OIL era will end! It will, admits none else than the industry veteran – Saudi Oil Minister Ali Al-Naimi. While addressing the Business and Climate Summit last Thursday in Paris, he conceded: “In Saudi Arabia, we recognize that eventually, one of these days, we are not going to need fossil fuels. I don't know when, in 2040, 2050 or thereafter.” The issue under the hammer is not if - but - when? Some say the demise is closer. Others insist, it could be at least decades away. Minister Naimi is definitely not oblivious to all the realities - under the ground and on the surface. He is an insider - in true sense. And thus he cannot be taken lightly on the issue. “Hopefully, one of these days, instead of exporting fossil fuels, we will be exporting gigawatts, electric ones. Does that sound good?” he asked, to applause in the audience. Balancing his statement, Naimi also clarified that calls to leave the bulk of the world's known fossil fuels in the ground, to avoid risky levels of climate change, needed to be put “in the back of our heads for a while”. “Can you afford that today?.. Where would the western civilization be today if it was not for fossil fuels yesterday?” he counter asked the delegates underlining it wouldn't make economic sense to make a dramatic move now. “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?” he countered. “What will happen to the [oil] price if today I remove 10 million barrels per day of the market.” For now, many parts of the world, notably Asia and Africa, can't develop solar energy and are still heavily dependent on fossil fuels, the industry veteran argued. And With more than one billion people globally, still lacking access to electricity, there would be strong demand for fossil fuels for years to come, he emphatically said, adding that more work was needed to find ways to burn oil, coal and gas without releasing warming carbon dioxide. The minister said technological improvements will eventually make solar economically competitive with fossil fuels, even with very low oil prices. For the time being, let's focus our attention on how can we manage emissions so we can continue using fossil fuels until we are able to develop the alternatives,” he told the climate summit attendees. The talk of the ultimate end of the oil era is not new. Sheikh Ahmed Zaki Yamani, the grand old man of the industry, has not only been an insider for a number of decades, but is also among one of those very few individuals, who despite advancing age and having left the corridors of power almost four decades back, have been relevant to the industry in one form or the other. For many years now, while talking on oil, and its future, he has been reminding; ‘coal didn't end, coal era came to an end.' And thus when Saudi Aramco opted to use its immense resources to produce chemicals with projects such as Sadara, many strongly felt that instead of offering only crude to its buyers' in a ‘buyers' market,' the Saudi state oil giant was endeavoring to add value to its resources, offering a portfolio of products to its customers, that went beyond simple crude. And the evidence of crude losing some of its grip is getting to the fore - slowly and gradually. Transport sector, has traditionally been overly dependent on crude supplies. Not any more. The situation is changing - slowly but surely. The simultaneous rise of alternate fuels and the growing efficiency of America's vehicle fleet seem impacting gasoline consumption growth rates. The US Energy Information Agency is now reporting that the US transport system required about 6 percent fewer BTUs of energy in 2014 than it did in 2007. And it used nearly 10 percent less oil than it did then. In fact, oil consumption was lower in 2014 than 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, the EIA report highlighted. Despite low oil prices, other fuels - especially biofuels - chiefly 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. Add in the small amount of biodiesel, and these renewable biomass fuels in 2014 accounted for 4.7 percent of the transport sector's energy consumption up from 0.5 percent in 2000. They have increased their market share tenfold in 14 years. At the same time, the fracking revolution has made natural gas cheap and plentiful. As a result, it is increasingly being used as a transportation fuel, especially for buses and trucks. A considerably big number of fuel-intensive vehicles switching to natural gas, such as a school bus fleet in Oregon or the latest additions to the fleet of UPS, which has 2,500 vehicles that run on natural gas. Meanwhile, companies like Clean Fuel Energy are building filling stations and inking supply deals with big users - which in turn would make it still easier for more companies to adapt. According to the EIA, natural gas in 2014 accounted for 946 trillion BTUs, or about 3.5 percent of the transport sector's energy consumption, up from 2.2 percent in 2004. Combined, natural gas and biofuels account for 8.2 percent of the energy used by the sector. And this data set doesn't include electricity used to power cars. Every month, several thousand cars are sold that run exclusively or partially on electricity - combined sales of plug-in hybrids and all-electrics were about 9,000 in April. There are also a few buses that run entirely on electricity. There's another big factor that's taming the need for all fuels - and that is particularly taking a bite out of oil use. Vehicles that use petroleum have been getting much more fuel-efficient. As Michael Sivak and Brandon Schoettle of the University of Michigan report, the typical car sold in April 2015 gets 25.2 miles per gallon, compared with 20.1 in October 2007- an increase of 25 percent. Companies are developing technologies and products that make large, gas-guzzling vehicles more efficient. That's not to say that petroleum is out as a transport fuel. It's still the dominant one by far. Most companies would be psyched if their product had a 91.5 percent market share. But there's reason for concern. With each passing day, a slightly smaller proportion of America's vehicles run on petroleum. And with each passing day, companies that profit by helping vehicle operators and owners use either less oil, or less fuel, are getting bigger. Indeed there are reasons for crude producers to be a little worried in the longer term. Naimi definitely had a point!
