Electric vehicles (EV), autonomous vehicles and ride-sharing have played key roles in reshaping the plans of oil and gas companies, according to speakers on Deloitte’s recent “The Future of Mobility” webinar.

But while the evolution of these transportation technologies will likely impact future gasoline demand, some oil and gas leaders doubt the impact will be substantial according to Thomas Shattuck, lead market insights analyst at Deloitte Services.

For the upstream sector, Shattuck’s only real concern is whether the current trends will reach the countries that fuel a lot of the global demand growth, such as China and India. Shattuck expects the upstream sector to remain resilient considering U.S. gasoline consumption is a minuscule factor in the dynamic global system for oil and gas.

“[A] major reasons is when you sell oil, you’re selling oil on a global market. Secondly, due to just natural depletion of existing resource base there’s just going to be constant need for investment,” he said.

Furthermore, the midstream sector’s long life and upfront investment puts it in a similar position as the upstream sector, Shattuck said. But he said some facilities might face challenges, particularly refineries or pipelines located inland in the Gulf Coast, adding that rethinking the facilities’ operational systems is imperative in a continued improvement scenario.

“In a scenario with only moderate gasoline consumption decline the effects would be minimal, there might be some need for capacity rationalization or rethinking exactly where flow is coming from or going to, but the natural flexibility within the market would allow for that,” Shattuck said.

However, Shattuck said the oil and gas industry mostly anticipates the transformation to affect the downstream market which includes gas stations, retailers and refiners.

“Ultimately geography [specifically] the urban, suburban and rural divide…each will have different implications for oil and gas,” he said.

In urban areas, where it is heavily populated, the demand for autonomous vehicles and ride-sharing services are high, potentially imposing greatly on the downstream sector, he argued Location could play a small role in upstream and midstream, too.

A decrease in the need for gas stations would seem to be a problem for the entire industry, but oil and gas leaders say that EVs will make up less than 10% of the total global car stocks by 2040, according to Shattuck. The Department of Energy’s projections for the next 20 to 25 years estimates U.S. EV sales growing to about 1.5 million cars per year by 2040 or about 19% of total car sales.

Shattuck urges each sector to consider the current impact of EVs since California and eight other states are committing to millions of EV stock by 2025. By the same year, Norway and the Netherlands are aiming to have 100% of new cars sales be just EVs.

three_scenarios_modeling_future_of_mobility's_impact

“We assume that in the scenarios there will be at least some level of adoption,” Shattuck said. “When we’re talking about gasoline consumption we really are interested in mainly in things like plug-in hybrids and EVs, however just things like increasing the revitalization of the existing fleet thus increasing the turnover of the amount of cars on the road would also have a dramatic impact.”

As part of Shattuck’s devised strategy, he suggested oil and gas producers to first understand the evolution of mobility. Shattuck said being informed on the transformation would allow companies to not only optimize their own ecosystem, but also better prepare for the possibility of global competition.

Also, to aid with the uncertainty amongst perspectives, Shattuck said oil and gas companies should evaluate the impressions of existing mobility models. Specifically, how the autonomous Tesla Model 3 and Chevy Bolt EV revolutionized mobility with their rapid popularity, Shattuck points out.

Another part of the plan, he said, requires the preparation to also eliminate the cost of inaction in the future in areas greatly infiltrated with EVs. Investing in EVs, with adequate preplanning, could return peak capacity revenue by 2040 where building more attainable charging outlets is the smartest and most lucrative investment, he added.

“Due to demographic and economic factors across a range of scenarios, gasoline consumption is likely to decline,” Shattuck said.

fuel_consumption_decline_graph

Regardless of the impact the gas stations will need to take initiatives to set up charging outlets, manage natural gas and LNG demand from power plants that help fuel EVs and investing in wind and solar renewables, according to Shattuck.

Overall his advised key takeaway is flexibility stating it will aid the oil and gas industry in the long run during the mobility evolution.

Mary Holcomb can be reached at mholcomb@hartenergy.com.