Oil demand may reach a plateau worldwide by the end of the decade as cars, trucks, railroad engines and power plants increasingly use natural gas instead, according to Citigroup Inc. analysts.
U.S. prices for the fuels provide an economic incentive to make the switch. Crude oil is about four times more expensive than gas for a similar amount of energy, measured in British thermal units, based on New York futures trading.
In the U.S., a growing number of corporate and public-transit fleets use liquefied natural gas or compressed natural gas.
“The shift from oil to gas is already under way in the U.S.,” Seth Kleinman, the head of European energy research at Citigroup, and five other analysts wrote yesterday in a report. Other countries are poised to follow suit, they wrote, as gas becomes more plentiful and anti-pollution efforts intensify.
China has more than 40,000 trucks that run on liquefied natural gas and plans to put up thousands of service stations for these vehicles and passenger cars, the report said. In the U.S., a growing number of corporate and public-transit fleets use LNG or another fuel, compressed natural gas, they added.
Canada, Russia and India are testing locomotives fueled by LNG, Citigroup’s analysts wrote. So is BNSF Railway Co., a unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), which said earlier this month that it will operate six LNG engines this year.
Gas may supplant oil as a fuel for generating electricity in the Middle East, India and Latin America, the report said. Citigroup’s analysts added that international shipping and petrochemical companies may make similar shifts.
“Oil demand growth may be topping out sooner than the market expects,” Kleinman, based in London, and his colleagues wrote. Greater fuel economy may combine with the shift toward gas to cause global demand to level off at about 91 million barrels a day, the report said.
longhaul trucks cost 40k more than regular trucks, some longhaul fleets are only adding to their NG fleets if they get state subsidies to help spring for added cost (the payback time is 1.5+ years) plus refueling infrastructure currently inadequate, and NG prices may not stay this cheap long term- given eventual LNG export and expanded use as domestic fuel, added demand may remove current excess NG supply. But subsidies would increase national security so may be worth taxpayer money if it accelerates the pace of expansion. Could even make environmentalists happy. But refiners, maybe not
the vision of expanded NG fleets points to westport as remaining a growth stock- it's appreciated steadily 600% since 2009