I wonder whether the decline of oil demand in highly developed countries will be offset by rising demand in developing countries? Would be interesting to crunch the numbers (extrapolated from current trends) and see.

That’s currently happening, and there will certainly be a lag in developing countries oil use. However they will also transition towards BEVs so I doubt they would make up the difference. That said, with population increases any saving in the developed world may well be used up by the developing world, even if they move away from oil at the same rate.

Unfortunately, the solution to this problem is heavily population related, not just by moving towards BEVs.

 

[Mercenary Keyboard Warrior]

Oil companies don’t have a hand in oil price. It’s market driven.

This also depends on what you consider short term and long term. Short term for me will be the next 20-30 years, longer term is after that.

I really don’t see it going up quickly solely due to market forces. You have to remember that most of the cost of production of oil is up front costs (Capex). Once the wells and development is complete the operating costs (Opex) are relatively minimal (generally a few $ a barrel). Reduced demand and price will reduce the amount of exploration and development, but those wells already producing may well be doing so for the next few decades. As long as prices don’t go below $10-20 a barrel most companies will still continue selling that oil. The reduced exploration/development won’t affect the market as much due to a reduction in demand. If it does, oil prices will rise and new wells will be put online.

Tax is going to be the main driver of price.

Demand for petrol is going to be high for at least the next few decades. Even when sales of BEVs reach 50%+ it’s still going to take a decade or two for the majority of cars on the road to be BEV.

Of course oil companies influence the price, they control the supply. They arent that good at doing it as they tend to not do what they say, and some dont form part of the agreements, but in general they try to stabilise the oil price (crude) by manipulating supply to match demand.

You have to think of the lifecycle. Its not just the crude its the whole supply chain. If demand starts to fall people will stop building tankers as they may not have a full life, things like that start to come into play.

The factors are different when your talking about the refined product which is what I was talking about as opposed to the crude product. The reason people complain a lot when the end product doesn't fall anywhere near the amount they expect when they hear about the price of a barrel falling.
The thing is teh industry is incrdibly efficent reight now as it has a massive volume, as that starts to drop the efficiency will start to drop, with either distances increasing or other factors coming into play, it will start small but will slowly increase at an ever increasing rate as teh efficiencies of scale a slowly stripped away.

 

[Jonnycoupe]

You know the countries with the oil in the ground in actually own the oil, the OPEC nations for example...

 

[Simon]

Have a read of this.

https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-fuel/oil.html

 

[Psycho Sonny]

Petrol will get cheaper as demand drops.

The only thing which makes it expensive even now is the tax. That tax will start getgin shifted to EVs as they get more popular though...

How will the tax be shifted to EV's?

If you tax the vehicles themselves you hurt the car industry.

If you tax the electricity you hurt everyone including those that don't own vehicles.

So please explain

 

[Haggisman]

How will the tax be shifted to EV's?

If you tax the vehicles themselves you hurt the car industry.

If you tax the electricity you hurt everyone including those that don't own vehicles.

So please explain

I would guess either some kind of per mile tax based on a network of Anpr, or via an actual onboard system (since let's face it, all EVs seem to have some kind of connectivity already), or against the vehicle as we currently do via VED

 

[McPhee]

The general expectation seems to be that at some point people there will be a tax per mile driven.

Fuel duty is expected to raise £28.4bn this year. 45.5 million people hold driving licenses in the UK, and drive an average 7,900 miles per year. So roughly 360bn miles are driven in the UK annually. If you taxed each mile at an average rate (it could vary for different classifications of vehicle) of 7.9p, you'd be able to use this tax to replace lost fuel duty income.

However, I would be very surprised if petrol and diesel cars aren't hit with this in addition to fuel duty (assuming it happens).

 

[Amp34]

Of course oil companies influence the price, they control the supply. They arent that good at doing it as they tend to not do what they say, and some dont form part of the agreements, but in general they try to stabilise the oil price (crude) by manipulating supply to match demand.

You have to think of the lifecycle. Its not just the crude its the whole supply chain. If demand starts to fall people will stop building tankers as they may not have a full life, things like that start to come into play.

The factors are different when your talking about the refined product which is what I was talking about as opposed to the crude product. The reason people complain a lot when the end product doesn't fall anywhere near the amount they expect when they hear about the price of a barrel falling.
The thing is teh industry is incrdibly efficent reight now as it has a massive volume, as that starts to drop the efficiency will start to drop, with either distances increasing or other factors coming into play, it will start small but will slowly increase at an ever increasing rate as teh efficiencies of scale a slowly stripped away.

Ok, I’ll clarify. They have no direct influence of the price due to market forces but that’s about it. As I already said, reduced prices reduce exp and dev and general investment, increased prices increase investment. That’s very different to controlling price. OPEC used to be able to do that, but with the glut of oil from shale in the US it’s broadly irrelevant now (as seen by the last few years).

Contrary to the “big oil” claims by some the industry actually consists of thousands of different companies all competing against each other. The idea companies will prop up oil price is junk, as proven by the last few years, where US shale producers have kept the oil price consistently low due to the lack of coordination between the hundreds of companies involved.

I agree, the refined products are different, but again there isn’t just one refinery controlled by one organization. There are hundreds controlled by dozens of companies. Agreed about the efficiencies of scale, but the disagreement here is the the timeframe. Is going to be decades, because most of the required infrastructure is already set up and is continuing to be installed. Companies will run that infrastructure for as long as possible to get as much of their investment back as they can.

Pipelines and platforms last for 50+ years, wells can go 30+ years, tankers and refineries a similar length of time etc etc. They’re not all going to stop at the same time, and if they do and price spikes companies will take advantage and build/develop more (unless there is government intervention).

As already said, the setup capex is is the main cost in oil and gas, it’s not the opex, which is where your argument falls down. The gradual reduction in producing wells, tankers and refineries won’t cause prices to spike. Go up eventually, sure, but not in the next couple of decades (or more) and unlikely after that too. Taxation is going to be the main price driver.

 

[Amp34]

I would guess either some kind of per mile tax based on a network of Anpr, or via an actual onboard system (since let's face it, all EVs seem to have some kind of connectivity already), or against the vehicle as we currently do via VED

Something a simple as mileage check at each MOT.

Yes, a small minority may try and fiddle it, but they do already (red diesel etc).

 

[Domi]

The general expectation seems to be that at some point people there will be a tax per mile driven.

However, I would be very surprised if petrol and diesel cars aren't hit with this in addition to fuel duty (assuming it happens).

My feeling is that this is the most likely outcome as essentially double taxing petrol/diesel cars is an exceptionally easy way of forcing them off the road faster.

It also allows for easy manipulation of the tax revenues and the actual vehicle market (price per mile would be different depending on type of fuel and will shift over time).

My guess is the battery EV will have a short golden period of 5 to 10 years starting in about another 2 or 3 years time where they are almost as cheap to build and buy as an ICE with almost negligible fuel costs and tax. However
as they slowly become the mainstream the tax will come back with a vengeance.

 

[Nasher]

It would be much harder to track old petrol cars and tax them per mile though. They aren't connected to the outside world like most of the EVs

 

[Jonnycoupe]

It would be much harder to track old petrol cars and tax them per mile though. They aren't connected to the outside world like most of the EVs

you can still tax the fuel on those ones...