How New Transportation Technologies Will Impact Energy Markets

In our last blog article, we discussed five factors that might have an impact on the adoption of new transportation technologies like electric cars and natural gas-powered trucks. We believe that factors like cost, performance, and policy will play a major role in determining whether—and when—these technologies will realize their potential for increasing energy efficiency and reducing carbon emissions nationwide.

But the adoption rate of advanced transportation technologies is only half the story. What will their impact be if they are adopted?

This question is especially interesting to government policy makers, technology developers and investors, as well as non-governmental environmental advocacy groups.

  • Government policy makers and state energy offices need to know if these technologies will help them achieve their environmental and energy use goals. They’re also interested in how the success or failure of these technologies will bolster or hurt economies from the local on up to the national level.
  • Developers and their investors want to make sure they’re investing wisely in transportation technologies that have a chance of succeeding against conventional vehicles.
  • Non-governmental advocacy groups are generally looking for ways to reduce carbon emissions and want to back technologies that will help achieve their emissions goals.

Here are a few areas in which new transportation technologies could have a major impact:

The Demand for and Price of Natural Gas

If natural gas trucks gain widespread use, it could increase the demand for natural gas. Increased demand for natural gas tends to lead to increased natural gas prices, though not necessarily. Other factors may compensate for increased demand, such as new technologies for producing and delivering natural gas, as well as new pipelines.

The Demand for and Price of Oil and Gasoline

If the use of electric and natural gas vehicles increases, the demand for oil—used in the form of gasoline to power conventional vehicles—may decrease. For many interest groups, this is desirable. It may lead to less dependence on foreign oil and therefore greater energy security, and lower gas prices. For states and companies dependent on the oil trade, this is less desirable.

New Government Policies

If advanced transportation technologies like electric and natural gas vehicles become feasible, it may cause government policy makers to tighten their standards. For example, the federal government could choose to increase the Corporate Average Fuel Economy (CAFE) standards to reflect the availability and popularity of fuel efficient vehicles.

Predicting the Future

These are just three of the areas in which the adoption of new transportation technologies could have an impact. How much of an impact will it be? Answering that question requires a complex understanding of how different factors like energy costs, technology costs, and government policy play off each other and drive trends. The approach we recommend is called integrated modeling.

By using the most technologically advanced and respected modeling package (currently the NEMS Model), combined with years of experience in the relevant industries, and by using up to date information and data such as the 5 critical factors outlined above, collated from the various industries, the team at OnLocation, Inc. can use their expertise to predict the adoption rates of Advanced Energy Technologies.

Projections produced by OnLocation, Inc. include energy supply & demand, imports, conversion, and prices to the year 2040. Projections are based on the NEMS model which was developed and is maintained by the Energy Information Administration (EIA), but also take into account policy trends, current legislation, and technology evolution which can greatly affect the outcome of any modeling, and generally a sound understanding of the energy market.

For a better idea of how integrated modeling can answer difficult questions about the future of advanced transportation technologies and their potential impact on energy markets, read our free white paper, “7 Key Factors Influencing the Adoption Rate of Advanced Energy Technologies”.

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