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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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The Seismic Impact Of Self Driving Cars On Oil

Self Driving Car

All self-respecting automakers today have an electric car project. Most are either working on or considering an autonomous vehicle, too. E-cars are hot. Self-driving ones are even hotter. And according to one new report, they may take over roads much sooner than most analysts project.

RethinkX is a freshly set up think tank that will issue a series of reports on major disruptions in technology, starting with transport. According to the authors, co-founders James Arbib, a venture capitalist, and Tony Seba, an entrepreneur, autonomous cars will be the dominant form of transportation in the U.S. by 2030.

That’s in stark contrast to most forecasts, which see the evolution of self-driving cars as much more linear than it actually is, Arbib and Seba argue. That’s because driverless car technology is a tech disruption, and tech disruptions take much less time to unfold, Seba says.

In the report, Arbib and Seba paint a picture of electric self-driving cars that people don’t even own, but just rent whenever they need them. These self-driving cars will be electric simply because electric engines are not just greener, but also longer-lasting than internal combustion ones. Also, they break down less often because their powertrains consist of much fewer elements than an ICE powertrain. And they are much more cost-efficient.

An average household, the authors argue, would save some US$5,600 annually from switching to Transport-as-a-Service, and this will be sufficient motivation for the very fast adoption of the service. Total savings until 2030 could hit US$1 trillion and another US$1 trillion would flow into GDP from improved productivity resulting from the switch to TaaS. Related: Aramco Aims To Take Over The Offshore Rig Market

The implications of such a change would be of seismic proportions, of course, starting with oil and spreading into basically every industry. Jobs will be lost, certainly, and business models will in all likelihood have to be rethought fundamentally in the car making, transportation, and logistics industries. That is, if all that RethinkX says will happen, actually happens.

The report’s authors argue that the first self-driving cars will hit the roads in the U.S. as soon as 2021. By then, they say, regulations will be put in place and they are more likely than not to be supportive of the whole TaaS idea. Supportive or not, regulators will no doubt try to make sure that autonomous cars are really as safe as they are advertised to be before allowing them on the roads. Extensive testing will also be among the requirements, and this kind of testing takes time.

The California Department of Motor Vehicles, for example, has had regulations in the making since 2015. Among the proposed requirements is a communication link between the vehicle and a remote-control center, as well as the written support from the local jurisdiction (quite a vague term at this point). Something that is missing, however, as Wired notes, is proof of the car software’s ability to drive safely. There is no driving test for the autonomous car. Related: Are Oil Markets Becoming Untradeable?

That’s just one example of the issues that are bound to crop up when self-driving car legislation really gets into gear to make the jump from testing-only to commercial-scale adoption. With this in mind, 2021 sounds a little bit too optimistic as the year the self-driving car revolution begins.

Things might certainly change over the next four years, and turn the forecast a reality. Yet, it is too early to sing the dirges of the oil industry. Even if self-driving car adoption in the U.S. does reach 95 percent by 2030, which is far from certain, there is a whole world out there where autonomous car adoption will be much slower. It’s not just about affordability, green energy and more cost-efficient driving. A lot of people just like having their own cars and the concept of ownership is an old one. Old concepts are hard to shake off, and may very well take more than a decade to do that.


By Irina Slav for Oilprice.com

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  • Dan on June 05 2017 said:
    Where do you get your source for "cleaner and longer lasting" and " break down less" as AAA has higher premiums for EV because of costs. Natural Gas is cleaner and all real autos on the road can convert without pricey batteries that pollution comes from mining and so called end of life. I see 1930s and 40s cars going down the road holiday weekends but have still not see the unicorn EV. Can you make a statement the EV cars last longer when clearly auto shows everywhere show the truth?
  • JS on June 05 2017 said:
    I lived for a couple of years without a car and used car sharing services. I keep seeing think tanks come up with stuff about the future that makes me wonder if they've had any experience with them at all.

    Car sharing certainly has it's market (young folks without families living in dense urban settings) and while self driving car technology may help expand that there are still problems beyond the technicalities of self driving cars that need to be over come before you see a major shift to sharing.

    1) Car sharing is unreliable. You may be able to get a car easily if you need to go to a meeting across town during the work day, but good luck finding one during rush hour. Between this and regular system outages, signal troubles and more you always need an alternative. Whether it's public transit a bike or simply walking. Is there going to be a car share for everyone during rush hour in the future? How is that different from people just owning their own car? A lot of these cars sit idle outside of rush hour, not sure how that's making anyone money.

    2)The cars are disgusting a lot of the time. Finding dog mess in a car that isn't supposed to have dogs in it gets old fast. These cars are public transit so just beware.

    3) If you have a family and need to do a grocery run are you going to cram everything into a small commuter? No. There are services that allow you to rent larger vehicles, but again good luck getting those during peak times, and yes you will pay a premium.

    4) The costs add up fast if you are a frequent user and you begin to wonder about the hassle. You do save a little money car sharing, but is it worth it? Are the companies profitable at these rates? So far I'm guessing no. So what is the true price going to be in the future?

    So basically I'm very skeptical that this niche market will somehow turn into much more than what they are today, a service for urban 20-30 somethings. I did it for a while and am no worse off, but once my situation changed I got a car and like most people the world over, I love it.
  • Oilracle on June 05 2017 said:
    --- E-cars are hot. Self-driving ones are even hotter.---

    Why does the author presume that gas powered cars cannot become "self-driving?"
    They became "self-parking," haven't they?!
  • Bill Simpson on June 05 2017 said:
    You don't live in the Deep South where, for 5 months of the year, you start sweating as soon as you step out of any air conditioned space. I'll pass on getting into a possibly still damp publicly owned car. Not to mention what else might be in there. With no driver owner, like in a cab or Uber car, who will be motivated to clean the inside of those things - nobody will. Good luck with that. Watch out for the used needles with AIDS and other undesirable life forms on them. I'll buy my own EV, so I don't have to wait a second when I want to go somewhere, other than the time it takes for the electric Genie to get the garage door open.
    It reminds me of car pooling. Most people could do it, but not that many do.
    I wonder how long it will be before someone sends their self driving car out on a trip and gets a ransom demand for bitcoin to get it back. They will be easy to hijack with no driver on board. Taking 18 wheelers full of alcohol or electronics would be a lucrative business. Cut the GPS and it might be yours? Mobsters could make some serious money.
  • LB on June 07 2017 said:
    The prediction needs to be modified to the new car market will be dominated by autonomous cars to have any chance at all to be real. The majority of existing car owners are not going to sell/abandon the cars they already own into a collapsing market and move to autonomous cars. That alone guarantees that most vehicles on the road in 2030 will still be manually drive ice.

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