panies that require more costly oil to be profitable. Lower oil prices have forced many to stop production.
According to BloomburgNew Energy Finance (BNEF) clean energy peaked in 2005 with nearly $350 billion in invest- ment. As fuel prices dropped biofuels were hit hard from an investment perspective and battery operated car sales also fell 4.1 percent. It was no coincidence fuel demand rose 5 percent reversing a 6-year decline and people were once again opting for gas guzzlers and more driving. Bloomburg New Energy makes a bold prediction that electric car sales will sky-rocket 44 percent this year reaching almost 650,000 units. Given that companies such as Tesla continue to revolutionize battery technology those predictions are much more believable. However, that won’t even register on OPEC’s radar because it will displace only a fraction of 1 percent of global oil demand. Michael Liebreich, founder of the Lon- don-based research group, says the fact consum- ers will have better access to greener alternatives such as ethanol will help investors return. BNEF is predicting that by 2040 a quarter of cars will be electric. They noted that everyone from Toyota to GM are joining Elon Musk’s, Tesla Motors Inc. in building new models to support the movement. Volkswagen shocked everyone at the recent Paris auto show with a prototype that they say will travel twice the distance on a single change as industry pioneer Tesla’s new Model 3 sedan. The U.S. is riding a rollercoaster with oil prices and auto- mobiles. As oil rises the demand for things like electric cars takes on a new urgency. Outside the U.S. govern- ments have controlled the electric car industry with signif- icant subsidies and as we see oil prices climb this practice will likely gain even more momentum in those areas. The underpinning of electric car sales with generous sub- sidies from governments, especially in Europe, makes oil prices far less connected to progress. Varro states “there’s a very weak relationship between electric cars and the oil price outside the U.S.” Manufacturing leaders such as Renault SA have traded their reliance on oil prices for a similar connection to the level of government subsidies which is the true driver of battery operated cars in Europe. OPEC can do whatever they want with oil prices and it has very little impact on demand for Renault’s products. Carlos Ghosn is the leader of both Renault and Nissan. Renault has the number one selling electric car and the LEAF from Nissan is number two. Ghosn said the price of oil is “unpredictable, it’s uncontrollable.” He did note there is one constant across the global industry and shared that “what is predictable is that emissions con- straints are going to become stricter and stricter.” Ghosn said they are betting that for the long term electric cars will be the solution.
By Jamie Barrie
O rganization of the Petroleum Exporting Countries (OPEC) is forced to blink in the standoff on oil pro- duction and the makers of electric cars rejoice with a collective sigh of relief. The oil cartel has been permit- ting the market to set the price of oil for well over two years and in doing so lower prices have tilted the deck away from green transportation options. Gasoline prices fell an average of 5.8 percent last year across the U.S. as demand for more fuel rose for the first time in years. According to the International Energy Agency that was bad news for alternatives to carbon fuels. Now that OPEC has a cap on production it means we may have witnessed the end of decreasing fuel prices which will stabilize the business model for alternatives such as biofuels and electric cars. Laszlo Varro is the chief economist for IEA the Paris- based energy watchdog and he stated “a higher oil price increases competitiveness of electric cars.” His wish is coming true as prices have stabilized on the markets in recent days including an immediate 5 percent jump when the cap was announced. The price of oil has a huge psychological impact on con- sumers. While oil producers and green alternative com- panies do not compete directly, more costly energy prices drive growth in public demand for other options. Saudi Arabia’s willingness to support production caps is a drastic reversal of their previous stance that the market should be allowed to determine price. Many experts felt the position was more self-serving than that. A drive towards energy independence in the west is being driven by smaller com-
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