Offshore oil platform at sunset

Is Big Oil slipping in terms of market dominance?

A European bank’s sustainability study says the threat is real.

The study from BNP Paribas, a French international banking group, is titled, “Wells, Wires and Wheels: EROCI and the Tough Road Ahead for Oil. It was written by Mark Lewis, BNP’s head of sustainability research.

“With 36% of demand for crude oil today accounted for by Light Duty Vehicles (LDV) and other vehicle categories susceptible to electrification, and a further 5% by power generation, the oil industry has never before in its history faced the kind of threat that renewable electricity in tandem with EVs poses to its business model,” Said Lewis.

EV’s Could “Easily Replace” as Much as 40% of Global Oil Demand

Lewis shored up his claim with four factors. He said renewables have a short-run marginal cost of $0, that they’re much cleaner than oil and that they’re much easier to transport. He added that if renewables have the necessary scale, they could “readily replace up to 40% of global oil demand.“

“We conclude that the economics of oil for gasoline and diesel vehicles versus wind and solar-powered EVs are now in relentless and irreversible decline, with far-reaching implications for both policymakers and the oil majors,” Lewis said.

Speed of Renewables Growth Is an Alarm

On a global level, renewables are gaining investment and momentum, the study said. One of the flagship regions is Europe, where Lewis likened the speed of development to a warning light on a vehicle’s dashboard.

“The speed with which the competitive landscape of the European utility industry has been reshaped over the last decade by the rollout of wind and solar power … should be a flashing red light on the oil industry’s dashboard,” he said.

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