Shenzhen has converted its city bus fleet to an all-electric fleet of 16,000 electric buses. Authorities there have determined that the electric bus fleet will eliminate the use of 345,000 tons of diesel fuel per year.
China is promoting electric buses to improve urban air quality and cut greenhouse gas emissions. Bloomberg has projected that China will have 1.2 million electric city buses by 2025.
To support the manufacture of electric buses, China has an enormous battery manufacturing capacity—both operating and planned.
In 2016 the world consumed 97 million barrels of oil per day, or 35,244 million barrels of oil per year. Scaling up the savings of diesel fuel from Shenzhen’s 16,000 electric buses to China’s projected 1.2 million electric buses—and converting the units from tons to barrels—shows that China’s electric buses will eliminate the use of 194 million barrels of oil per year.
Simple division shows that China’s electric buses will reduce global oil consumption by 0.5 percent.
A half-percent reduction in oil consumption will trim oil company revenues by at least one-half percent, if the price of oil remains the same, or by somewhat more if the global demand curve shifts down, resulting in a lower equilibrium price for oil.
Oil company profits per barrel sold will decline somewhat more than revenues, as the fixed costs of production will be spread across a somewhat smaller quantity of oil sold.
In the world’s transition to 100 percent clean renewable energy, which is now underway, the impact of China’s electric buses on global oil consumption—and on oil company revenues and profits—is a leading indicator of the changes to come.
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