Can Europe’s Green Transit Sector Fend Off Falling Oil Prices?

With Europe’s green transit sector still in its infancy, some are arguing that more regulations are required to offset falling oil prices, which in turn may tempt drivers back to traditional gas-powered vehicles, and larger guzzlers at that.

Certain analysts argue that renewable power has reached the point where it no longer affected, or affected to a large degree, by movements in the oil market – especially downwards.

Putting it into perspective, the greet transit sector is still quite small, representing about 10 percent of the total.

But here’s the rub: the price of oil has dropped by approximately 50 percent since last summer, which could easily negatively impact consumers’ incentive to buy electric and hybrid vehicles. So what do the numbers say?

EU sales of EVs in the last quarter of 2014 fell to 24,548 from 26,607 in the final quarter of 2013, or about 8 percent drop, according to the European Automobile Manufacturers’ Association. That said, over the course of the entire year, the figures showed a nearly 37 percent increase.

As to what impact lower fuel costs will have on green vehicle sales, the jury is still out.

But, given that average fuel taxes in the European Union are 48-55 percent, as compared with 14-17 percent in the United States, the future for green transit initiatives is quite bright.

Category: Fuel & Oil, General Update, Green