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News > Environmental and ecological related reports > The economic performance of gasoline and diesel is in an "irreversible decline".

The economic performance of gasoline and diesel is in an "irreversible decline".

  • 2019-11-14

A new report claims that the economic performance of gasoline and diesel is in an "irreversible decline," demanding that production costs fall to $10-20 per barrel to effectively compete with renewable energy vehicles. The report concludes that over the next 25 years, gasoline cars will cost 6.2 to 7 times more to achieve the same mileage as electric vehicles. BNP Paribas Asset Management states that the economic situation for gasoline and diesel vehicles is in a "relentless and irreversible decline, with long-term impacts on policymakers and oil tycoons." The analysis focuses on how much energy can be generated per unit of capital input. Assuming a barrel of crude oil at $60, the report states that wind and solar-powered electric vehicles can generate 6 to 7 times more "energy at wheels" than gasoline, and 3 to 4 times more than diesel. For diesel to remain price-competitive in transportation, its long-term price must be between $17 and $19 per barrel, while gasoline needs to be between $9 and $10 per barrel. The report calls the findings a "flashing red light on the oil industry's dashboard," adding: "We believe oil majors should accelerate their investment in renewable energy and energy storage technologies, and/or increase dividends to shareholders to reduce the risk of duplication." "Our analysis makes the clear conclusion that if we were to rebuild the global energy system from scratch, economics alone would dictate that road transport infrastructure would be built on electric vehicles powered by wind and solar power." "And that's before we consider the other advantages that renewable energy and electric vehicles have over oil; namely, climate change and air pollution, the resulting public health benefits, the fact that electricity is easier to transport than oil, and the low and stable long-term prices of wind and solar power, while oil is notoriously volatile." Writing in the Financial Times, Mark Lewis, global head of sustainability research at BNP Paribas Asset Management, said: "Today the oil industry enjoys a huge advantage over wind and solar power. But it is a time-limited advantage for now." "The simple fact is that the oil industry has never faced a threat to its business model from renewable energy and electric vehicles. This is the first time that a competitive energy source has zero short-term marginal cost, is cleaner, and, once deployed at scale, could replace 40% of all oil demand." "Energy economics is now on the side of the angels." Source: edie (2019/08/06) Compiled by: PIDC

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