We’ve all heard about the Strait of Hormuz, currently closed to most ship traffic as a result of a now six month long war of choice that seems to have no real strategy attached.
But that’s just one of many oil conflicts that are currently affecting oil availability… and electric cars have nothing to do with any of them.
Ever since oil became such an important transportation fuel, it has fueled global conflict. Many wars of the 20th and 21st century have been centered around oil.
Not only that, but it is also quite harmful to health. Burning oil causes harmful air pollution and climate change.
The danger of oil as a resource has only become more apparent over time, as the world discovers new harms of pollution, climate change, and continued oil conflict.
Right now, that last point is being made abundantly clear, with the world experiencing no fewer than six conflicts directly tied to oil availability, and a few more waiting in the wings.
You’ve all heard of the Strait of Hormuz by now
The first is of course the conflict around the Strait of Hormuz, through which about a fifth of the world’s oil used to pass.
The Strait has been generally closed since March, after the US and Israel started an unprovoked war against Iran, with their first attack killing its Supreme Leader, Ali Khamenei. Since then, despite several threats from the former reality TV host posing as head of government in the US, Iran has declared the narrow Strait along its coast closed to ship traffic.
While some ships have been able to pass through at various times over the last six months, total traffic through the Strait has slowed to a trickle.
When the conflict started, everyone was worried about an imminent global oil price shock. Prices did rise, but not as much as many had initially anticipated, even though diesel prices have recently hit an all-time high in the US and show no sign of recovering.
The primary reason for the relatively smaller-than-expected price shock was due to China cutting its oil use, largely due to the country’s rapid embrace of electrified transportation. Other countries have seen EV sales skyrocket since the start of the conflict, but China’s EVs have offset more oil use than any other country.
China should have been one of the most vulnerable countries to Hormuz closure, given that most of the oil going through the Strait makes its way to East Asia, where China is the largest consumer. But the country cut its oil imports and its oil use drastically, which led some to credit it for “saving the world” from a potentially worse oil shock.
That’s not the only Mideast Strait affecting oil markets
The Hormuz conflict has forced everyone to rapidly try to find any other method to transport oil, as the world is dependent on its free flow. One method has been to utilize a key pipeline that crosses Saudi Arabia from East to West, relieving the pressure built up by the closed Strait of Hormuz – the pipeline was, in fact, first built in the 1980s to relieve pressure during a previous Hormuz conflict.
However, that became a significantly less viable option this week when a pumping station along the pipeline was blown up in a drone attack just last week, causing the Saudis to shut off the pipeline as a precaution.
The attack was launched by the Houthis, a rebel group in Yemen (currently at civil war since 2014) which is backed by Iran and opposes the US, Israel, and Saudi Arabia.
And the Houthis’ territory is in Southwest Yemen – which happens to border another narrow oil chokepoint, the Bab-El-Mandeb strait between the Red Sea and the Gulf of Aden, through which up to about 9% of global seaborne oil shipments travel.
The Houthis don’t have as much control over this strait as Iran has over Hormuz, but have threatened and carried out attacks on ships transiting it. This has led other nations to form a defense pact to protect ships in the Gulf of Aden, though given that there is already trouble on the other side of the Arabian Peninsula, attention will have to be split between the two.
Nor do they have much ability to project power beyond their territory, but they have attacked several other parts of Saudi Arabia in recent weeks (including sending missiles at the Saudi capital as this article was being written). Given Saudi Arabia’s importance to international oil markets, their vulnerability to Houthi attacks threatens further disruption.
Ukraine blows up oil refineries after Russian invasion
Not too far north of all of this nonsense is another conflict, which is increasingly focused on oil. In 2014, Russia invaded Ukraine and occupied the Crimean Peninsula, which is, you guessed it… another chokepoint for oil shipments.
The bottom of the Crimean Peninsula borders the Strait of Kerch, which connects the Sea of Azov to the Black Sea, which in turn connects to the Mediterranean and the Atlantic.
Until Russia occupied Crimea, it controlled one side of the Strait of Kerch, but now it controls both. This secures another method for oil to leave Russia and get into the world economy, which is a major source of income for the country.
Or at least, it was a major source of income. As Russia’s war with Ukraine has intensified, with its invasion of Eastern Ukraine in 2022, other countries have put significant sanctions on Russia, limiting its ease of exporting oil.
(That 2022 invasion was only possible after the international community basically ignored Russia’s aggression in Crimea, as a stronger reaction might have jeopardized Europe’s supply of Russian gas, which it relies on for heating despite that there are cleaner solutions available.)
But more importantly, Ukraine has recently found a highly effective new tactic: blowing up Russian oil refineries. Reportedly the country’s refining capacity is now only 70% of its domestic usage, with 24 out of the 33 biggest refineries in Russia having been struck.
