simplest and most likely answer is... the gas and diesel engine will power transportation for many generations to come.
Yes, oil will continue to dominate as the fuel for transportation around the world. But remember, oil prices can spike at any time. Geopolitical events are inevitable. They have sparked oil booms and busts in the past and will in the future. The new unconventional paradigm is uncharted territory. This is the first supercycle downturn dominated by unconventional production… During the first 100 years of the oil-driven world, all production was from conventional sources. Periods of oversupply took years to clear since the production-decline rates were shallow. As prices fell and drilling slowed, wells continued to produce at levels that kept oversupply high for many years. But today… we are looking at 85%-90% production declines in the first three years of an unconventional well. Wells created by horizontal drilling and fracking are a new paradigm. In a world driven by production from unconventional wells, when prices decline and drilling slows, the supply overhang will evaporate rapidly. OPEC’s – and specifically Saudi Arabia’s – spare capacity has dwindled. The U.S. has become the world’s swing producer, but it is an unconventional producer. The markets appear to be unaware of this new dynamic. The markets are treating the current oversupply as if we were living in 1986. But everything has changed since 1986. Technology and innovation will, at times, drive prices lower. So too will shale and tight-sand production and new discoveries in the Gulf of Mexico. But only for a short time.
Demand will dominate the next supercycle.
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