OPEC can't stop the slow, painful death of the oil economy: Don Pittis

A move by OPEC senta brief surge of optimism through the Canadian petroleum industrylastweek, when theoil cartelannounced it was extending its production cuts.

But according to researchreleased shortly after that announcement, the world is on the verge of an electrifying change that will have a cascading effect on the entire global energy industry and even OPEC isn't big enoughto stand in its way.

• OPEC decision stabilizes oil prices, but for how long?

A report from BloombergNew Energy Finance (BNEF) shows that within as little as eight years, electric cars in Europe and North America will be cheaper to buy and run than traditional vehicles powered by internal combustion engines.

The reportcomes at a vitalmoment for the world's oil industry.

The Paris promise

This weekend, leaders of the G7 countries gatheredin Italy, and one of the issues on the table was their commitmentto cut greenhouse gases, agreed to in 2015 with the Paris climate accord.

U.S. President Donald Trump who has been seen as a climate change skeptic and as a champion of continuing to produce fossil fuels in spite of the environmental costs has not yet declared whether his country will keep its Paris promise, negotiated under the Obama administration.

Climate change divided the G7into two camps: Trump on one side, and on the other, the six remainingleaders who spentthe weekend urging him touphold the Paris accord, but failedto get any assurances.

Trump tweeted that he would make a finaldecision on the accord this week.

That decision was expected earlier this month, but at the time, Trump's team announced it would delay deciding until after the G7 gathering.

As a representative of established business interests, few would be surprised if Trump dumped the Paris agreement.

Holding back the tide

That's because vested interests in the existing industrial economy basedon fossil fuel extraction, distribution and consumption would like to hold back the changing tide.

That includes the auto retail sector.

On a recent visit to a Toyota dealership to check out a plug-in hybrid, none were available to see. The salesman actively encouraged this potential customerto buy something else.

So far, electric vehicles small cars packed with expensive technology are not a big money-maker for the car companies. They prefer the profit margins on thirsty SUVscontaining technology paid for decades ago.

• Enough with concept cars, we need them on the lot

No wonder Canadian electriccar sales remainlow.

According toBNEF, a trend to improving battery technology andfalling costs, combined with higher costs for diesel and gasoline cars, will mean electrics will match the cost of internal combustion engines by about 2025.

As is usual with such long-range predictions, the exact dates can only be an estimate, but the direction of the trend is clear: People are going to be using less gas.

And while the world continues to pump out more and more oil, total demand will begin to slow and then decline.

If that prediction comes true, then the U.S. strategyto extract as much oil as possible to fulfil existing demand is a good short-term business decision. Cutting back on production and leaving oil in the ground may just mean it will stay there forever, as demand eventually shrinks.

Fighting a rearguard action against change, the companies ateach step of the fossil fuel industrial complex that want to be successful must also prepare themselves for a new world.

Investor influence

Increasingly, investors and companiesthat manage investment portfolios are eyeingtraditional industries to see whether they are preparing themselves for a lower carbon world.

According to Reuters, Fidelity Investments is the latest to add its voice with a new set of proxy-voting guidelines, saying it may support shareholder proposals related to sustainability.

"Fidelity doesn't want to be sidelined from some of the most consequential decisions being made on climate risk,"Shanna Cleveland, part of a group involved in the decision, told Reuters.

Getting more Canadians to buy and drive electric cars is also part of a federal government strategy announced Friday.

Transportation produces about one quarter of Canada's greenhouse gases, and as part of the country's commitment to getting that number down, the feds want us to buy more zero-emission vehicles.

"Canada is home to countless innovative firms and talent that are already shaping the automotive technologies of the future," Innovation Minister NavdeepBainssaid in a statement announcing the plan.

Clean growth?

As with any new technology, selling more electrics will bring prices down. But high prices and the barrier of dealing with an unfamiliar technology discourages all but the most adventurous or committed from dropping tried-and-true habits.

So far the federal plan includes creating an advisory group "to contribute to developing options for addressing the key barriers for greater deployment of these technologies in five areas: vehicle supply; cost and benefits of ownership; infrastructure readiness; public awareness; and clean growth and clean jobs."

If the BNEF research can be trusted, falling prices for electric vehicles will have a greater impact than a study by a Canadianadvisory group. Falling prices could also lead to exponential sales growth from today's low levels, sharply cutting global demand for gas and diesel.

While digging in their heelsmay be a good strategy for the short term, companies and countriesthat are already planninghow to adapt tothat inevitablechange will be the biggest long-term winners.

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