This has led to long lines at Russian gas stations, and in the famously EV-reticent nation, EV sales more than doubled in the last 3 months. It has also meant that Russia, previously a major oil exporter, doesn’t have much presence on international oil markets anymore, tightening global supply.
Long term instability in Libya
Libya has experienced prolonged political stability since the killing of its former leader, Muammar Gaddafi, and that instability has caused fluctuations in the country’s oil production. Just this week, the country’s petroleum security force suspended production at several fields and shut down a pipeline, as the group demands a transfer of ownership.
The country says that this hasn’t affected production, but if the shutdown continues, it probably will. While the amount of oil threatened by this conflict is lower than the others we’ve mentioned, it’s still happening in an overall unstable global oil market, and every new development counts.
Venezuela’s government in limbo
There’s also the situation in Venezuela, which was again started by an unprovoked attack by the US, kidnapping Venezuelan dictator Nicolas Maduro and killing several civilians in the process.
Since then, Venezuela has been officially governed by the country’s former vice president, Delcy Rodriguez, but the US has made big claims about being in charge of the country’s oil fields.
A recent deal reportedly gives US companies access to large greenfield oil sites in the country, but these will take up to a decade to develop. That means they may only come online after the world reaches peak oil demand – a timeline that seems to be coming closer as the entire planet rapidly shifts to electric transportation.
US tries to starve Cuba with an oil blockade
Related to the Venezuelan conflict is the US’ current attempt to starve Cuba by blockading oil shipments to the island nation. Cuba used to get a lot of cheap oil from Venezuela, and the US has blockaded not only those shipments, but shipments from any other country to Cuba.
This has led to energy availability issues in the country, leaving the streets full of trash and rolling blackouts that even shut down hospitals, forcing doctors in some instances to have to keep infants in intensive care alive by manually using hand-pumped ventilators, all in the name of a political stunt.
Cuba has used the opportunity to try to rapidly build out solar and electrify its transportation, in order to become more self-sufficient and get away from clearly vulnerable and unreliable fossil fuel resources.
Even the US-Canada trade war has an oil element
The trade war between US and Canada is a bit different than the rest of these conflicts, in that it there is no “hot war” or intentional attempt at starvation attached. But it is a conflict that is related to oil, in that these two interconnected countries trade heavily in oil and are now thinking of ways to disentangle themselves from each other.
This could result in less development of cross-border oil transport schemes. As is, much of Canadian oil is refined in the US, and the two countries had spent decades getting closer with free trade across their borders. But Canada is now reconsidering its close relationship with the US, which could affect the oil trade between the two countries.
And even if we ignore potential disruptions in US-Canada oil trade, the trade war has led Canada to allow Chinese EVs into its market. This gives Canada access to cheap, clean transportation options that aren’t available in the US, and should result in a tick up in EV sales in the country going forward, as EV competition takes hold.
There’s “no endgame” for much of this conflict
Altogether, one analysis says that 43% of world’s oil comes from countries that have been hit with conflict.
And worse, all of this nonsense shows no near-term sign of letting up, with each of these conflicts showing some amount of intractability due to the obstinacy of the entities involved (and, in America’s case, idiocy/illegitimacy/hostility to the people of America and the world).
This week, JP Morgan’s oil team threw up its hands and said it has no idea what’s going to happen to oil markets going forward, stating that “we simply don’t know how to model the endgame” for the US’ war on Iran. The same note mentioned the Saudi-Houthi conflict and Ukraine-Russia as continued risks to the oil market.
Countries have responded to all of this by draining their strategic oil reserves, trying to buffer markets from an oil price shock that would rankle consumers. But emergency reserves are only good for a certain amount of time, and after months of doing so, petroleum reserves are starting to run low for many countries.
Most notably, China, the country with the largest oil reserve, which “saved the world” from oil price shocks as it suddenly stopped buying oil near the beginning of this year, has reportedly been considering starting up its oil purchases again. Even with China’s dropping consumer oil demand, this would still be a huge shock, putting the world’s second largest oil consumer back on the market after it took itself off the market months ago.
Climate change promises more conflict to come
And of course there’s the issue of climate change. Burning oil is a major contributor to climate change, which has led to increased conflict and weather-related disruptions.
These disruptions are becoming more and more impossible to ignore, with each summer hotter and more destructive than the last. Wildfires, hurricanes, floods, and other freak weather occurrences all get exacerbated by fossil fuels being burned by humans.
Not only does this cause harm on its own. but climate change is projected to continually increase global conflict as time goes on. As sea levels rise and certain areas become unlivable, humans will have to migrate, which will increase conflict.
