November 9, 2013

Electric cars and oil production in Norway

The neighboring countries Sweden and Norway was in a union between 1844 and 1905. They had the same King, foreign policies, and diplomatic representations. At the time of the peaceful dissolution of the union, few Swedes could imagine that they had given up a huge treasure chest.

40 years after the dissolution of the union, petroleum had become an important part of the global economy. Speculations that the North Sea, just outside of Norway, could include vast amounts of petroleum products began in the early 1960s. The first well was drilled during the summer of 1966, but it turned out to be empty - or dry in oil industry parlance. They drilled more wells until the first oil was found in a field called Ekofisk, and during the 1970s more oil fields were found. It was now the Swedes made a second mistake when numerous Swedish industrial companies denied to help develop these oil resources. Other companies began to help, and Norway would soon become one of the world's major exporters of oil and as a result, one of the world's wealthiest countries. This chart shows the oil production in comparison with the US oil production:

US and Norway oil production 1859-2012

The problem with the oil found in Norway is that only five major fields have been found since the search began in 1971. And since oil is an endless resource, the oil production from these five fields peaked in 2000 and have now begun to decline. We saw the same result when we investigated the oil production in US since 1859 and the peak can also be seen in the chart above. 

In another article, What will happen after peak oil?, we saw how the Americans had begun to buy electric cars. Also the Norwegians have begun to buy electric cars. Norway is the country with the most Tesla Motors Model S customers compared with the size of the population. The five million inhabitants ordered 1 000 of the 20 000 pre-ordered cars.

To motivate people to begin driving electric vehicles, the Norwegians established a number of incentives to increase the price of gasoline vehicles. "The benefits are too good," a Norwegian said. "You can take bus lanes, get free parking and it costs very little to refuel." These incentives has given a result: 
  • While three percent of all cars sold in Norway are electric, the same number in US is 0.1 percent. 
  • The current number of electric cars on the Norwegian roads today is 7 000, and the total amount of cars is 2.4 million. These numbers can be compared with the neighboring country Sweden where the incentives are less favorable. The Swedes have 4.4 million cars, but only 600 of those are electric. 
  • About 40 percent of those who own an electric car in Norway also own a gasoline car. 

The goal of the Norwegian Electric Vehicle Association is to have 100 000 electric cars in Norway within year 2020 – the same year as when several experts have estimated that the global oil production will begin to decline. According to the chart above, there's a long way to go if that promise is to be fulfilled. Notice that I don't know how the Norwegians are defining electric cars. According to ssb.no, there's no option for hybrid vehicles, such as the Toyota Prius.

Total electric cars in Norway 2008-2012

Source: The Engineer, Norwegian Petroleum Directorate, Wikipedia

If you are interested in the data used here, leave a comment or send me a mail and I will upload it somewhere.