WEBVTT - Oil Demand for Transport: Stronger for Longer 0:00:00.440 --> 0:00:03.840 Hi, Mark Da. So we're talking about vehicles a lot 0:00:03.880 --> 0:00:06.200 here a beIN late Absolutely, it's a fun thing to 0:00:06.240 --> 0:00:09.000 talk about. And every year we write the long term 0:00:09.000 --> 0:00:11.520 Electric Vehicle Outlooks, So we've been doing this for four years, 0:00:11.600 --> 0:00:14.840 which really spurs a lot of conversation around vehicles. And 0:00:14.880 --> 0:00:17.919 then there's a so what what does that mean for businesses? 0:00:18.160 --> 0:00:22.280 What opportunities? Where's the demand? HRE'SUS supply or the cost declines? 0:00:22.840 --> 0:00:25.360 And there's a really interesting report that we're going to 0:00:25.440 --> 0:00:29.040 talk about today which is the twenty nineteen Road Fuel Outlook. 0:00:29.360 --> 0:00:31.840 So we're going to be joined by David Doherty, who's 0:00:31.880 --> 0:00:35.960 actually an analyst that looks at oiled Man specifically, and 0:00:36.040 --> 0:00:38.280 he's going to tell us this. So what in the 0:00:38.320 --> 0:00:40.240 Electric Vehicle Outlook? I think one of the one of 0:00:40.240 --> 0:00:42.440 the biggest punch lines. So let's let's talk a little 0:00:42.440 --> 0:00:44.800 bit about vehicles. So, Mark, do you have car? I 0:00:45.240 --> 0:00:47.199 sadly do not, well, not anymore. I live in the 0:00:47.200 --> 0:00:49.839 middle of London and I frankly don't need one, but 0:00:49.920 --> 0:00:51.879 you know what, I want one? Yeah, if I were 0:00:51.920 --> 0:00:53.760 to buy one, I would buy an electric vehicle. But 0:00:54.600 --> 0:00:56.400 last night, actually I was just sitting there in my 0:00:56.440 --> 0:00:58.160 flat and my wife says, you know what, I want 0:00:58.160 --> 0:01:01.880 to buy a Classic Mini, like a Ni Mini, like 0:01:01.880 --> 0:01:05.200 a Maximni now in pink. So from having no car 0:01:05.520 --> 0:01:08.440 to wanting an electric vehicle to possibly going back and 0:01:08.480 --> 0:01:11.160 buying an old Classic that is not efficient by any means. 0:01:11.319 --> 0:01:13.480 So I've got a Mini, but I've got a Maxim 0:01:13.480 --> 0:01:16.920 Many and Many Country. It's a plug in hybrid, and 0:01:17.040 --> 0:01:20.080 so I'm loving it. First of all, I'm loving charging 0:01:20.160 --> 0:01:21.840 it and the parking. Do you feel like you're part 0:01:21.840 --> 0:01:24.560 of the future. I feel like I'm stepping into the future. 0:01:24.880 --> 0:01:27.319 I feel like the interface inside the car is cool, 0:01:27.400 --> 0:01:29.560 the outside of his cool, and plugging in my car 0:01:29.680 --> 0:01:31.880 is cool. You know. Instantly, we actually we had a 0:01:31.959 --> 0:01:36.400 roundtable event with some people working in financial services around 0:01:36.840 --> 0:01:39.560 the electric vehicle outlook, and there are all these really 0:01:39.760 --> 0:01:43.039 fascinating questions, and you know, we liaise with people across 0:01:43.120 --> 0:01:45.040 all parts of the BYE side, and you know, some 0:01:45.160 --> 0:01:47.800 people in vcs. We're looking at some really cool technology 0:01:47.880 --> 0:01:50.160 and I can't help getting swept up into is up 0:01:50.160 --> 0:01:52.760 in all of it, thinking we're stepping into the future. 0:01:52.880 --> 0:01:56.440 This is so incredibly cool. It is cool cool. We're 0:01:56.480 --> 0:02:02.720 talking about transitions, energy transition, the electric vehicle transition, inflection points, yes, 0:02:03.080 --> 0:02:09.600 peaks and all of this stuff to this report really real. Yeah, 0:02:09.720 --> 0:02:13.080 it brings it home. You know, not to give everything 0:02:13.120 --> 0:02:15.400 away because David Doherty is going to give you a 0:02:15.560 --> 0:02:18.040 much better view on all of this. But ultimately, there's 0:02:18.040 --> 0:02:21.320 a future for oil, and there's a there's a future 0:02:21.400 --> 0:02:24.280 for CEO two and electric vehicles. They're going to disrupt 0:02:24.280 --> 0:02:27.239 things and provide opportunities and force companies to think a 0:02:27.320 --> 0:02:30.840 little bit differently. But the future in some regards looks 0:02:31.440 --> 0:02:35.399 somewhat like today if does not provide investment and strategy advice. 