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   Home      Hirunika Case By Lahiru Harshana

 Penetration of alternative fuel vehicles will increase in the next decades but will remain at low levels:
By 2040, only 6% of the passenger car stock and 5.3% of commercial vehicles will be running on non-oil fuels. Without a technology breakthrough, battery electric vehicles are not expected to gain significant market share in the foreseeable future. Besides the high purchase price, there are serious challenges in terms of convenience, such as range limitations and poor battery performance during very hot or cold weather conditions. Similarly, anticipated high purchase costs, the lack of refuelling infrastructure, and relatively expensive hydrogen fuel will make fuel cell electric vehicles less likely to become a global breakthrough technology over the forecast period. Natural gas vehicles will be the most attractive option.
However, high price premiums and a scarce network of refuelling points in most countries will limit the large-scale adoption of this technology. The overall picture is not too different in the commercial vehicles segment.

A crude awakening in 2015:
The impact of the price drop on upstream investments and supply is already apparent in the market. The effect is most visible on tight crude production, given its faster reaction to price changes compared to other liquids supply. Although the most prolific zones within some plays can break even at levels below 2015 prices (and are thus likely to see continued production growth), month-on-month growth in total tight crude production has started declining. In the presence of reduced drilling activity, the steep decline rates of tight oil wells imply that annual output growth slows and could potentially become negative. On an annual basis, tight crude supply growth in the US & Canada was 1.1 mb/d in 2014. It is expected to be 0.5 mb/d in 2015 and then 0.1 mb/d in 2016. (It should be noted that in OPEC’s Monthly Oil Market Report (MOMR) for October 2015, expected 2016 production from the US & Canada turned negative, as did that for overall non-OPEC supply.)
In addition to the US & Canada, slowing supply growth in 2015 took place in Latin America, OECD Asia Pacific and the Middle East & Africa region, while moderate declines were observed in Mexico, Other Eurasia and in some developing countries.