The fluctuation of fuel
Posted on December 19, 2018 by
As electric cars and hybrid vehicles become a more popular alternative, just what impact will this have on traditional fuel sources?
With the help of Motability dealers Lookers, we explore the future of fuel. Recently, the government in the UK have proposed plans to ban any sales of new diesel and petrol vehicles by 2040 as they try to clean the nation’s air quality. This stems from diesel receiving a lot of scrutiny due to the levels of Nitrogen Oxide our vehicles emit. As a result, 2017 was a record year for sales of electric vehicles, with over 4,000 new registrations per month in the UK — a significant increase compared to 2013 figures, which witnessed just 3,500 new registrations over the entire year!
The introduction of electric fuel stations
In the past 12 months, our electric car charging infrastructure has evolved substantially to suit the lifestyles of many drivers with many more EV charger installation points appearing. This is following in the footsteps of other countries around the globe, like New Zealand who are rolling out easier-to-find charging stations, and the UK has over 20 companies and organisations installing and running nationwide or regional electric car charging networks. Despite developments, this hasn’t stopped electric vehicles being criticised since the mobile was launched, due to a lack of EV charging points raising concern for many drivers, but could a transition towards electric and hybrid vehicles see us eventually wave goodbye to traditional fuel?
InstaVolt installed at least another 3,000 rapid charging points across fuel station forecourts across the UK following ChargePoint making a multi-million pound deal in May 2017 which saw. Some researchers have also claimed they could have developed an ‘instantly rechargeable’ method that recharges an electric battery in the same time as it would take to fill a gas tank – a solution to one of the biggest headaches of electric vehicles.
Chief executive of BP downstream, Tufan Erginbilgic, commented: “EV charging will undoubtedly become an important part of our business, but customer demand and the technologies available are still evolving.”
According to The Guardian, the British oil firm, BP, is also investing $5 million (£3.5 million) in the US firm Freewire Technologies, which will provide motorbike-sized charging units at forecourts to top up cars in half an hour. BP have also stated that they would be adding an increased number of charging points for electric vehicles into their UK fuel stations within the first few months of 2018. Other oil firms are also recognising the potential for growth into the battery-powered vehicle market. A decision that follows in the footsteps of their rival, Shell, who have already invested money in several electric car infrastructure companies to install charging points at their service stations.
In November 2017, global figures hit three million for the number of electric vehicles collectively on the roads – with China proving to dominate the market. Whilst oil firms such as BP expect the electric market to continue to rise, they hope the oil demand is not seriously affected – by cutting themselves a slice of the electric vehicle charging cake though, firms are covering their back if traditional oil demand does take a dip in line with the government’s plans to reduce harmful emissions and cut back on crude oil prices.
How will fuel prices be affected?
The RAC and other industry experts have encouraged supermarkets to reduce their fuel prices to make the public be able to afford the fuel type. This came closely after a three-year high was witnessed for the price of fuel and diesel on the UK’s forecourts. At the start of 2018, three of the UK’s leading supermarkets had listened to the RAC’s call for lower fuel prices, and reduced fuel prices by up to 2p per litre as of February 2018.
Simon Williams, a RAC fuel spokesman, stated: “Both petrol and diesel are now at their highest points for more than three years which is bound to be making a dent in household budgets”.
There are a variety of factors which have contributed to yo-yo affect of fuel prices such as Brexit, conflict with the UAE and harmful emissions. Fuel prices haven’t been steady for some time now – and a plan to eliminate petrol and diesel cars will not help steady the cost of fuel either.
The OPEC made a decision in 2014 to increase the level of domestic fuel production in the UK, which led to a price drop to 98p in January 2016 — the lowest price of fuel per litre since the financial crisis in 2009. However, the UK still heavily relies on imported energy and fuel – around 38% of the UK’s total energy consumption is reliant on imported energy. With all of our current uncertainty regarding Brexit, could our trading relationships be at risk? And, of course, we must also consider how the uncertainty around the value of the pound could affect fuel costs following Brexit.
The value of the pound experienced a fall of 20% against the dollar immediately following the UK’s decision to leave the EU. This caused fuel prices to increase by around 10p per litre and experts to raise concern that Brexit could mark the end of cheap fuel in Britain. The combination of higher crude oil prices and the devaluation of the pound mean Britain should expect higher fuel prices become the norm.
It appears that both the high fuel prices and efforts to improve the UK’s air quality will cause the EV market to increase and success is forecast to continue to surge in the years leading up to 2040.
Sources
https://visual.ons.gov.uk/uk-energy-how-much-what-type-and-where-from/
https://www.petrolprices.com/news/brexit-process-impact-fuel-prices/
http://www.theaa.com/about-us/newsroom/fuel-price-update-october-2017
http://home.nzcity.co.nz/news/article.aspx?id=263989
https://www.rac.co.uk/drive/news/motoring-news/higher-fuel-prices-could-be-new-norm-in-2018/
https://www.rac.co.uk/drive/news/motoring-news/rac-sparks-fuel-price-drop-on-supermarket-forecourts/
