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> If massive amounts of people move to electric vehicles gas prices will fall. This will make combustion vehicles more attractive. If gas prices fall any lower
by mywittyname 6y ago
> If massive amounts of people move to electric vehicles gas prices will fall. This will make combustion vehicles more attractive.
If gas prices fall any lower due to demand, then production capacity will probably disappear permanently, leading to shortages and a huge, long-term rise in price. Oil pumps aren't like taps that can be shut off and powered back on demand. They basically need to be operated continuously because restarting them is pretty expensive. And storing excess oil is also pretty expensive.
We also have to consider that low gas prices are due to volume. Refinement is still costly, and if the volume of gas falls by a large amount, that refinement costs gets distributed among the remaining volume. Refinement capacity is even more expensive to bring back online than pumps.
I predict gasoline production will death-spiral at some point. Gas stations will be culled as prices spike and volumes drop. I would expect this to happen in a relatively short timespan, over maybe 1-2 years for the bulk of it, then a long tail of persistent decline.
- davidhbolton 6y agoI think the petrochemical industry might disagree with you there. Sure petrol/diesel for transport will decline but pharmaceuticals, plastics and many more items are made that way and they are not going away. This site has a big list. https://www.ranken-energy.com/index.php/products-made-from-petroleum/ https://www.ranken-energy.com/index.php/products-made-from-p...
- mywittyname 6y agoPer your own link, 50% of a barrel of oil goes to gasoline production. If by, "ultra-low sulfur distillate", they mean diesel fuel for road going vehicles, that increases the percentage dedicated to motor vehicle transportation to 75%. That is pretty staggering. If automotive transportation consumes somewhere between 50-75% of crude oil production, then the fallout from the reduction in that market is going to be very significant. There's no way that growth in the ammonia and rubber boots sector is going to be enough to capture the production excess left by EVs. Your link has me pretty well convinced that the gasoline market collapse will be swift and extreme.