A World without Oil: Companies Prepare for a Fossil-Free Future

Published on Spiegel Online Internagtional, by SPIEGEL Staff, April 2, 2012.

Drivers may hate rising gas prices, but some companies are delighted as they watch the oil price soar. Firms like BMW and Airbus which are leaders in fuel efficiency actually benefit from expensive oil. They are just two of a growing number of companies that are already developing technologies for a post-fossil-fuel world. 

A few cents more and a liter of super unleaded gasoline will cost German drivers €1.80 (around $9 a gallon). That means that someone driving a BMW 3 Series will have to pay over €110 ($150) to fill up the tank, with its 63 liter (17 gallon) capacity.

But Norbert Reithofer, the CEO of BMW, seems surprisingly relaxed for an executive whose company’s products depend on gasoline and diesel. “One could see this as a threat,” Reithofer says. But the auto executive actually views the rising price of fuel as “an opportunity.” He is convinced that his company will in fact “derive a benefit from this” … //

… No Plan B:

When gas prices go down, people drive more and buy more powerful cars, which in turn leads to higher fuel consumption. But when that happens, the world heads toward the inevitable end of the oil era even more quickly than it already is. At some point, it will consume the last drop of oil and end up without a plan B.

But if gasoline becomes noticeably more expensive, phasing out fossil fuels could be relatively pain-free, as paradoxical as it sounds, because it will prolong the transition into the post-oil era. The world would be buying time for an energy revolution, gaining a reprieve in which scientists could develop more efficient batteries for electric vehicles, for example, or grow energy plants to produce biofuel in a way that takes up as little agricultural land as possible. Higher fuel prices would enable the world to stave off the fossil-fuel finale.

If the United States, France, Great Britain and Japan do in fact release their oil reserves, the stockpiles of fuel that are built up to deal with crises like disruptions in supply, wars or natural disasters — as some politicians have been calling for — it will probably bring down prices at first, but it will also send precisely the wrong message.

By now, it isn’t just environmentalists, but also liberal economists who advocate a strategy of increasing fuel prices. Oil is apparently still far too cheap, or else consumers wouldn’t be as wasteful with it, says Thomas Straubhaar, president of the Hamburg Institute of International Economics. “The whip of scarcity is the most effective tool for driving innovation.”

This brutal mechanism could be seen for the first time after the 1973/74 oil crisis. At the time, the oil producing industry searched for new sources to reduce dependency on oil from the Middle East. This led to discoveries of deposits under the ocean floor in the North Sea and the Gulf of Mexico.

Approaching the Limits: … (full text).

Part 2: Turning Adversity into a Virtue;

Part 3: Chemical Giant BASF Bets on Batteries.

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