Welcome to 'All of the Above' Transportation

by Ramanan Krishnamoorti (University of Houston/Houston Chronicle) ... It won't happen overnight. Barriers remain, from range anxiety with full electric vehicles to an already overburdened and aging electric grid. Affordable grid-scale energy storage remains elusive.

Transportation makes up roughly a third of energy demand in the U.S. and is almost entirely based on crude oil. Efforts over the past 15 years have tried to incorporate ethanol, biodiesel, hydrogen and natural gas into the transportation ecosystem, but each has its own problems – corn-based ethanol has driven up food prices, for example – and penetration remains low.

That doesn't mean the immediate end of the internal combustion engine. All electric vehicles will be a niche market for the foreseeable future, even as market share grows. Growth, especially when viewed globally, will be uneven, with gasoline and diesel vehicles shrinking more quickly in some regions of the world, even eliminated entirely.

• Without big jumps in energy efficiency and conservation, an all electric fleet will require doubling existing base load electricity generation in the United States. That's more complicated than it might seem. Nuclear appears stagnant or in decline, and coal, even coupled with carbon capture systems, faces environmental, cost and technological barriers. Expanding natural gas-fired generation will require a multi-trillion dollar infrastructure expansion in the U.S., and would require more exports to countries without domestic natural gas supplies.

• Grid-scale storage will allow a mix of distributed and intermittent sources – think solar and wind, which aren't available 24/7 – to power this emerging market, but that too will require investment and research.

• Until the energy density and life-cycle cost of replacement fuels such as natural gas, hydrogen and all-electric vehicles can match that of gasoline and diesel, fossil fuels will retain a price advantage. Booming production in Texas' Permian Basin suggests supply in the U. S. won't be an issue.

• Regulatory policy must be updated to accommodate new grid and microgrid networks.
These challenges do nothing to undermine the significance of the push for electric motors and cars to augment and replace the traditional internal combustion engine. Change is coming, and it won't be stopped just because questions involving regulatory policy, government subsidies and infrastructure projects remain unanswered. READ MORE

Excerpt from OilPrice.com: So, we are living in an energy world of contradictions. The clutch is completely disengaged between the consumer trends we see today (growing use of cheap oil and sparse EV penetration), and conjectures about tomorrow (the imminent demise of oil).

So what’s going to happen over the next few years? Here are two possible outcomes as a result of greater EV sales and headline momentum:

1. A tightening of capital will clean out oil’s inefficient producers. The progressive wing of the industry, mostly located in North America, will innovate even more aggressively to lower their costs. Technology leaders within the business will do very well and be battle hardened to handle any potential demand moderation in the 2020s. Oil prices will stay low with ample supply, making the consumer decision to switch to EVs more difficult; or,

2. Shrinking capital investment into the industry will result in oil supply constraints. Declining production will drive the price of oil higher again, after bloated inventories clear in the next couple of years. The advent of higher oil prices will be a catalyst for faster EV adoption, around the same time that more model diversity becomes available. Low-cost oil producers that are aggressively innovating today will benefit from their call option on the higher prices.

Ironically, progressive oil companies will do well under both scenarios. READ MORE