This underlies current and recent conflicts (like the Syrian civil war, which was exacerbated by recordbreaking drought likely associated with climate change), and will to affect them into the future.
Electric transportation solves *all* of these problems
The common line between all of these is that electric vehicles not only haven’t had any part in causing them, but offer a solution to them.
The majority of the world’s oil is used in transportation, to move vehicles. And most of that goes to moving on-road, light duty vehicles – that is, personal cars and trucks that people use to get around. And very little of the world’s oil is used to generate electricity, with almost every region having access to some method that is cheaper and more secure using whatever local resources it has available to it.
And no, there is not another resource that will simply take oil’s place. The resources used to build and fuel EVs are necessarily less worrisome and more flexible than oil. Most of them are used in much smaller amounts per car, are well-distributed geographically, and are recyclable, not burned.
A gas car will necessarily burn through some 50,000lbs of oil over its lifetime, which is a lot of stuff you need in order to fuel it. An EV can be fueled by a number of methods (generated locally/regionally, contributing to energy independence), and is also some ~4x more energy efficient than a fossil car to begin with, which means less stuff, less energy, less waste, less conflict.
What this means is that we have the solution to all of the above problems available to us. There is a wide variety of light duty electric cars and trucks available on the world market suitable for any application. And a wide and growing variety of medium and heavy duty electric vehicles suitable for all but the most difficult long-haul heavy transport tasks.
These are available not just in certain countries and regions, but globally (well, less so in the US, where Americans are deprived of many options that are available to the rest of the world – but we still have plenty of great options available, as we report on regularly here at Electrek).
So there’s a way to end all of these conflicts: stop using the resource contributing to them. And the best way to do that is to get oil out of transportation. Which we have the technology to do. Now.
In the conflicts above, we already see people working to improve the situation. China’s EV adoption relieved pressure from Hormuz, Russia is buying electric cars at an unprecedented rate, Cuba is installing solar and using electric garbage trikes, Canada is allowing EV imports that it previously did not, Europe is installing heat pumps to warm its homes electrically instead of with oil.
And it’s working. Electric cars displaced oil demand equal to 70% of Iran’s total output last year, helping to bring energy prices down for everyone. Electricity has gone up in price (spurred on in the US by data centers and republican efforts to block energy projects), but not as much as oil has, and electricity still remains a cheaper fuel for transportation in most places around the globe. While high oil prices increase the cost of many inputs for consumer items, that effect would be less severe for everyone if more transport stopped using oil when superior electric options are available.
Problems vs. solutions, which side should we be on?
Incidentally, there is a trend between these problems, and these solutions. Many of the oil conflicts have been caused or exacerbated by the individual who is currently squatting in the US White House (despite him being Constitutionally barred from holding US office), who is also doing his best to attack the availability of solutions by diminishing US manufacturing of the high-tech electric vehicles the world wants.
The US could have been on track to be an EV manufacturing powerhouse, had President Biden’s EV manufacturing policies been allowed to take hold, but republicans have instead worked to send those EV jobs to China.
China, incidentally, is the country providing the solutions that the world needs now. As the world turns to electric cars to try to save itself from these needless conflicts, one country, more than any other, is benefitting from soaring global demand for EVs.
Money is flowing from every country interested in solutions, into the pockets of China, which is becoming the automaker of the world’s present and future. This has received little pushback from formerly-dominant auto powers who are instead lobbying towards their own irrelevance. China is also dominant in solar panel production, and in battery production generally, offering batteries for all classes of vehicle and for stationary storage.
It didn’t need to be this way. But despite how obviously backwards the US’ actions have been, both on a government and industry level, it’s still stubbornly refusing to learn its lessons. Just this month, the main US auto lobby group begged Congress to stop the most competitive EVs from entering the country, asking for government to block competition instead of working to offer better products.
And just yesterday, Hyundai’s CEO, who has generally been pretty pro-EV, fearmongered that Chinese EVs would mean a drop in profitability for US automakers. The implicit point underlying his statement is that he views the US auto market as a cash cow, milking Americans with overpriced vehicles, which wouldn’t be possible if they had to compete against the country providing the best EVs in the world right now.
That thought is common across the industry. Automakers view America as their last redoubt, a veritable city-in-a-hole where they can send their polluting, overpriced garbage, in order to extract whatever’s left out of the pockets of Americans while everyone else moves on to better options.
And oil companies love it too, offering billions in bribes to keep these conflicts going, hoping to extend their record-breaking war profiteering and to keep the world from moving into the future.
But at some point, the camel’s back has to break. And it’s not going to look pretty for anyone who has committed themselves to a resource that the entire world has known for decades that it desperately needs to get off of.
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