10 Updates

Oil Price 'Deniers' Distort the Case for Alternatives

May 9 2014, 4:00pm CDT | by

Predicting the price of oil is as difficult as predicting the Oscar winners before the movies are even made (unless you’re talking Meryl Streep).  The global price of crude oil and gasoline is...

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11 weeks ago

Oil Price 'Deniers' Distort the Case for Alternatives

May 9 2014, 4:00pm CDT | by

Predicting the price of oil is as difficult as predicting the Oscar winners before the movies are even made (unless you’re talking Meryl Streep).  The global price of crude oil and gasoline is contingent on many factors that have nothing to do with the actual costs of extracting it from the ground, such as geopolitical stability, global and regional economic growth (and its impact on fuel consumption), and the availability of competitive alternatives.

As of April 16, the global price for crude oil was near $105 per barrel, yet some financial institutions, such as Citibank, are now predicting that price of crude oil will actually start to decline  and fall to $75 per barrel in 2017.

However, historical data suggests that prices will continue to climb.  The price of crude oil per barrel has grown by a substantial average of 12.9% annually since 1998 (when it was less than $11 per barrel), while correspondingly, in the United States, the retail price of gasoline has grown from $1.51 per gallon to $3.53 per gallon, or 5.8% annually .

One Way Up

Demand for gasoline for transportation is expected to go down in the United States in future years, thanks to the gains in vehicle fuel efficiency, which, in theory, could reduce the price at the pump.  However, globally, demand for oil will increase by 12.2% between 2015 and 2025, according to OPEC .  Since crude oil is sold on the global market, this will likely increase the price of gasoline in the United States.  Also, while there are new reserves of crude in North America, much of it from the oil sands, the higher cost of extraction  indicates that prices won’t likely be going down.

As the chart below illustrates, Navigant Research’s latest Electric Vehicle Market Forecast  report estimates that the price of gasoline in the United States will go up by 2.9% per year through 2022.  If the historical trend from the preceding 16 years is carried forward, by 2022, gas would be $6.18 per gallon.  The World Bank (PDF ) is predicting that despite increasing global demand (and the lessons of history), the price of crude oil will, however, be going down.

Gasoline and Crude Oil Spot Market Prices, United States: 2014-2022

(Source: Navigant Research, World Bank)

If you ignore history, and assume that the price of gasoline will go down or stay the same, then you may be significantly underestimating the potential market for alternative fuel vehicles such as electric vehicles (EVs) or natural gas vehicles (NGVs).   While some consumers select EVs for other benefits (excellent performance, reduced emissions, etc.), most want the fuel savings to provide a positive return on investment.  If gasoline permanently goes above $4 or $5 per gallon, then the case for investing in EVs or NGVs gets correspondingly stronger.  Based on Navigant Research’s assumption of slow but steady increases in the cost of petroleum fuel, Navigant Research’s Electric Vehicle Batteries  report forecasts that U.S. plug-in vehicle sales will surpass 470,000 annually by 2022.

Those who are steadfastly against EVs , or who deny that petroleum-based fuel is likely to become more expensive, have a distorted view of the future of transportation that hinders businesses developing alternatives to a petroleum-dependent world.

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robbers. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat today. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern state ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 millio ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industr ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involv ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan B ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Ki ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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