As drone attacks on Saudi oil production spike prices above $60 a barrel, a new investor report from French financial giant BNP Paribas notes the market price of oil will have to fall below $20 a barrel within the next decade, or the industry risks losing its entire ground transport customer base:
“The oil industry has never before in its history faced the kind of threat that renewable electricity in tandem with electric vehicles poses to its business model,” wrote Mark Lewis, global head of sustainability research at the bank’s asset management division. He described his estimates as a “death toll for (gasoline).”
“If you can’t produce oil below $20 a barrel within 10 years, you’re going to have a big problem selling oil as a transportation fuel,” he said.
That could prove to be a serious problem for Canada’s oilsands, where the cost of producing a barrel of oil from a new project is estimated at around $40.
Meanwhile, renewable energy costs continue to plunge. In the case of global solar electricity, the price has, so far, fallen 81% from $400 per megawatt-hour in 2010 to $75 in 2019.
This means presently, the same capital outlay for new wind and solar-energy projects along with electric vehicles will produce 6-7x more useful energy at the wheels than oil at 60/barrel for gasoline-powered light-duty vehicles, and 3x – 4x more than for light-duty vehicles running on diesel. It also suggests that the long-term break-even oil price for gasoline to remain competitive as a source of mobility is USD 9 – 10/barrel and for diesel USD 17 – 19/barrel. See Wells, wires and wheels for the full report.
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