0:02:35.440 --> 0:02:36.800 And you can hear the full disclaimer at the end 0:02:36.800 --> 0:02:39.519 of the show you're listening to switch it on. This 0:02:39.680 --> 0:02:41.760 is Dana Perkins and I'm Mark Taylor and we are 0:02:41.840 --> 0:02:44.639 joined here today by David Doherty. Welcome David, thank you, 0:02:45.040 --> 0:02:47.239 thanks for joining us today. Can you tell us what 0:02:47.400 --> 0:02:50.120 the one thing is that people should remember from this report? 0:02:50.440 --> 0:02:53.200 The one thing that people should take from this report is, 0:02:53.840 --> 0:02:57.720 regardless of how many electric vehicles, electric chooks, alternative cleaner 0:02:57.760 --> 0:02:59.880 fuel as we add, we still end up where we 0:03:00.000 --> 0:03:02.880 are today in terms of carbon emissions from road transport, 0:03:03.080 --> 0:03:05.280 I think that's a big one thing. I think people 0:03:05.360 --> 0:03:09.440 sit there and we have this assumption that if we 0:03:09.560 --> 0:03:12.000 have a lot more electric vehicles on the road, that's 0:03:12.040 --> 0:03:16.359 going to drive carbon emissions down and probably oil demand down. 0:03:16.560 --> 0:03:19.519 You're an oil demand analyst, So where are you seeing 0:03:19.639 --> 0:03:22.200 this really develop? Yeah? I mean the problem is not 0:03:22.320 --> 0:03:24.160 so much in the markets we tend to sit in 0:03:24.280 --> 0:03:27.000 the US, Europe and China, for instance. That's where we 0:03:27.040 --> 0:03:29.639 see e vs and alternatives really taking off. That's where 0:03:29.680 --> 0:03:33.720 fuel economy regulations are pretty stringent, pretty strict in Europe 0:03:33.720 --> 0:03:36.720 for instance. And the problem is in developing world where 0:03:36.760 --> 0:03:38.880 they take our second hand cars where they don't have 0:03:39.040 --> 0:03:42.120 mobility today, so they want mobility tomorrow, and that's the 0:03:42.480 --> 0:03:45.160 demand that comes onto that pile. So it's so quick 0:03:45.320 --> 0:03:47.880 this demand growth that regardless of what we're adding into 0:03:47.920 --> 0:03:50.440 this pile, we're not catching up with it. So we 0:03:50.600 --> 0:03:52.920 end up in twenty forty where we are today in 0:03:53.080 --> 0:03:56.120 terms of overall oil consumption from passenger cars and from 0:03:56.120 --> 0:03:58.400 commercial trucks. And that is really the crux of this 0:03:58.480 --> 0:04:02.000 whole thing. Add add these clean vehicles, but demand just 0:04:02.120 --> 0:04:05.040 outpaces everything. But a really report I came away with 0:04:05.160 --> 0:04:07.280 three things. Really to me, the whole thing said, there's 0:04:07.280 --> 0:04:09.560 gonna be a lot more people. People want to get places, 0:04:09.680 --> 0:04:12.160 and people want more stuff. Right. Does that sound like 0:04:12.240 --> 0:04:14.520 too broader generalization or does that sound no? I think 0:04:14.560 --> 0:04:16.599 it's pretty fair. And I mean it's run a high 0:04:16.640 --> 0:04:19.320 horse sitting here in London, and we can say we 0:04:19.440 --> 0:04:21.880 need cleaner air, we need cleaner fuels, we need a 0:04:22.000 --> 0:04:24.360 nice electric vehicle. But getting from A to B is 0:04:24.360 --> 0:04:26.520 a necessity for some people that they don't mind what 0:04:26.640 --> 0:04:28.560 it pops at the back of that tail pipe. If 0:04:28.600 --> 0:04:31.240 you're talking about like a Western African nation, mobility is 0:04:31.279 --> 0:04:33.160 what they want. You have to be rich enough to 0:04:33.279 --> 0:04:35.640 really care about the air that you're breeding in if 0:04:35.680 --> 0:04:37.640 you can't get around, right, So you don't want to 0:04:37.680 --> 0:04:40.320 take that mobility away from somebody, and you want to 0:04:40.320 --> 0:04:42.400 give them the opportunity to get it. How do we 0:04:42.440 --> 0:04:44.680 do that in the cleanest way? That is really the 0:04:44.760 --> 0:04:47.320 question we haven't really answered. It's um, it's it's a 0:04:47.360 --> 0:04:50.120 bit of a double edged sword, right. People want this, 0:04:50.520 --> 0:04:52.800 They want more stuff, like you said, want more miles. 