As Rozencwajg sees it, it’s simply the good old law of supply and demand once again rearing its ugly head. Demand for oil has already exceeded pre-COVID-19 levels in some quarters, says the resources expert, with monthly records being set in 2021 in the United States, China, and India, the top three consuming countries. This, despite the fact that the airline industry is yet to fully recover from the pandemic.
Meanwhile, supply is drying up. “No one has spare barrels of oil,” says Rozencwajg, “and that includes Saudi Arabia and Russia.” The one country that might have some oil capacity in hand is the United States, but supply there has plummeted in recent months as much a result of activist investors forcing major oil companies to curb exploration and investment as any coronavirus-induced cutbacks. And in a way, the day of $200-plus oil may already be here.
Hold your horses, says Rozencwajg, not so fast. For BEVs to take advantage of that price surge, the cost of batteries would have to continue their steady decline. But, while most experts are calling for the cost of lithium-ion to decline to the US$100 per kilowatt-hour that would make BEVs price-competitive with internal combustion, Rozencwajg thinks that the price of batteries has already bottomed out.
The reason is again supply and demand. According to the International Energy Agency, electric vehicles require six times as much mineral input as a conventional car, and wind-generated electricity nine times as much minerals as a typical gas-fired power plant. In all, the IEA estimates that, to meet projected demand,