Big Oil Is on the Ropes
It’s no surprise that the boom of cleaner energy alternatives in automobiles has caused a stampede of buyers to the marketplace. Some have argued that the drop in oil prices at the end of last year was because of an increase in production, but some experts say that Big Oil is on a run for its money. Your St. George, UT, Area used car dealership explains.
Demand Is Flat
Probably the biggest problem for oil companies is that demand seems to be plateauing. Over the last ten years, demand in the United States for barrels of gas has actually gone down by about two million barrels per day. That’s 730 million barrels a year fewer. As demand goes down, so does price.
MPGs Are Up
Part of the reason for less demand over the last decade is the technology that makes today’s conventional engines more efficient. Since 2004, the average miles per gallon for cars in the US has risen from about 24 miles per gallon to over 31. That’s more than a 25% increase in efficiency.
EV and FCVs Are on the Move
Yet another reason for lower demand is the speed with which Electric Vehicles are hitting the market. With charging stations and infrastructure on the build and the cost of batteries dropping sharply, EVs are becoming more common. Hydrogen Fuel Cell Vehicles are also making their market debut and bypassing the pump completely.
Additives Are Too Costly
The oil companies had hoped that efficiency additives like ethanol would help them hold onto their numbers, but investment in those additives has dropped sharply since 2007. As a result, gas is just plain gas while investor dollars take other avenues.