0:04:52.839 --> 0:04:54.040 They want to be able to do things that we 0:04:54.120 --> 0:04:56.640 can do, and we sit here saying, well, actually, you 0:04:56.720 --> 0:04:58.920 know the air is a bit dirty. I got a 0:04:59.000 --> 0:05:01.760 chest infection from that diesel, like the sut that comes 0:05:01.800 --> 0:05:03.640 out of the car. You have to be rich enough 0:05:03.640 --> 0:05:05.360 to care about that sort of thing. If you you know, 0:05:05.560 --> 0:05:07.480 we can get around. If you can't, you don't. You 0:05:07.520 --> 0:05:09.320 don't care if it's gasoline, if it's diesel, or it's 0:05:09.320 --> 0:05:11.360 the tank, you're going to move around well. So this 0:05:11.520 --> 0:05:13.600 is where governments come into play. And one of the 0:05:13.680 --> 0:05:16.160 things that you point out in this report is that 0:05:16.880 --> 0:05:20.720 fuel economy standards actually have a more meaningful impact in 0:05:21.200 --> 0:05:24.960 some parts of the vehicle chain than others. Can you 0:05:25.040 --> 0:05:28.080 extrapolate on that a little bit? So we talk a 0:05:28.160 --> 0:05:31.479 lot about different technologies, electric hydrogen, they don't really play 0:05:31.520 --> 0:05:34.600 a role until they past, at least not in big numbers. 0:05:34.800 --> 0:05:36.520 So how do you tackle that in the next ten 0:05:36.560 --> 0:05:40.640 years thirty? The easiest way is the fuel economy regulations. 0:05:40.720 --> 0:05:43.480 So the fuel economy is how much oil your car 0:05:43.600 --> 0:05:46.239 burns to travel one mile um And the way governments 0:05:46.279 --> 0:05:49.360 are regulated in Europe, US and China basically is say 0:05:49.520 --> 0:05:51.920 the average car that you sell has to have x 0:05:52.120 --> 0:05:55.160 of a fuel economy improvement by a certain date. So 0:05:55.279 --> 0:05:58.360 you could sell electric vehicles and one tank that just 0:05:58.680 --> 0:06:01.279 consumes tons and tons of reesel. Once the average works 0:06:01.320 --> 0:06:03.200 out at a certain amount, then you're good to go. 0:06:03.360 --> 0:06:05.360 And so that's where we're seeing electric vehicles being the 0:06:05.400 --> 0:06:07.320 answer at the moment to like the false wagons of 0:06:07.400 --> 0:06:10.080 the world. And we saw FEAT buying the credits that 0:06:10.480 --> 0:06:13.000 TSLT produced from their electric vehicles, so they can meet 0:06:13.040 --> 0:06:15.480 that hurdle. But fuel economy standards are are the one 0:06:15.520 --> 0:06:17.520 that really hit oil demand in the short term, and 0:06:17.560 --> 0:06:19.599 they're the easiest to put into place. They come at 0:06:19.640 --> 0:06:22.360 a cost to the auto manufacturer, which in turn gets 0:06:22.400 --> 0:06:24.320 passed on really to the to the client at the 0:06:24.400 --> 0:06:26.039 end of the day, me and you're driving our cars. 0:06:26.400 --> 0:06:28.000 But it's the quickest one that you can do, and 0:06:28.040 --> 0:06:30.840 if you look in terms of emissions, it's the first 0:06:30.960 --> 0:06:32.640 one that makes a dent in that in that big 0:06:32.720 --> 0:06:34.920 stack of emissions. So they're the easiest one to put 0:06:34.960 --> 0:06:38.040 into place if you're a government theoretically, but if you're 0:06:38.040 --> 0:06:41.400 an auto manufacturer, I would assume this is pretty tough. Um. 0:06:41.680 --> 0:06:44.599 You can hear from my accent, I'm American. We recently 0:06:44.640 --> 0:06:47.240 in the US decided to roll some of those back 0:06:47.400 --> 0:06:51.919 in the future. What does that potentially do to this forecast. 