Sami Grover on Treehugger.com speculates that the oil industry is more vulnerable than is generally acknowledged, based on an analogy of how slashing demand for coal by 10% reduced the industry’s credit-worthiness:
Headlines like these are coming so thick and fast these days that we have to pick and choose which ones we write about. Individually, they are all just a blip in the global picture of oil demand, but collectively it won’t be long before they really start to add up. And when they do start to add up, it won’t take too much cut in demand to radically reshape the future prospects for oil.
Of course, all of the above stories are about adoption of existing technologies at current pricing. But what if prices were to fall further, and faster, than they have so far? Wards Auto is reporting on conversations with auto industry insiders who say electric vehicle batteries should be under $100 per kilowatt hour by 2020, and $80 not long after that. That’s a figure well below the $125 per kilowatt hour that the Department of Energy set in 2010 as a target for cost parity with internal combustion engines.
And once we reach cost parity, there’s little that can be done by dropping tax credits or removing other incentives, to slow the march to electrification.
This sort of ties in with my thought that Americans are not entirely of the subspecies homo economicus – that is, we are not always controlled by the most economical choice, but rather make choices based on other criteria.
Abstractly speaking, the use of economics to guide choice is a common proxy for future survival prospects, but they are only a proxy. Recognition of the importance of the environment, or of climate change, or any of a number of allied topics, in our personal futures, or those of our children, can lead to discarding economics as the primary mode of making a decision in favor of a more direct decision designed to preserve what is perceived as important for future generations.
As this spreads through a substantial, if still minor, part of the American population, I expect more electric cars to be sold, along with other environmentally friendly travel choices, even in the face of higher prices (compared to fossil fuel based choices) for those options. Economics will continue to play a role, especially for those members of the population who remain in the homo economicus group, and an overwhelming role for some, especially those of very limited resources or whose education has been such as to make economics the be-all and end-all of life – but for others who’ve learned there’s more than one way to view the world, they’ll be the ones who discard economics in favor of a more full view of the future.
