Oil Companies a surprising turn of events, are finding themselves in a confrontation with the rise of electric vehicles (EVs) in the United States. A recent Bloomberg article shed light on this development, highlighting the collaboration between oil companies and biofuel producers as they face the increasing threat posed by EVs.
The Unlikely Alliance: Oil Companies and Biofuel Producers
Traditionally, oil companies and biofuel producers have been at odds with each other. However, the rapid increase in EV adoption has prompted them to unite against federal policies that prioritize EVs as the sole alternative for the future.
Pushback Against EV Promotion Policies
Federal policies advocating for EVs have spurred resistance from both the oil and biofuel industries. The American Petroleum Institute, along with the National Corn Growers Association and other industrial groups, has thrown its support behind a Republican proposal in Congress. This proposal mandates the sale of gasoline blended with higher concentrations of ethanol throughout the year, challenging the dominance of EVs.
Changing Stance of Oil Companies
Oil companies, typically opposed to higher ethanol blends due to decreased gasoline sales, have taken a different stance under the pressure of EV sales. Recognizing the threat posed by EVs, they are now actively collaborating with biofuel companies, particularly those reliant on corn-based ethanol.
Impact of EV Sales on Oil Demand
While EV sales reached a record 7% of total automotive sales in the US in 2023, growth is expected to taper off. Despite this, the demand for gasoline remains resilient, driven by the enduring popularity of traditional vehicles. Even in Norway, known for its high rate of EV ownership, fuel demand remains steady.
Concerns of Oil Companies
Oil companies are primarily concerned about the growing pressure from Washington and government interventions that could undermine their industry. Although EVs have only displaced a small fraction of daily global oil sales, the looming threat of increased regulations and policies favoring EVs is a cause for apprehension.
Doubts Surrounding EV Goals
President Joe Biden’s ambitious goal of transitioning half of all car sales to EVs by 2030 faces skepticism from traditional industries and biofuel producers. Many doubt the feasibility of such a target without coercion, casting doubt on the viability of widespread EV adoption.
In conclusion, the rise of EVs poses a significant challenge to the entrenched interests of oil companies and biofuel producers in the US. While they may have historically been at odds, the threat of EVs has spurred an unexpected alliance as they seek to protect their respective industries from the tide of electrification.