0:06:52.160 --> 0:06:54.960 Does it does it make it fluctuate wildly? Things change, 0:06:55.160 --> 0:06:57.000 It's a big risk. So if you were, like in 0:06:57.040 --> 0:07:00.320 the US, going to flatten your fuel economy, regulate some 0:07:00.400 --> 0:07:04.440 say so just say over those four years freeze you 0:07:04.520 --> 0:07:06.720 don't need to improve anything in the US alone, that 0:07:06.760 --> 0:07:09.320 would add about five thousand barrels per day half a 0:07:09.360 --> 0:07:12.040 million barrels per day. That's about the point five of 0:07:12.120 --> 0:07:14.600 total consumption as we stand back into that pool. So 0:07:14.680 --> 0:07:17.160 it's very sensitive to these things. And you have to 0:07:17.240 --> 0:07:19.920 think as well. If an electric vehicle comes onto the road, 0:07:20.280 --> 0:07:21.680 the way you've got to think about it is it's 0:07:21.680 --> 0:07:24.760 replacing what would have been an ice vehicle, combustion engine vehicle. 0:07:25.440 --> 0:07:28.600 So the efficiency of that combustion engine vehicle really matters 0:07:28.640 --> 0:07:30.760 when we're thinking about how much are these electric vehicles 0:07:30.800 --> 0:07:33.360 actually displacing in the world. You know, if it's a 0:07:33.400 --> 0:07:37.200 less efficient vehicle, that that ev displacement number looks pretty high. Really, 0:07:37.240 --> 0:07:40.040 it's still displacing the similar mile. It's just that mile 0:07:40.120 --> 0:07:43.000 consumes more oil um. So that is probably the biggest, 0:07:43.520 --> 0:07:46.440 the biggest swing in any of these forecasts. What what 0:07:46.680 --> 0:07:50.120 is that mile consuming? You know, how much gasoline, how 0:07:50.240 --> 0:07:52.920 much diesel, and people can change their mind. You know, 0:07:53.240 --> 0:07:55.440 Trump came in, we saw that they try to roll 0:07:55.520 --> 0:07:57.560 that back where they frozen for now, it's a little 0:07:57.600 --> 0:08:00.760 bit in limbo at the moment, Europe get more stringent. 0:08:01.040 --> 0:08:03.040 We saw during the week Japan released news that they 0:08:03.080 --> 0:08:05.840 were going to introduce a new one. These are people 0:08:05.880 --> 0:08:08.040 sitting in rooms making decisions. They're not people on a 0:08:08.200 --> 0:08:10.680 you know, a manufacturing line making the car. They have 0:08:10.800 --> 0:08:13.320 to react to these politicians and this policy that comes 0:08:13.360 --> 0:08:16.160 into play, but it is the most efficient, quickest way 0:08:16.200 --> 0:08:18.080 to do it. So is that the main I don't know, 0:08:18.160 --> 0:08:21.000 load bearing assumption in the report, so the government regulations 0:08:21.160 --> 0:08:24.920 or is it uptake from emerging markets or elsewhere? Yeah, 0:08:25.240 --> 0:08:26.600 it's a bit of boat to be honest. So in 0:08:26.640 --> 0:08:29.680 the developing markets, I would say that the biggest dependency 0:08:29.800 --> 0:08:32.199 for this, what could really swing that number, would be 0:08:32.320 --> 0:08:34.960 the fuel economy. You assume that the car holds because 0:08:35.000 --> 0:08:37.439 we're looking at markets that are essentially flat, and actually 0:08:37.480 --> 0:08:40.080 what you're more concerned about now is what does uber 0:08:40.160 --> 0:08:43.280 do to that market? So if us three are going somewhere, 0:08:43.360 --> 0:08:45.400 what if we shared that car instead of all three 0:08:45.440 --> 0:08:47.840 of us driving our cars. That's three for one, right. 0:08:47.920 --> 0:08:50.800 That's very different to in Africa, where somebody might cycle 0:08:51.120 --> 0:08:53.360 or they might take a bus, and they're probably going 0:08:53.400 --> 0:08:55.959 the opposite direction. They want their own vehicle, they want 0:08:56.000 --> 0:08:58.080 their own space, and they want to move that male themselves. 0:08:58.600 --> 0:09:00.600 So it's two very different things. You have a bit 0:09:00.640 --> 0:09:02.880 of crossover in the likes of say India, where we 0:09:03.040 --> 0:09:06.040 think sharing where it's more normal there to share in 0:09:06.080 --> 0:09:09.199 the first place, will be um key to answering that 0:09:09.360 --> 0:09:13.480 demand and that mobility growth. So it's very different and 0:09:13.600 --> 0:09:16.520 very different regions, so you kind of can't put them 0:09:16.559 --> 0:09:20.000 all in the same box. But absolutely the developing world, 0:09:20.120 --> 0:09:22.800 where the population makes us look tiny, is really where 0:09:22.840 --> 0:09:25.240 the growth comes from. In both the trucks and passenger cars. 0:09:25.559 --> 0:09:29.240 We make an assumption in here around autonomous driving and 0:09:29.320 --> 0:09:31.920 that that is going to essentially reach a tipping point 0:09:31.960 --> 0:09:34.480 in the technology that doesn't quite exist yet. We're just 0:09:34.559 --> 0:09:36.960 assuming it's going to be there. So my kids, are 0:09:37.000 --> 0:09:38.559 they going to grow up they can have a driver's license. 