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EVs to cut oil consumption

The continued development of self-driving electric vehicles (EVs) and travel sharing are set to dent oil consumption by 2040, BP said in their annual Energy Outlook report.

Unlike previous BP Energy Outlooks, this year’s Outlook is described with reference to the ‘Evolving Transition’ scenario, which assumes that government policies, technologies and societal preference continue to evolve at a manner and speed similar to the recent past.

“BP’s strategy has to be resilient and adaptable to significant changes in the energy industry. This Outlook considers the possible implications of some of these changes and helps inform our long-term planning. We cannot predict where these changes will take us, but we can use this knowledge to get fit and ready to play our role in meeting the energy needs of tomorrow,” explains Bob Dudley, group chief executive.

Transport analysis

The oil and gas giant believes that there will be a 100-fold growth in electric vehicles by 2040, with its chief economist Spencer Dale painting a world in which we travel much more but instead of using private cars, we increasingly share trips in autonomous vehicles.

In the ET scenario, 30 per cent of car kilometres are powered by electricity by 2040 from almost zero in 2016. At the same time, the number of EVs is set to increase from 3 million today to over 320 million by 2040, representing roughly 15 per cent out of a total car fleet of 2 billion.

As a result, fuel demand from the car fleet is forecast to dip to 18.6 million barrels per day in 2040 from 18.7 million bpd in 2016, when it represented around one-fifth of total oil demand, according to BP.

BP expects autonomous vehicles to become available in the early 2020s. Their initial high cost means the vast majority of the cars will be bought by fleets offering shared mobility services. The average electric car is expected to be driven about two and a half times more than an internal combustion car, according to Dale.

Fuel analysis

In the ET scenario, renewable energy is the fastest growing source of energy, accounting for over 40 per cent of the increase in energy supplies.

By 2040 oil, gas, coal, and non-fossil fuels are projected to each provide around a quarter of the world’s energy.

Natural gas grows much faster than either oil or coal, with its share in primary energy overtaking coal and converging on oil.

Oil will grow, although is projected to plateau in the 2030s. Coal consumption is broadly flat, with its share in primary energy declining to 21 per cent, the lowest since the industrial revolution.

“We are seeing growing competition between different energy sources, driven by abundant energy supplies, and continued improvements in energy efficiency. As the world learns to do more with less, demand for energy,” says Dale. 

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Fuel stocks stable: Z Energy, BP

Disruption continues and the costs are rising following the rupture of a fuel pipeline in Northland on Thursday.

Though nearly 30 flights have been cancelled today, and estimates indicate that the spill may cost up to $15 million, councils and fuel retailers remain positive that the situation is being handled competently.

Z Energy today said that four of its Auckland stations ran out of 95 octane fuel yesterday, due to the company prioritising the delivery of diesel and 91 octane petrol.

The pipeline which connects Marsden Point Oil Refinery and Auckland Airport was breached on a farm near Ruakaka. Source: stuff.co.nz

The company assured drivers today though that despite yesterday’s shortages, good stocks of 95 octane fuel were continuing to be trucked into Auckland and there should be no Z stations running out of it.

BP also confirmed that its fuel stocks were stable.

“Availability of all fuel grades currently continues at BP sites across New Zealand. This includes Regular 91, Premium 95, Ultimate 98 and Ultimate Diesel as usually stocked,” BP said in a statement released just before midday today.

The pipeline, which carries all aviation fuel to Auckland Airport, is 169km long and operated by refining company Refining NZ, ruptures Thursday following what is thought to be damage caused by a digger earlier in the year.

In an update released at 9am this morning, Northland Regional Council said that around 80,000 litres of fuel has been reported spilled, but that this is not likely to cause any significant environmental damage, owing to the timely response from the refinery.

In a statement yesterday, Refining NZ said that a 30 person team has been working on a 24 hour basis over the last four days to clean up the spill, and that most of the jet fuel has been recovered from the spill site.

Energy and Resources Minister Judith Collins told RNZ’s Morning Report today that a number of measures were being taken to speed up fuel distribution.

The NZTA was making it easier for tankers to get over-weight permits to be allowed to carry more fuel, Collins said.

Auckland Transport and NZTA were working together to phase traffic lights so trucks could get to fuel stations more quickly.

Auckland Council would also extend the times when fuel drop-offs were allowed in the city, she said.

The Government also said the NZ Defence Force was making 890,000 litres of military fuel available to civilian aircraft, and 20 of their drivers were being drafted in to help local operators manage the workload.

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Fuel spending hits two year low

Spending on fuel in New Zealand has reached the lowest monthly total since February 2015, says Sue Chapman, the business indicators manager for Stats NZ.

In a press release published this morning, Chapman noted the large drop in the price of fuel since June.

“Fuel prices were cheaper by almost 10 cents a litre in July compared with last month.”

While spending in most retail industries increased on last month, spending on fuel fell a massive $36 million (6.1 per cent) compared to June.

Overall, card spending on fuel is down 4.9 percent in July 2017 compared with the same month last year.

When adjusted for seasonal effects, spending in the retail industries fell 0.5 per cent in July 2017, after a 0.1 per cent fall in June 2017.

Spending on vehicles in New Zealand, excluding fuel, has remained mostly constant since March. It displayed no change from June to July, remaining at $167 million.

Spending on vehicles excluding fuel is up about 3.1 per cent compared to the same month last year, totalling $162 million in July 2016.

Actual retail spending using electronic cards was $4.9 billion in July 2017, up $96 million (2.0 per cent) from July 2016.

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Study finds fuel prices may not be reasonable

The Fuel Market Financial Performance study, commissioned by the Ministry of Business, Innovation and Employment following public pressure regarding petrol prices in New Zealand has found that prices may be unfair, although constraints of data meant the report was unable to reach a definite conclusion.

The 118-page report gathered data from major fuel companies, including BP, Mobil and Z Energy, and some information from independent company Gull and industry participants, such as suppliers. Analysts sought to conclude whether fuel prices were reasonable, what regional factors could explain nationwide disparities in price, and if there was any evidence of cross-subsidisation between the product and the market.

“We can indeed identify features of the New Zealand fuel industry possibly giving cause for concern that consumers are not as well served as they could be,” the report said, “but with the information and time available it has not been possible to be more definitive, nor could we assess whether the benefits of all of those measures exceed their costs.”

“This causes us to conclude that we cannot definitely say that fuel prices in New Zealand are reasonable, but we have reason to believe that they might not be.”

Data collected from the industry found that retail gross margins have increased significantly during the period studied, and in some cases, the Return on Average Capital Employed (ROACE), had doubled between 2012 and 2017.

A weakening competitive intensity, a shift towards greater product differentiation and a rise in independent retailers were cited as the most likely causes for this rapid increase in price, and the report suggested several methods to mitigate this rise, including the removal of Z Energy’s Main Port Price on its website, and a possible liquid wholesale market in selected regions.

Regional pricing was also singled out, and the report found a lack of competition was most likely to blame for high margins in Wellington and the South Island, and that a new competitor would struggle to enter the market due to low population density and high distribution costs.

“This is a very complex area and the Study takes us a significant step forward in our understanding, said Energy and Resources Minister Judith Collins.

“I have now instructed my officials to assess the recommendations of the Study and report back to me by November.”

Collins thanked Z Energy, BP, Mobil and Gull for participating in the study.

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