Electric Cars and the Oil Collapse

As we are all aware the oil economy will come to an end. Whether we like it or not, there is a finite amount of time there will be oil so the best thing we can do now is acknowledge our status on this sinking ship and plan accordingly. We may not know the details of how or when this is going to take place but it will take place, of this much we are sure.

One variable we are now certain will play a role in this process of petrol obsolesce will the advent of the consumer electric vehicle. When it comes to the electric car we see this is no longer a niche impractical, and with cars like the Nissan Leaf, and the Tesla Model 3 more and more auto makers are getting into the economy electric car and making some really compelling cars. ffff

This is refreshing because it has long been held that the oil industry would dry up when it literally dried up and all the wells were tapped in the world. This no longer seems like an inevitability and it may be a matter of time.

The oil industry is extremely vulnerable to price fluctuations than you may think or be aware of. For instance, even a short term dip in prices like the one currently going on across the US send a shock wave in the market that reverberates through the whole industry. We have seen that in North Dakota alone, as the oil prices cratered, so too did their profit margins and now the the oil boom is largely being seen as an oil bust. States are also speeding up this process with the passage of favorable electric legislation. 

What makes this significant is the fact that the oil is still there, but no one wants to go and get it. What most people may not know is that the getting of Crude oil and transforming it into gasoline or diesel that is car ready is an extremely expensive and timely process. In order to create the necessary investiture to do so requires a huge initial investment, I’m talking hundreds of millions.  This is because if they were to get it out and to market they would do a little better than break even. Frankly this is not a tempting offer for most investors. Especially when you calculate the cost of liability and insurance associated to this very dangerous and environmentally impact industry.

Oseberg AWith the price of electric cars becoming slashed every day we can see that much of the oil with out infrastructure already surrounding it will likely stay in the ground. Tesla Motors is about to put their gigafactory to use, which is going to exceed the lithium ion battery output of the entire world. So we can imagine that this will result in not only the cheapest electric cars on the planet, but the cheapest cars on the planet period. We are not sure what this will mean for the stability of the regions where their economy is based on oil but we are pretty certain it won’t be pretty.

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