0:09:38.600 --> 0:09:41.280 Are they all going to be and shared autonomously driven vehicles? Yeah, 0:09:41.320 --> 0:09:43.280 it's I mean, it's it's hard to know. It's one 0:09:43.320 --> 0:09:45.160 of those things where you can make a best gas 0:09:45.200 --> 0:09:47.640 at But what actually happens we will, you know, have 0:09:47.800 --> 0:09:49.920 to wait and see. But that robot taxi is, so 0:09:50.040 --> 0:09:52.360 to speak, which is quite a terrifying where are being 0:09:52.440 --> 0:09:55.120 tested out. We're seeing them on the roads in California. 0:09:55.280 --> 0:09:57.640 But they are on the roads in California, which even 0:09:57.720 --> 0:09:59.840 from London seems a mile away. You know, you're you're 0:09:59.840 --> 0:10:01.959 not quite connected to how that works. And can I 0:10:02.080 --> 0:10:05.560 see myself driving around with a robot actually behind the wheel? 0:10:05.800 --> 0:10:07.400 I don't know. You've got to change mentalities, and I 0:10:07.440 --> 0:10:09.280 would like to think I'm probably on the forefront of 0:10:09.320 --> 0:10:12.480 being okay with these things, but not proven in my head. 0:10:12.880 --> 0:10:16.640 But in our forecast in the later part of the ties, yeah, 0:10:16.679 --> 0:10:19.040 we see that playing more of a role. The interesting 0:10:19.080 --> 0:10:21.520 part of that is by that time, the more you drive, 0:10:21.559 --> 0:10:23.440 the cheaper it is to drive on an electric mile. 0:10:23.520 --> 0:10:26.280 So they will all be electric. They might use more electricity, 0:10:26.720 --> 0:10:28.520 but they will be electric. They won't be running off 0:10:28.559 --> 0:10:30.520 of diesel. You know, your robot is not going to 0:10:30.600 --> 0:10:33.000 pull into a station and refill their engine. You know 0:10:33.080 --> 0:10:35.720 it's but isn't the same thing for the right sharing companies? 0:10:35.720 --> 0:10:38.120 I saw in the report it said that you're still 0:10:38.120 --> 0:10:40.520 going to have ice vehicles like scuber and lift. I 0:10:40.559 --> 0:10:42.800 didn't quite believe that. Yeah, for sure, I mean the 0:10:43.040 --> 0:10:46.079 logic makes sense to shift to electric. So basically, the 0:10:46.120 --> 0:10:48.200 more you drive, the more miles you cover, the better 0:10:48.280 --> 0:10:51.240 the payback period is what I think. What's really interesting 0:10:51.280 --> 0:10:53.840 in the shared hailed services is in the short term 0:10:53.920 --> 0:10:56.080 it adds into the pile. So we've seen London, New 0:10:56.160 --> 0:10:59.040 York where they're really actually now worried about congestion because 0:10:59.200 --> 0:11:00.840 maybe on a night out I would have previously got 0:11:00.920 --> 0:11:02.839 a bus home or the night to I am not 0:11:02.880 --> 0:11:04.959 getting that anymore. I'm most definitely getting an uber And 0:11:05.040 --> 0:11:07.160 if you really want to skimp on pennies, you'll do 0:11:07.200 --> 0:11:10.400 an uber pool. Like you know, it's it's totally different 0:11:10.440 --> 0:11:13.200 way of thinking. That adds back into consumption. So our 0:11:13.240 --> 0:11:15.920 forecast builds that into the short term, actually adds into 0:11:15.960 --> 0:11:18.840 the oil pool. Further out it dips off. Yeah, absolutely, 0:11:18.960 --> 0:11:20.760 But then you shift into different parts of the world 0:11:20.760 --> 0:11:24.200 where infrastructure can become a problem or actually that competitiveness, 0:11:24.559 --> 0:11:27.679 the price competitiveness becomes an issue because ice vehicles and 0:11:27.720 --> 0:11:30.880 certain regions are incredibly cheap. India, for instance, electric vehicles 0:11:30.920 --> 0:11:33.720 really struggle to compete because cars there are incredibly cheap. 