An interesting article in Fortune Magazine (June 2018) talks about the changing technologies resulting in the so-called peak horse, peak car and possibly peak oil.
Before the dawn of the motor car, the horse was the beast of burden providing the muscles for land transport. In 1920, horses in the United states numbered around 25 million. By 1930, the number came down to 19 million. By 1960, it further dropped to 3 million, being completely replaced by the motor car. At the same time, the consumption of gasoline has increased by leaps and bounds.
Technology does not stop there but keeps on progressing. The electrification of trains in public transport has reduced the use of private cars in and between big cities. The fast growth of air transport produces the same effect for long-distance travel. In recent years, the explosion of ride-sharing makes owning a car redundant. Today, Uber handles 4 billion rides worldwide. Lyft reports that 40% of rides are shared by two or more passengers. The coming of the driverless car further reduces the cost of ride-sharing as it eliminates a major labor cost. In the United States, the number of passenger cars seemed to have peaked in 2016 with a record of 17.5 million newly registered. The number came down to 17.2 million in 2017, and is projected to dip below 17 million in 2018.
Consumer preference in America is changing at the same time led by millennials. For the age group between 20 and 24, 92% registered for driver licenses in 1983. The figure has come down significantly to 77% in 2014. The car no longer seems so cool that a young person must possess. One major reason is urbanization and the fact that the young like to live in big cities where traffic jam and parking are headaches to be avoided. The young also have a keener sense of climate change because they know they will be burdened with a polluted world that the older generation leaves behind. The arrival of peak car, besides impacting manufacturers, will reduce government revenues derived from taxes based on the car value and its annual license renewal. The budget for repairing existing roads and bridges will be squeezed if there are fewer cars on the road. Barring an increase in existing car tax, some American cities are considering adding a tax for usage, that is, the amount of distance the car is driven annually.
With the approach of peak car, what about peak oil? This is subject to debate because oil is used for aviation, manufacturing and space heating, too. A recent report from BP (formerly British Petroleum) suggests that peak oil will arrive around 2030. What are the writings on the wall that we can see? Saudi Arabia, the top oil producing countries with the biggest reserve, is investing a total of 1 trillion dollars over a few years in solar and wind in its vast deserts. So are the biggest oil companies around the world. The rise of hybrids, electric cars, and better fuel efficiency are making a dent in the current gasoline consumption around the world. In American cities, many retail gasoline stations at street corners are closing and giving way to shops and other retail outlets. Although climate deniers insist on maintaining the status quo, a rising environmental consciousness on a global scale is driving consumer preferences away from oil and other fossil fuels. Last but not least, solar and wind have now reached grid parity with oil. That means utility companies can cost-effectively switch from oil to solar or wind in the generation of electricity for their customers.