• 4 minutes Will We Ever See 100$+ OIL?
  • 8 minutes Iran downs US drone. No military response . . Just Destroy their economy. Can Senator Kerry be tried for aiding enemy ?
  • 11 minutes Energy Outlook for Renewables. Pie in the sky or real?
  • 1 hour Iran Loses $130,000,000 Oil Revenue Every Day They Continue Their Games . . . .Opportunity Lost . . . Will Never Get It Back. . . . . LOL .
  • 15 mins Renewables provided only about 4% of total global energy needs in 2018
  • 3 hours Berkeley becomes first U.S. city to ban natural gas in new homes
  • 2 days Iran Captures British Tanker sailing through Straits of Hormuz
  • 1 day EIA Reports Are Fraudulent : EIA Is Conspiring With Trump To Keep Oil Prices Low
  • 13 hours Shale Oil will it self destruct?
  • 1 hour Today in Energy
  • 3 days Drone For Drone = War: What is next in the U.S. - Iran the Gulf Episode
  • 2 days Oil Rises After Iran Says It Seized Foreign Tanker In Gulf
  • 9 hours So You Think We’re Reducing Fossil Fuel? — Think Again
  • 3 hours N.Y. Governor Signs Climate Bill
  • 2 hours First limpet mines . . . . now fly a drone at low altitude directly at U.S. Navy ship. Think Iran wanted it taken out ? Maybe ? YES
  • 3 days LA Solar Power/Storage Contract
  • 19 hours U.S. Administration Moves To End Asylum Protections For Central Americans
Alt Text

The Scary Truth About Canada's Energy Security

Canada, the world’s fourth largest…

Alt Text

Cracks In Gasoline Demand Weigh On Oil Markets

Slowing economic growth has taken…

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

More Info

Premium Content

The Self-Driving Vehicle Revolution Has Begun

The energy markets are starting to recover from their multi-year swoon, but there may be a bigger change ahead. It’s starting to look like the rise of self-driving vehicles is not only inevitable, but that it will be here sooner than many would have thought possible. That will likely upend the oil markets in ways many have never considered.

For evidence of the rise of self-driving vehicles, one needs to look no further than the two recent announcements showing how fast technology and regulations are evolving.

First, Michigan, the traditional home of automobile production, just became the first state to put in place comprehensive rules allowing self-driving vehicles to operate without a driver. The graphic below from the Michigan Department of Transportation illustrates where the state is in comparison to other states.

While different states are proceeding at different paces, it is clear that the regulations are changing fast. The states noted in the graphic represent more than 25 percent of the overall U.S. population – in other words, for more than a quarter of the country, self-driving car testing and more is now legal. That’s a huge shift from a couple of years ago, when all of this would have been regarded as a fantasy.

To be clear, Michigan is enacting these laws in order to protect its own interests; only motor vehicle manufacturers are allowed to operate an on-demand network of self-driving cars. Thus Google, Apple, and anyone else who is not a manufacturer, but wants to play in this space in Michigan, will have to work with a traditional automaker. Related: Oil Spikes After EIA Reports Surprise Draw To Crude Inventories

The changes in technology in the space are even more significant than the change in regulation though.

Anheuser-Busch recently used a self-driving truck for the world’s first autonomous cargo shipment, hauling beer 120 miles across Colorado. The truck technology was built by an organization called Otto. Otto was founded by former members of Google’s self-driving vehicle team, and the new firm was quickly snapped up in an acquisition by Uber.

AB’s self-driving truck delivery is a big deal. There are 3.6 million class 8 trucks in the U.S. that drive more than 280 billion miles each year, using roughly 43 billion gallons of fuel. These semi-trucks are extremely expensive pieces of capital equipment which means that outfitting them with self-driving tech to make them more economically efficient and potentially more fuel efficient is sensible. Related: After Agreeing To Cut, Is OPEC’s No.2 Going Rogue?

With AB already pushing the envelope and having a self-driving truck running cargo 120 miles across a major state, it is very likely that we’ll see more and more of this type of innovation in the next 12 months. Two years ago, almost no one outside the industry was talking about self-driving vehicles. Today, the technology is advancing so fast that every week seemingly brings a new milestone. In two more years, many new commercial cars and trucks may be equipped with the tech. Within five or ten years, the idea of a professional driver may be obsolete. When this happens, it could lead to more travel and transportation (because the cost of those activities falls), but it could also lead to greater fuel efficiency thanks to less stop-and-go driving. It’s an open question which effect will dominate.

All of this is significant for oil investors – cars and trucks are the dominant users of oil. Even forgetting about electric vehicles altogether, self-driving gas and diesel powered vehicles will change the dynamics of the market. Will we use more or less oil? A valid hypothesis can be made either way. For now, investors need to study this emerging trend carefully and try and discern its effects on demand.

By Michael McDonald for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment
  • spin on December 17 2016 said:
    Initially maybe more oil but given you can recharge an electric truck whilst it's moving and it needs little maintenance it's conceivable you would have self driving electric trucks that are operational 24/7 just stopping for loading / unloading and new tyres.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play