0:11:33.760 --> 0:11:35.880 So you're you're not you know, you've moved the goalposts 0:11:35.880 --> 0:11:38.920 in different markets. You're looking at in a very different way. Yeah, okay, 0:11:39.080 --> 0:11:43.000 So in here we say that peak demand for oil 0:11:43.160 --> 0:11:47.719 for light and heavy duty vehicles peaks in. But I 0:11:47.880 --> 0:11:50.840 looked at the chart and it didn't look very peaky. 0:11:51.040 --> 0:11:52.880 If you will, It looks like the sort of you know, 0:11:52.960 --> 0:11:54.360 mountain I want to climb when I go on a 0:11:54.400 --> 0:11:57.280 country walk on the weekend. So how far have we 0:11:57.320 --> 0:11:58.719 gone out into the future and do we see a 0:11:58.800 --> 0:12:00.839 drop off at any time? Or is it really looking 0:12:00.920 --> 0:12:03.080 like business as usual into the future as far as 0:12:03.120 --> 0:12:06.760 we can tell, well, the story diverges massively between passenger 0:12:06.800 --> 0:12:09.960 cars and heavy duty vehicles. Right, So if you're looking 0:12:10.040 --> 0:12:12.920 at me and you driving around, we have alternative options. 0:12:12.960 --> 0:12:15.120 We've got different drive trains coming along. We've got different 0:12:15.160 --> 0:12:18.000 solutions like uber, like lift, like that robot cab that 0:12:18.040 --> 0:12:21.280 might bring us around. When it comes to trucks, you're 0:12:21.280 --> 0:12:23.440 in a very different field of things. You're you're looking 0:12:23.480 --> 0:12:25.959 at how heavy is that truck? A truck works off 0:12:26.000 --> 0:12:28.720 of putting things in the back and transporting them. If 0:12:28.760 --> 0:12:31.240 you've got a huge battery, you can't put more things 0:12:31.320 --> 0:12:33.440 on the back of it because you're regulated into how 0:12:33.520 --> 0:12:35.280 heavy your truck can be. In general, if you're in 0:12:35.320 --> 0:12:38.160 a city center, however, you may not allowd be using 0:12:38.679 --> 0:12:40.760 be allowed to use diesel anymore. You can only use 0:12:40.800 --> 0:12:43.760 electric or something clean. So the trucking market itself is 0:12:43.880 --> 0:12:47.120 just a whole other things, six or seven different markets. 0:12:47.160 --> 0:12:48.920 You have to think about them in a very different way. 0:12:49.520 --> 0:12:52.960 Passenger cars is easy that peaks pretty early I think 0:12:53.880 --> 0:12:56.720 in our forecast, and comes off afterwards. It doesn't totally 0:12:56.800 --> 0:12:59.560 nos dive, but the whole time, trucks continue to grow 0:12:59.679 --> 0:13:02.920 until twenty thirty five and slow down afterwards, but it's 0:13:03.080 --> 0:13:05.800 a very minimal slowdown, which is what causes that sort 0:13:05.840 --> 0:13:08.560 of flattening out. Like you said, the mountain you want 0:13:08.600 --> 0:13:10.640 to climb in the weekend sort of thing. So you 0:13:10.679 --> 0:13:12.319 can't look at them. You look at them together, but 0:13:12.400 --> 0:13:14.679 it's difficult to really understand the story unless you really 0:13:14.720 --> 0:13:16.480 pick them apart and look at what's happening in each 0:13:16.480 --> 0:13:20.000 of them. And our house view tends not to favor hybrids, 0:13:20.360 --> 0:13:22.560 but it seems like there's really a place for hybrids 0:13:22.720 --> 0:13:27.080 or range extenders or plug ins, or something that's halfway 0:13:27.120 --> 0:13:30.559 between in this truck's space. Yeah, I mean hybrids in 0:13:30.640 --> 0:13:33.000 general are expensive to make. So if you think about it, 0:13:33.040 --> 0:13:35.680 you've got the expensive parts of an ice engine mixed 0:13:35.720 --> 0:13:37.920 with the expensive parts of an electric and I mean 0:13:38.080 --> 0:13:40.240 you're putting two expensive things. You don't get anything that's 0:13:40.280 --> 0:13:42.719 any cheaper. However, in the trucking space, it comes down 0:13:42.840 --> 0:13:45.400 to function. Yet again, you might not have the infrastructure 0:13:45.520 --> 0:13:48.959 to refuel if you've got a truck doesn't have a 0:13:49.040 --> 0:13:51.480 set route. Let's say you might be going from Edinburgh 0:13:51.559 --> 0:13:53.480 to London one day, you could be going from the 0:13:53.520 --> 0:13:55.640 middle of Poland to the middle of German You another day. 0:13:56.160 --> 0:13:58.240 So you need to know where infrastructure lies in advance. 