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Fossil Fuel Era over: End of Crude oil

Fossil Fuel Era over: End of Crude oil

The data below  indicates that the race between renewable energy and fossil fuels is over; the inflexion point was hit back in 2013 when 143 gigawatts of renewable energy were added versus 141 gigawatts that came from traditional power plants that burn fossil fuels. If you look at the chart above, the trend is expected to gain momentum in the years to come.   In most cases, the cost of solar energy is on par if not cheaper than grid electricity.  This is perhaps why the Saudi’s are panicking and want to destroy competition so that they can push prices back up and try to lock in as much money as they can before they are knocked out of the game.  They are even planning on selling shares in Aramco.

Source www.bloomberg.com

Mohammed bin Salman, the kingdom’s deputy crown prince, said he was “enthusiastic” about launching an initial public offering of Saudi Aramco, and a decision would be made “over the next few months”.

They must be getting nervous even to consider the idea of selling shares in Aramco; this clearly suggests that they are aware that the world might finally have found a way to wean itself off fossils fuels.

By 2030, the gap between capacity that is added by fossil fuels and renewable energy will widen to as much as 400%.  The trend is in, and it appears that oil will have a hard time trading back to the lofty levels of $140.00.  For the next 12 months, oil is not projected to trade past $60 for any prolonged period. Note the cost of batteries continues to drop and at some point, the electric car is going to become a real threat to the fossil fuel industry.

Battery prices fell 35% last year and at this pace, the cost of an electric car should be comparable to the cost of a gas-powered car by 2020.  Bloomberg states that by 2040  long range electric vehicles will cost less than $22,000 in today’s dollars.

Game Plan 

You can invest in Battery makers and the makers of electric vehicles; the most famous of these is  TSLA (Tesla Motors). However, we suspect there will be a lot of competition in this field soon, and the price of these vehicles could plummet a lot faster than projected.

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