1. Home
  2. EV proliferation might not prevent surge in oil prices

EV proliferation might not prevent surge in oil prices

by Drew Johnson

Gas prices could skyrocket within the next two years, says one Wall Street vet.

Electrified vehicles have been making significant inroads in a number of global markets, but some on Wall Street don't believe EVs will affect traditional fuel demand for at least another decade.

"There's a view around the world that electric cars are going to really affect hydrocarbon demand in the near term,” Kyle Bass, the founder and chief investment officer of Hayman Capital Management, told CNNMoney. Bass added that electric vehicles won't "even dent” demand for traditional fuel until about 2030.

The hedge fund manager also predicts rising gas prices over the next few years. Bass says the price hike will be the result of OPEC's decision to cap oil production and the United States' recent move to start exporting its own supply. "Crude is going to go from a glut to a shortage in the next two years,” he said.

Only time will tell how accurate Bass' prediction actually is, but there is evidence to support his forecast. So far this month Brent crude prices have increased by 3.5 percent to $71.04 a barrel — the highest level seen in nearly four years. A recent government forecast also estimates that gas prices would climb to an average of $2.74 per gallon this summer, an increase of 14 percent over last year.

The revelation that there could soon be a crude shortage comes at an interesting time. Ford confirmed this week that it will be killing off most of its car models in favor of trucks, SUVs and crossovers. Although automakers, including Ford, have made tremendous strides in terms of fuel mileage for larger vehicles, trucks and utilities still lag their car counterparts for all-out efficiency. It'll be interesting to see how Ford's decision ultimately plays out given Bass' prediction for crude prices.