The Economist’s August cover story titled “Yesterday’s Fuel” showing an aging dinosaur could be symbolic of oil’s slow death?
Citibank argues production will fall to 92 million barrels per day (mb/d) despite rising population in China and India, due to a number of reasons.
Gas is slowly replacing oil in power plants, chemical plants, ships and heating systems. Moreover, many the petrol and gas vehicles are now more fuel efficient (using less oil) and buttressed by robust growth in electric vehicles and hybrid cars (run by natural gas/hydrogen cells).
China is shifting transport vehicles to hybrids; USA is developing shale gas – the next “Saudi Arabia” of natural gas – to get out of the politics of oil in the Middle East. Even the Middle East’s UAE has developed nuclear power plants to replace oil.
Twenty percent of American buses and over fifty percent of new garbage trucks now travel on natural gas. Most of the “supermajors” in oil now cultivate 40% of their business based on gas with the two biggest Exxon and Shell over fifty percent in gas.
The “supermajors” oil reserves had also fallen due to poor replacement ratio and are beaten in the oil exploration games by the so-called National Oil Companies (NOCs) led by the World’s three biggest oil producers as: Saudi Aramco (12.7 mb/d), Gaapron (Russia) (8.4 mb/d) and BIOC (Iran) (6.1 mb/d) displacing Exxon at fourth (Mobil) (4.1 mb/d).
In short, the “supermajors” are producing “less and less oil in a more and more expensive way”.
Compressed Natural Gas (CNG) is considered more environmentally clean and increases the life of the vehicle, aside from being cheaper and its utilization more cost efficient.
Since the 1990’s, there has been a marked attraction to CNG – powered vehicles. As of 2010, this was the list of top CNG – vehicle – using countries: Pakistan (2.7 million), Iran (2.6 m), Argentina (1.9 m), Brazil (1.7 m), India (1.1 m), Italy (730,000), China (450,000) and Columbia (340,000).
The writing on the wall is clear.
In Singapore, public transport buses, taxis, delivery trucks and cars are turning CNG. In Myanmar, a 2005 law mandated all public transport to convert to CNG. In Malaysia, Petronas now operates 200 CNG refueling stations because since the late 1990s taxi cabs and limousines have been CNG based.
China is serious into the same and, in fact, operates two major gas pipelines for better distribution reach. Since 2004, all Indian city buses and auto rickshaws run on CNG.
Europe’s major car producers are producing Bi-Fuel (Petrol and CNG) vehicle like: Fiat, Opel, Volkswagen, Citroen, Renault and Mercedes. By 2020, Germany will have 2 million CNG vehicles while Italy and Sweden have 800 and 90 CNG refueling stations, respectively.
Canada, a known producer of natural gas, therefore, has thousands of truck, buses and taxi engines that are CNG – fired. At least 34 states in America already have CNG stations.
Is oil losing its luster, now?
Even in the Philippines, our power needs is only 36.4 percent dependent on oil. Our other diverse sources are geothermal: 21 percent; coal: seventeen percent; biomass: thirteen percent; natural gas: seven percent, and hydro: five percent.
Twenty percent of the controversial Malampaya operations in Palawan is actually capable of producing natural gas. The problem is the infrastructure needed to make it operational at least in Metro Manila and Luzon is daunting: US$5 billion (roughly P215 billion) for a massive gas pipeline and several mother-daughter stations. Thus, RP is stuck with less than 60 CNG run experimental public buses on the road.
But the intermediate future of CNG looks bright, nonetheless.
Aside from that, the first phase of 800,000 new electric motorcycles in RP is now on stream en route to completely phase out the 5 million motorcycles (mostly tricycles) here.
If PNOY makes good his first SONA speech that by the end of his term, all public vehicles will be electicity – run, that’s a lot of market taken away from oil.
Quo vadis, oil?
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