By Joe Petrowski

The United States currently has 340 million vehicles and 130 million households, or 2.6 vehicles per household. Currently only 3 million vehicles are electric vehicles or hybrid, with 273 million gasoline powered vehicles (including motorcycles), 20 million flex fuel vehicles and 44 million diesel-fueled vehicles. Those making combustion-powered vehicles and producing or selling liquid fuels are frightened by the prospect of the EVs growing in the US, as they have in China and the Scandinavian countries where EVs are over 25% of new sales.

While optimism always outruns reality, even if under the most optimistic scenario (price and regulations) EVs achieve 1/4 sales of the 18 million new vehicles sold every year by 2025 it will mean an additional 5 million electric vehicles added to fleet every year. That would mean almost 15 years before we reach the 100 million EV mark leaving a substantial amount of liquid fuel vehicles on the road.

What to watch and what may allow the liquid fuels market to survive jointly with EVs is the multiple car household. Current interesting facts on multi vehicle households are:

  1. 30% of households are one car (39 million households).
  2. 34% of households are two car households (44 million households).
  3. 36% of households are 3 or more vehicles (47 million households).
  4. Washington DC is biggest single car owner with 63% of households owning one car
  5. In the Dakotas 13% of households have 5 or more vehicles.
  6. There is no correlation between income and multi car ownership. In fact, it is actually an inverse relationship (the richer you are the more likely you will have one vehicle).
  7. There is a Strong relationship between multi-vehicle ownership and rural/urban split. Urban households (NYC, DC, San Francisco) dominate single vehicle households while Texas, Montana, Nebraska, Missouri, Kansas, New Mexico and Oklahoma lead the multi-vehicle group.

What this leads us to is the Following conclusion. By 2025 we should have:

  1. 160 million households (given historical household formation—and millennials getting away from their screens)
  2. 9 vehicles per household (at historical growth rates and the Dakotas for once being trend setters)
  3. Which gives us 464 million vehicles broken out as follows:
  4. 10 million EVs vehicles (in Elan Musk’s wildest dreams)
  5. 30 million flex fuel vehicles (in the RFA’s wildest dreams)
  6. 22 million diesel vehicles (only CNG and LNG threaten this sector, not electric)
  7. 402 million gasoline vehicles

With 454 million liquid fuel vehicles we will still need 250 billion gallons of liquid fuel per year; or still 16.5 million barrels/day of petroleum and ethanol production; or 193,000 retail fueling facilities compared to 154,000 today, even if the average site does 25,000 gallons per week.

Note to policy makers:

  1. Do not stop drilling or growing corn.
  2. 10 million EVs removes 22 million tons of CO2.
  3. Allow retailers and marketers to purchase greenhouse gas offsets (one tree absorbs 48 pounds of CO2/year)

On the last point, a retailer selling 20,000 gallons per week would need to plant or have someone plant for him 170,000 trees to mitigate entirely their greenhouse gas footprint. And possibly we would spur an industry to remove greenhouse gases without bankrupting the country or stop living. It’s also easier than putting a methane capture diaper on a cow!

 

Joe Petrowski

Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. He currently serves as Director of Fuels for Yesway, where he oversees all operations of the fuels team, including pricing, procurement, and management of the firm’s fleet services program. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October of 2008, he was named CEO of the now combined Gulf Oil and Cumberland Farms, whose annual revenues exceed $11 billion and that now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is Managing Director of Mercantor Partners, a private equity firm investing in convenience and energy distribution, and a member of the Gulf Board.