Saudi Oil Minister Predicts the End of Oil

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Saudi oil minister predicts the end of oil

Could soon be going the way of coal

By Rashid Husain Syed
Columnist
Troy Media

RIYADH, Saudi Arabia/ Troy Media/ - Saudi oil minister Ali Al-Naimi shocked the Business and Climate Summit in Paris last week when he conceded, “One of these days, we are not going to need fossil fuels.

“I don’t know when,” he went on to say. “In 2040, 2050 or thereafter.”

Naimi, however, did not agree with calls to leave the bulk of the world’s known fossil fuels in the ground. Such a move, advocated to avoid risky levels of climate change, should be put “in the back of our heads for a while” because it would not make economic sense.

“Where would the western civilization be today if it was not for fossil fuels yesterday?” he asked delegates. “You say decarbonize (the industry). Are you willing to have me go back home and shut all the oil wells? Can you afford that today?”

“What will happen to the [oil] price if today I remove 10 million barrels per day of the market?”

Fossil fuels not done yet

With more than one billion people globally still lacking access to electricity, he said, there will be strong demand for fossil fuels for years to come. Work was needed to find ways to burn oil, coal and gas without releasing carbon dioxide, the minister said, adding technological improvements will eventually make solar economically competitive with fossil fuels, even with very low oil prices.

This talk of the ultimate end of the oil era is not new. Shaikh Ahmed Zaki Yamani, the grand old man of the industry, has been stressing such as message for years now: “Remember, coal didn’t end, the coal era came to an end.”

Oil is slowly but surely losing its tight grip. Energy intensity has been going down, and the transportation sector – so heavily dependent on petroleum as fuel – is beginning to explore alternatives. The rise of alternate fuels and the growing efficiency of the United States’ vehicle fleet are impacting gasoline consumption growth rates.

The U.S. Energy Information Agency (EIA) reports that the U.S. transport system required about 6 per cent fewer BTUs of energy in 2014 than it did in 2007. And it used nearly 10 per cent less oil than it did then. Oil consumption was lower in 2014 than it was in 2000. And as a proportion of transportation fuel, petroleum hasn’t been this low since 1954, when coal was still a significant transportation fuel, according to the EIA.

Despite low oil prices, other fuels – especially biofuels like ethanol – are slowly gaining traction. From a tiny base, 135 trillion BTUs in 2000, ethanol consumption rose eightfold to 1.092 quadrillion BTUs in 2014. Adding in biodiesel, these biomass fuels in 2014 accounted for 4.7 per cent of the transport sector’s energy consumption, up from 0.5 per cent in 2000. That’s a tenfold increase in market share in 14 years.

Natural gas emerges

At the same time, the fracking revolution has made natural gas cheap and plentiful. Consequently, many fuel-intensive vehicles are switching to natural gas. Companies like Clean Fuel Energy are building filling stations and inking supply deals with big users, making it easier for companies to adapt. According to the EIA, natural gas in 2014 accounted for 946 trillion BTUs, or about 3.5 per cent of the transport sector’s energy consumption, up from 2.2 per cent in 2004. Combined, natural gas and biofuels account for 8.2 per cent of the energy used by the sector.

And then there are electrically powered cars. Every month, several thousand cars are sold that run exclusively or partially on electricity. U.S. sales of plug-in hybrids and all-electrics were about 9,000 in April.

Gasoline-powered vehicles have been getting much more fuel-efficient. As Michael Sivak and Brandon Schoettle of the University of Michigan reported, the typical car sold in April 2015 gets 25.2 miles per gallon, compared with 20.1 in October 2007- an increase of 25 per cent.

With each passing day, a slightly smaller proportion of the U.S.’s vehicles run on petroleum. Naimi is merely observing the obvious.

Rashid Husain Syed is an energy analyst and expert on global energy affairs. He appears regularly on BBC and other news media. He operates an energy consultancy, Husain’s Associates, from Toronto.