Ed Brost: The oil age won't end because we used up the last of the oil

The adoption of electric vehicles is going to begin devastating oil-based economies much sooner than you think.

By: Ed Brost

Albertans and Canadians have benefited from oil sands wealth creation and prosperity, especially during boom years. But is expecting another oil boom realistic considering electrification of transport trends?  

A transition is underway; electric vehicles (EV) are coming. Most people overlook that this transition need not be complete; a partial transition alone could soon affect global oil prices. 

Albertans should prepare for this scenario in case the impacts hit sooner than expected. Consider these words by Deborah Wahl, GM Global Chief Marketing Officer: “There are moments in history when everything changes. Inflection points. We believe such a point is upon us for the mass adoption of electric vehicles.”

Could the “inflection point” be as soon as the middle of this decade? If so, leaders need to decide to stay with past business models or imagine new businesses. 

The temptation to continue undue reliance on 20th-century fuels is rooted in arguments the reader will be familiar with. Vehicle sales are growing in developing countries, vehicles need fuel; so, oil demand will increase. Or, the more basic, we will need oil for decades to come. That’s true! But arguing we will need oil for decades to come says nothing about what price we’ll be paying for that oil … or in Alberta’s case, selling it at.

No one disputes there will be vestigial demand for oil for decades to come. No one disputes that chronically low oil prices threaten the sector’s viability. No one disputes it will take decades to complete a transition to electrified transport. Few will dispute that someday EVs will threaten oil demand and thus prices. But again, does the transition need to be complete before contributing to chronically low prices? Will long-term prices be high enough to sustain the more expensive oil sources?

Annual EV sales remain low, but looking at current EV sales is looking at where the puck is, not where it will be. EVs remain in use for over a decade. Fossil-fuelled vehicles displaced by EVs permanently removes the associated oil demand. The critical factor is cumulative EVs, not annual sales. So, how many EVs are required to impact oil prices? When might that occur? Is it decades into the future? Or is it imminent? How much does a small drop in oil demand, relative to supply, impact price?


An acute two per cent oil surplus led to a 70 per cent oil-price drop between 2014 and 2015. That surplus was partly due to Saudi Arabian mischief. But electrification of transport is chronic. That chronic effect on oil prices will start imperceptibly small and increase over time. As we saw in 2014 and again starting in late 2019 (pre-COVID), a slight supply-demand disconnect, an acute affect, seriously affected crude prices. Since the threat EVs imposes on oil prices is chronic in nature, this chronic effect will grow. A return to long-term high oil prices is unlikely.   

So, how many EVs could cause a two per cent oil supply-demand imbalance? A report by the Bowman Centre for Sustainable Energy estimated less than 40 million EVs worldwide. And that could happen by mid-decade.  

So, what to do? 

First, we need to recognize the severity of problems currently facing the sector. Jobs are disappearing; companies are under financial stress, and this is leading to serious ripple effects. Demand destruction, driven by better technology and economics, cannot be reversed by new pipelines and wishful thinking. Importantly, these challenges are being imposed on us by global forces. Even if they wanted to, government and industry leaders could not slow this global shift, regardless of their rhetoric.  

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Governments need to develop and implement transition plans designed for oil-sector workers and society at large. Equitable, data-driven, fair and realistic transition plans will embrace electrification of transport opportunities. Genuine leadership is required to resolve technical and social solutions. Leadership that provides opportunities and prepares the country, citizens, and companies for a post inflection point world.

What happens if we are wrong? Nothing. There is no downside. Implementing a transition plan will create jobs in addition to those in a scenario where the oil sands prosper as in the past.  

Recall the adage; the stone age did not end because we ran out of stones. The oil age is ending … and there will be oil left in the ground when it does.

Ed Brost is a professional chemical engineer and holds an M.Sc. in environment and management from Royal Roads University. He has over 35 years of experience in the energy sector with Shell, Ontario Hydro and Atomic Energy of Canada.

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