EVs Can Drive Down Offshore Oil

On the 11th anniversary of the tragic Deepwater Horizon explosion, SACE reexamines how we can move on past the threats of offshore drilling into a clean energy economy with electric vehicles.

Chris Carnevale | April 20, 2021 | Electric Vehicles, Offshore Drilling

By electrifying the transportation sector, we can make offshore drilling obsolete. Electric cars and trucks can effectively preempt the perceived need for any gasoline that could be produced by opening currently protected ocean areas in the United States to offshore drilling.

The Southeast has faced a near constant threat from offshore drilling in recent years, from Democratic and Republican administrations alike, even though the risks of drilling are immense and the benefits are meager and dwindling. Today, the burgeoning trend of transportation electrification stands to put a nail in the coffin of the misguided proposal to risk our precious coastline for oil.

Each year since 2018, we at SACE have produced an analysis of the feasibility of offsetting any potential gasoline production that would result from drilling the currently protected areas of the Atlantic, Eastern Gulf of Mexico, and Pacific by reducing gasoline demand through switching to electric vehicles (EVs). Our examinations have consistently found that EVs can eliminate the perceived demand for gasoline that could be produced from currently-protected areas, but that supportive policies are needed to ensure that EVs are deployed at the necessary scale.

In our reexamination this year, our findings haven’t changed: EVs can indeed drive down offshore oil.

We find that if Americans buy about 35 million EVs for their next vehicles, instead of gas-powered vehicles, by the early 2030s, gasoline demand would decrease enough to offset the amount of gasoline that could be produced from opening the Atlantic, Eastern Gulf of Mexico, and Pacific combined. Thirty-five million EVs represent a mid-point estimate–the range with sensitivities included is 22-55 million EVs–and largely depends on how much oil is economic to produce at various price points. You can see our assumptions and calculations below.

Solar, EVs, Healthy Beaches
Electric vehicles powered by clean energy are poised to keep our beaches healthy and oil-free.

Is it feasible?

Thirty-five million EVs on American roads by 2035 is entirely feasible, technically and economically, and to help ensure success in reaching this target, we need to support the enactment of pro-EV policies. Expert opinions differ on how likely it is that the U.S. will get 35 million EVs on the road by 2035. For example, the U.S. Energy Information Administration (EIA) forecasts fewer than 5 million EVs on the road in 2035, and fewer than 3 million in 2030; while Energy Innovation forecasts 66 million EVs on the road by 2035 and 27 million by 2030 under a “business as usual” scenario with no new pro-EV policies.

With a wide range of forecasts as to how quickly the vehicle market will electrify under current policies, the best way to ensure we deploy enough EVs to totally offset potential gasoline production from offshore oil is to enact supportive policies. A study published last week by UC Berkeley found that with supportive policies enacted, 100% of new car sales could be electric in 2030 and consumers would save about $1,000 per year as a result, but without new policies, just 20% of sales would be electric. The study shows that failing to implement policies that promote EVs would naturally slow EV adoption and therefore cost consumers money, extend public health burdens of combustion engine pollution, and ultimately contribute to thousands of premature deaths. The supply chain and manufacturing capacity to build out an electric transportation sector is particularly strong here in the Southeast and Southeastern states stand to benefit from transportation electrification.

Calculations

Assumptions and Sources

  • Timeframe: The early 2030s is the timeframe we are considering because it is the earliest feasible time frame in which new drilling in previously protected regions could take place. After any potential lease is bought, industry estimates are that production would not occur for at least 10-15 years after lease acquisition, meaning oil production could potentially begin in the 2031-2036 time frame if a new lease were granted today (which nobody is expecting). For simplicity of calculation, we have assumed full extraction of all economically recoverable reserves at a constant rate over 20 years.
  • Price of oil: future oil costs are forecast by EIA and the World Bank to be in the $40-$80 range between 2020 and 2035.
  • Economically recoverable oil: The most recent national offshore oil resource assessment is BOEM’s “2016a National Assessment of Undiscovered Oil and Gas Resources of the U.S. Outer Continental Shelf.” We used the price points of $60/barrel, $100/barrel, and $160/barrel in our sensitivity analysis of what would be economic to produce given that the cost to develop offshore oil has continued to fall in recent years.
  • Gasoline production from oil: 20 gallons of gasoline per barrel of oil per EIA.
  • Fuel economy of gasoline-powered cars in future years: EIA’s Annual Energy Outlook forecasts that about 60% of gasoline light-duty vehicles will be trucks and 40% will be cars over our timeframe. The fuel efficiency of a new gas car is forecast to be 34-38 MPG and a new gas light truck will be at 25-27 MPG after incorporating on-road efficiency “degradation factors,” bringing the average new gasoline-fueled vehicle to about 31 MPG in the 2021-2035 timeframe. For sensitivity analysis, we used a range of 26-36 MPG. The upward adjustment of our estimate of the EVs it would take to offset any potential gasoline production from expanded offshore drilling from last year (estimated 18-48 million) to this year (estimated 22-55 million) is due to our updating of this fuel economy assumption.
  • Miles driven per vehicle per year: vehicle miles traveled per licensed driver were used from EIA Annual Energy Outlook, which forecasts an average of about 12,700 miles per year from 2021-2035. For sensitivity analysis, we used a range of 10,000 to 15,000 miles driven per year.

About Electrify the South

Electrify the South is a program of the Southern Alliance for Clean Energy that leverages research, advocacy, and outreach to promote renewable energy and accelerate the equitable transition to electric transportation throughout the Southeast. Visit ElectrifytheSouth.org to learn more and connect with us.

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Chris Carnevale
Based in Charleston, South Carolina, Chris is SACE’s Coastal Climate and Energy Manager and South Carolina State Affairs Liaison. Chris joined the SACE staff in 2011 to help build a…
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