The list of countries to ban petrol and diesel cars between the next ten to twenty-five years are growing.
What should oil dependent economies do to mitigate the inevitable economic impact?
We discussed previously on the trend away from gasoline powered cars when France announced its plan to completely ban these products by 2040, the same week Volvo announced its plan to start making hybrid cars partly powered by chargeable battery and petrol in the next two years.
Before the French announcement, Norway had already indicated 2025 as the year Diesel and Petrol cars would be scrapped.
Now, the UK has joined the green race, with the environment secretary Michael Gove, announcing government green plan of scrapping diesel and petrol cars by 2040, the same year as France.
In our article, we predicted that this trend is only likely to extend beyond France, we did not expect the UK to make this announcement this soon, but the genie is indeed out of the bottle!
In all likelihood, diesel and petrol will still be around even beyond this period, but demand will also likely plummet.
The United States, one of the highest consumer of crude oil products is not likely to announce similar move during the Trump administration, mainly because of his stands on climate change and the focus on economic growth even at the expense of the environment, but his tenure of four years is already half a year gone, thus clock is ticking away. If he does not return for the second term, and an environmentally friendly President assumes office, the U.S is very likely going to join the ban on diesel and petrol cars.
Trump’s position on the climate is not widely shared across the U.S, to underline this, U.S states accounting for more than a third of national gross domestic product have pledged to meet the country’s commitments for cutting greenhouse gas emissions in the Paris climate agreement. It is within reason to believe another president will have a radically opposite stand.
The position of China and India, the two other mega fuel consumers are not clear, they are both signatories to the Paris deal.
Regardless of the position of the U.S, China and India, demand for crude oil will dip. If the whole Euro area takes a similar step to France and the U.K, the impact on the oil producing nations will be significant economically.
MITIGATING THE IMPACT
Twenty years is perhaps not enough to divest the economy heavily dependent on the proceed of crude oil, but countries in this category, particularly the African countries like Nigeria, Angola and Algeria need to refocus their economy to mitigate the inevitable catastrophic impact of having a product that no one wants.
There are plenty of scopes for these countries to thrive beyond the oil era, the political will to do this is another question entirely.
The rise of Nigeria as one of world economic powers and the decline of the EU with or without BREXIT
Nigeria, one of the countries predicted to be one of world economic powers by 2050 according to PWC 2017 report has more potential to thrive post oil era, but at the same time it is blighted by ongoing political instability and historic poor and corrupt leaders, by how much these other extraneous factors will affect the overall impact of lower income from crude oil is unknown, but the speed at which the country was tilted into recession from the fall in the price of crude oil is an indicator of what might happen.