0:13:58.280 --> 0:14:00.480 So that's where things like range extenders you could think 0:14:00.520 --> 0:14:02.760 of as a sort of a plug in hybrid, come 0:14:02.760 --> 0:14:05.000 into play. You can drive some of your miles electric, 0:14:05.040 --> 0:14:08.199 but ultimately it's the diesel that recharges that engine and 0:14:08.280 --> 0:14:10.839 then when it's recharge switches to that So there is 0:14:11.000 --> 0:14:13.120 a role to play, but it's not as simple as 0:14:13.200 --> 0:14:16.120 thinking of a plug in hybrid electric vehicle versus you know, 0:14:16.280 --> 0:14:19.160 a battery electric vehicle. It's a it's a completely different 0:14:19.160 --> 0:14:21.120 way of thinking about it. It's more through function for 0:14:21.200 --> 0:14:24.440 trucks than it is basic costs. You know, a car 0:14:24.960 --> 0:14:27.160 is a car, so to speak. You can drive longer 0:14:27.360 --> 0:14:29.600 or shorter. You tend to drive the same way. Trucks. 0:14:29.640 --> 0:14:32.360 You've got weight limitations, some technologies you can turn the 0:14:32.440 --> 0:14:35.400 corner for correctly. If you have, you know, a big 0:14:35.480 --> 0:14:37.160 fuel cell stack in the back of your truck, you 0:14:37.200 --> 0:14:39.560 can you can only angle so much around corners. There's 0:14:39.560 --> 0:14:40.600 a lot of things you have to think about when 0:14:40.600 --> 0:14:42.360 you're looking at the trucking market that before we did 0:14:42.440 --> 0:14:45.320 this research, I never ever thought about. So with these 0:14:45.480 --> 0:14:47.920 fuels that we're still going to see demand for in 0:14:47.960 --> 0:14:50.080 the future, can you break them down a little bit 0:14:50.240 --> 0:14:53.800 by gasoline and diesel because those have two very different 0:14:53.840 --> 0:14:58.120 demand profiles, don't they. Yeah, So the passenger car market 0:14:58.360 --> 0:15:02.640 is almost exclusively asoline now and we see diesel in Europe. 0:15:02.800 --> 0:15:04.920 Diesel has really had a hard time recently. There's been 0:15:04.960 --> 0:15:08.280 the Volkswagen scandal, it's fallen out of favor. You could 0:15:08.320 --> 0:15:10.280 clean diesel up now and it's still not going to 0:15:10.360 --> 0:15:12.080 sell the way it has. We've seen the likes of 0:15:12.120 --> 0:15:15.440 Renault abandoned the technology and smaller vehicles. It's just too 0:15:15.480 --> 0:15:18.080 expensive to make smaller cars or diesels now because the 0:15:18.120 --> 0:15:20.360 margins or something, so they're shifting away from that. So 0:15:20.560 --> 0:15:22.720 when Europe is sort of the only place using diesel, 0:15:23.360 --> 0:15:25.600 it makes sense for them to sort of conform to 0:15:25.680 --> 0:15:27.240 the rest of the world. And we're seeing lots of 0:15:27.320 --> 0:15:30.000 other uses for diesel trucking which is growing, so in 0:15:30.040 --> 0:15:32.120 theory the price of diesels should go up, but also 0:15:32.200 --> 0:15:35.200 shipping where they're shifting towards a cleaner fuel such as diesel. Right, 0:15:35.280 --> 0:15:38.360 So the passenger car segment is a gasoline market, which 0:15:38.440 --> 0:15:41.600 is why that peaks before diesel, and diesel is predominantly 0:15:41.680 --> 0:15:43.720 used in trucks. The only place you see gasoline and 0:15:43.760 --> 0:15:46.280 trucks is sort of the lighter vans, so you know, 0:15:46.440 --> 0:15:49.800 Amazon delivery services, they may run off of gasoline, particularly 0:15:49.800 --> 0:15:52.320 in the US in Europe pretends to be diesel, but 0:15:52.680 --> 0:15:55.280 the diesel profile is much stronger and more resilient in 0:15:55.440 --> 0:15:58.440 terms of, you know, susceptible to disruption than