Elon Musk, harbinger of an electrified future, has declared the world needs more oil at the same time its global production is being stifled.
For context, the Organisation of the Petroleum Exporting Countries (OPEC) and its allies – a collective known as OPEC+ – have agreed to reduce oil production by 100,000 barrels per day (BPD). While that sounds like a considerable number, keep in mind it actually equates to just 0.1% of global oil demand.
It’s also nothing more than a symbolic gesture considering Saudi Arabia, one of the largest oil-producing countries, already flagged the possibility of cuts. After reaching $127/barrel in March, oil prices have been declining since May, flirting dangerously close to six-month lows.
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Ahead of said cuts, some of the world’s largest energy players gathered in Norway for the annual ONS Foundation Conference. It was during an interview at that very conference Elon Musk remarked “civilisation will crumble” without oil and gas.
Big statement.
Especially from a man who only recently snipped the red ribbon on a new Tesla factory outside Berlin, Germany, where he hopes to capture the coming demand for electric vehicles in Europe.
A research paper from Schmidt Automotive forecasts battery electric sales in Western Europe will jump this year to 1,575,000, claiming a market share of 14%, (up from 11% in 2021). And it’s not hard to see why considering major cities like Paris plan to ban all diesel cars from January 2024; similarly, the UK has committed to banning the sale of new petrol and diesel cars in 2030.
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Energy prices are front and centre in Europe right now with gas supply being continually challenged due to the ongoing conflict in Ukraine. Russia has switched off a key gas pipeline to Europe (Nordstream 1), which caused gas prices to soar by 30% when trading began.
The invading country has indicated the pipeline will remain closed until sanctions are lifted.
Tesla’s CEO predicts that half of the cars on the road will be electric by 2030 and he’s hopeful that about 80% of vehicles will be electrified by 2035. With so much demand, it’s no wonder Tesla maintained its soft guidance at its 2Q earnings of “50% average annual growth in vehicle deliveries” across a “multi-year horizon.”
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