Ralph Torrie: We will drive less
Managing Director, Trottier Energy Futures Project
Transportation fuels, mostly gasoline, account for more than 75 per cent of North American petroleum demand. But total vehicle miles of travel has stopped growing for the first time since the Second World War, the car itself is being reinvented and electricity is poised to make significant inroads into what was once a captive market for oil.
From 1950 to 2004, United States per capita vehicle travel grew from 3,000 to 10,000 miles per year. But beginning in 2005, it declined five years in a row, and is now lower than it has been since the 1990s. The decline is new, persistent and structural. What started several years before the 2008-2009 recession waill probably continue as the driving population continues to age, the Internet makes inroads on mobility and transit- and pedestrian-friendly urban neighbourhoods become a priority.
Mobility is no longer seen as an end in itself, but as a means for providing access. And a new generation of transportation and urban planners is seeking urban forms in which people can get that access with less mobility rather than more – especially with less auto-mobility.
At the same time, the global auto industry is on the verge of an “IBM/Apple moment,” a technology- and innovation-led disruption that will change everything: cars, the companies that make them and their respective supply chains, including fuel. Automobiles are among the least energy efficient technologies, with only about 15 per cent of the energy actually creating forward motion, and nearly all of that to move the vehicle, which weighs 10 to 20 times more than the passengers. Cars are also among the most underutilized of all capital investments, typically sitting idle 90 to 95 per cent of the time.
That’s all about to change. Just around the corner are cars that weigh only half a tonne, cost $1,000 to build, run on electricity, consume the equivalent of one-half a liter per 100 kilometers of conventional fuel and are integrated with the emerging electric grid, providing both storage capacity and peak supply.
These changes are being driven by forces that are only weakly influenced by energy commodity markets, but they will have far-reaching implications for those markets, and especially for oil producers. As goes the demand for petroleum transportation fuels, so goes the demand for petroleum.