gasoline, so 0:15:58.600 --> 0:16:01.560 we see diesel peaking into any early five. Benefit of that, however, 0:16:01.720 --> 0:16:04.440 is diesel is much more efficient on a mile paramount 0:16:04.480 --> 0:16:08.080 basis than than gasoline. So it's carbon profile is I 0:16:08.080 --> 0:16:11.120 would say favorable to gasoline. You just need to manage 0:16:11.200 --> 0:16:14.120 the NOx and socks, the emissions and the air quality 0:16:14.120 --> 0:16:15.760 issues that come from back of it. Have you looked 0:16:15.800 --> 0:16:18.080 at what this means for I don't know. Strategies for 0:16:18.200 --> 0:16:20.800 oil companies say yeah, they have to think about how 0:16:20.880 --> 0:16:23.640 they approach is a very different way in future. At 0:16:23.680 --> 0:16:25.680 the moment, we have a huge refining system in the 0:16:25.840 --> 0:16:28.280 U S which produces an awful lot of gasoline, a 0:16:28.360 --> 0:16:30.720 big refining system in Europe which produces an awful lot 0:16:30.800 --> 0:16:32.760 of diesel, and that suits it at the moment. So 0:16:32.960 --> 0:16:35.720 Europe consumes diesel in its passenger cars, also in its trucks. 0:16:35.960 --> 0:16:37.880 The U S consumes a lot of gasoline in its 0:16:37.920 --> 0:16:40.840 cars right. What they have extra they export to Latin 0:16:40.880 --> 0:16:45.040 America or to Africa. Europe exports gasoline to Latin America 0:16:45.240 --> 0:16:48.040 or to West Africa. We're seeing now big refining projects 0:16:48.080 --> 0:16:50.320 coming into the places that we've always used to send 0:16:50.440 --> 0:16:54.320 our excess capacity, to our excess products to. So West Africa, 0:16:54.360 --> 0:16:56.160 for instance, they've got a huge refinery that don go 0:16:56.240 --> 0:16:59.520 to refinery that's being built to satisfy that gasoline demand. 0:17:00.160 --> 0:17:02.160 That is just one example of what we're seeing happening. 0:17:02.520 --> 0:17:06.200 China is doing the same, Southeast Asia, Middle East. These 0:17:06.240 --> 0:17:10.479 developing markets or developing markets quote unquote are satisfying their 0:17:10.480 --> 0:17:14.880 own demand now satisfying their own supply. So if you're 0:17:15.119 --> 0:17:17.800 pumping out aasoline in Europe or the US, you now 0:17:17.880 --> 0:17:20.320 have to compete when you're trying to price that into 0:17:20.359 --> 0:17:23.359 those markets, So your whole strategy has to change. The 0:17:23.400 --> 0:17:26.000 one thing I would say is the oil market is 0:17:26.359 --> 0:17:28.560 totally used to this. You know, we have big shifts 0:17:28.600 --> 0:17:32.040 and standards. We've always had big shifts in inspecs, and 0:17:32.080 --> 0:17:34.639 they're not afraid to move things around. We've got the 0:17:34.720 --> 0:17:37.040 I m O coming up next year, for instance. We'll 0:17:37.040 --> 0:17:40.000 see products shift around. We've already seen it happen before 0:17:40.040 --> 0:17:43.560 when diesel spects come into play. Um of the industry. 0:17:43.800 --> 0:17:46.840 It's incredibly flexible and I don't think people give it 0:17:46.920 --> 0:17:49.200 a lot of credit and how they can adapt to 0:17:49.320 --> 0:17:52.000 these changing markets. So in all this, who do I 0:17:52.040 --> 0:17:53.800 want to be? Do I want to be a truck 0:17:53.840 --> 0:17:56.040 and company in India? Do I want to be an 0:17:56.080 --> 0:17:58.399 oil company? Do I want to be an automo? Manufacturer. 0:17:58.520 --> 0:18:00.560 Who do I want to be. Yeah, that's quite a 0:18:00.600 --> 0:18:03.200 tough question. Everybody, I think can take value out of 0:18:03.280 --> 0:18:06.639 this in a certain way. Where I think the biggest 0:18:06.720 --> 0:18:09.160 opening up in terms of value will be is auto 0:18:09.240 --> 0:18:12.960 manufacturers or truck manufacturers. Particularly if you think of a 0:18:13.040 --> 0:18:16.160 truck and company. Now, they sell their truck to somebody 0:18:16.200 --> 0:18:18.119 who's going to use it, and that person who's going 0:18:18.200 --> 0:18:21.160 to use it parks it fills it with diesel every day, right, Okay, 0:18:21.320 --> 0:18:23.520