The oil industry has been a dominant force in the world for decades. The discovery of crude oil in 1859 was seen as one of the most important discoveries in history. Oil is now an essential part of our lives, but it now faces challenges from renewable energy sources.
There are now more than 5 million electric vehicles on roads around the world. Electric cars are now becoming much cheaper to buy, which is posing a threat to the fuel-based automotive industry. Here, are some ways to consider what will happen to this industry and why we should be thinking about these changes now.
The Power of Oil
Oil is an energy source that powers everything from our transportation and communications to our economy. It is found in so many different types of fuel: in gasoline, diesel, aviation fuel, methanol, jet fuel, and, of course, asphalt. Oil can also be used to create products like plastics and plastics can even be used to make wind turbines. Oil is also used to heat and light our homes and many other processes.
What is Renewable Energy?
Renewable energy refers to sources that do not derive their energy from fossil fuels. Instead, they harness the power of the sun and wind to produce energy. The future of the oil industry will depend greatly on whether renewable energy is able to meet the growing global demand. The amount of energy produced from fossil fuels is expected to be in decline.
The Threats to the Oil Industry
There are several problems for the oil industry to face. The cost of renewables is coming down, which is making it more appealing for people to use. Solar and wind energy are both now cheaper than oil or coal for energy production. At the same time, there has been an increase in electric vehicles. Because of this, electric vehicles could become much more common, which would have a big impact on the oil industry.
Emissions have always been an issue with oil, and the industry is taking action to minimize the impact of their emissions. It is also investing in new technology to create more efficient vehicles. This includes electric vehicles, hybrid cars, and natural gas vehicles. These vehicles use less fuel and emit less carbon, which is good for the environment.
World Energy Trends
Over the past century, oil has been the primary source of energy for vehicles. According to enerdata, oil and natural gas provided more than 54 percent of all energy consumed by the world in 2020 even with the pandemic lockdowns. The renewable energy sources, especially solar power, continue to improve in efficiency, and in the case of solar energy, they are growing faster than any other energy source. But it is in the last few years that renewable energy sources have finally started to take a share of the energy market.
According to the International Energy Agency (IEA), this market share for renewables is expected to grow to 18 percent by 2040.
Effects on Developing Countries
If the world were to switch to alternative fuels, it would take away many jobs in developing countries. Renewable energy would mean less manufacturing, mining, agriculture and construction, which are all very essential to the local economy. The economic impact of the oil industry is linked to its political and industrial strength. Having large oil reserves also means that countries have greater economic power.
Global demand for energy is rising
Due to the impact of global warming, the world needs to move away from burning fossil fuels. However, it is highly unlikely that renewable energy will replace fossil fuels entirely. Not all countries have the resources to develop their own energy sources.
The oil industry is at a turning point. The question is, how long will it take before renewables become the dominant source of energy provider?
Other oil-driven industries could soon be facing threats as well, such as that from electric vehicles. Both nuclear and coal mining have been steadily declining for years, with many companies looking to close down mines due to high production costs and the negative effects it have on the environment.