Is the future of the fuel industry electric?

Early this year, General Motors made a landmark announcement. They decided that by 2035 they will only sell zero-emission cars and trucks. This announcement came a day after President Biden signed a new executive order on climate change and represented a striking change for the company. General Motors was previously suing the state of California for its high fuel standards. It was a shock for many and a sign of the direction the industry may be moving in.

For over fifty years, we’ve been a California fuel and lubricant supplier. We’ve seen many changes come and go, such as new rules and emissions standards. In the past few years, as climate change has only gotten worse, the trend toward electric vehicle adoption has only grown, but the U.S. still lags behind much of the world. Only 3% of the vehicles in the US are electric. But that number is expected to multiply.

Transportation is the largest source of carbon pollution in the US. Transitioning to electric vehicles is one way to reduce carbon emissions, but it would have to be a significant shift. Research from Carnegie Mellon University found that 80% of miles driven in the US will need to be electrified to produce a significant drop in carbon emissions. That’s roughly 100 to 200 million electric vehicles. In 2019, plug-in electric vehicle sales reached 327,000. But even though the numbers are low now, the industry believes that widespread adoption of electric cars is coming.

Electric vehicle sales are becoming more popular, and automakers are making electric vehicles a priority. By 2025 electric vehicle sales will hit 10% of all passenger vehicles, rising to 28% in 2030 and 58% in 2040, according to a study from BNEF. Across the globe, the US is the slowest to embrace this trend. Electric cars are expected to account for as much as 50% of all cars sold in Europe and China by 2030.

So what does this mean for you and your business? As a fuel supplier, we know how vital fuel is for your work. Our customers rely on gasoline, diesel, and other fossil fuel-based lubricants to power their vehicles, machinery, and heavy equipment. Will it all go electric? The answer is a little murky. No one can definitively say when the switch will happen or how it will affect the local economy. After the rollercoaster year of 2020, we can all agree that attempting to predict the future is a mixed bag. But we can try to make sense of where the fuel industry is and where it hopes to go in the next few years. Here are a few things to consider.

  • Electric car infrastructure. Going electric is a great choice if you have the charging stations to support it. Right now, the infrastructure for widespread charging is not in place in the United States. The charging grid is a patchwork of stations across the nation. The average electric vehicle requires 30-kilowatt hours to travel 100 miles. That’s the equivalent electricity one American home uses each day. That’s quite a bit. We will need significant investment into building fast-charging stations across the nation.
  • Stable power supply. This year, a huge winter storm devastated our neighbors in Texas. Temperatures dropped lower than ever, and much of the state suffered from power outages due to record-high electricity demand. Texas is a unique case as they have their own grid designed for their needs. It was not prepared for the record low temperatures or increased demand. Severe weather is increasing, and its effect on our society and infrastructure cannot be ruled out. One of the reasons fossil fuels remain so popular is how easily these fuels can be utilized in inclement temperatures. Increased power supply from intermittent resources like solar and wind energy could affect a stable power supply.
  • Heavy equipment will make the transition slower. Investing in heavy equipment isn’t cheap. Buying a backhoe or an excavator is not the same as buying a car. These machines are designed for heavy use and long lifespans. Businesses will not be able to quickly switch over to electric alternatives, and there are still only a limited number of electric options available on the market. It’s more likely that the EPA and other government agencies will introduce progressive targets to reduce emissions from heavy construction equipment first.
  • New lubricants will need to be developed for electric engine technology. Electric engines may not need engine oil, but they may still need some form of lubrication. The oil industry’s role in the development of lubricants may increase as the years go on. Lubricant manufacturers may also begin to develop new synthetic lubricants with specialized formulas for electric engines. Many of our customers who use lubricants for their business will have to adapt to these changes and adopt new products with electric motors.
  • It will take significant time and money to switch refineries over. Refining fossil fuels to create gasoline, diesel, and other lubricants is a complicated, energy-intensive process. The refinery and industrial industries accounted for nearly 27% of all carbon emissions in 2019. The industry is looking for ways to reduce its energy consumption and carbon output, but it is a significant endeavor. Refineries and industrial plants are a considerable investment of time and money. The technology they use is complex. You can’t just switch out a few gears and go electric. The refinery industry will have to make significant investments to revamp equipment and switch to electric processes. These upgrades will not be cheap or easy to make.

As a bulk fuel delivery company, we keep an eye on these types of industry changes. It’s the smart thing to do, and as a business owner, you should do the same. Bulk fuel use is not going anywhere quickly, but change is coming. Industries and businesses will have to make changes as new methods and technologies are developed. That’s the way the world works. The best thing you can do as a business owner is stay informed and be prepared. The future is changing, and how it will affect the fuel industry is yet to be seen. For now, trust that we are here to support your business with the bulk fuel, diesel, gasoline, and lubricant supplies that you need.