HAMISH MCRAE: Not all together in electric dreams of switching from oil and gas

When Mr Bean, the world’s largest car manufacturer and the chief executive of OPEC, all agree on something, the rest of us have to sit up and take notice.

Rowan Atkinson made headlines last week when he was accused by the Green Alliance pressure group of damaging the rollout of electric cars by writing a newspaper article saying they were boring.

That was a bit unfair, considering he was an early adopter. He had a cute little BMW i3 that, I was told by a friend, kept running out of battery.

It’s a flattering idea, if a little absurd, that one column from a comedic actor would have such a global influence. The reality is that the transition to fully electric cars has slowed not just in the UK, but almost everywhere. Overall, the numbers are still rising, but at a more moderate pace than predicted, as the downsides become apparent.

So Toyota may be right about its skepticism about adoption rates. Its chairman, Akio Toyoda, said last month that the company believed pure electric cars would reach a 30 percent share of the market. “Engines,” he said, “will certainly continue to exist.”

So much for plans on the continent and in Britain to ban sales of new petrol and diesel cars by 2035 – a far cry from Bloomberg’s prediction that electric cars would account for 70 percent of new car sales by 2040 to finish.

There is a similar disagreement about the long-term prospects for oil. The latest forecasts from OPEC, the Organization of the Petroleum Exporting Countries, have raised the likely level of demand to 116 million barrels per day in 2045, up from 102 million barrels per day last year.

In contrast, the International Energy Agency thinks demand will start to decline by the end of this decade, and the long-term forecast is that it will fall to 55 million barrels per day by 2050.

What should we think of this? You could say that both Toyoda and OPEC speak their book. It’s in Toyota’s interest that combustion engines remain part of the lineup, because while the company pioneered the development of hybrids with the ubiquitous Prius, it has been relatively slow to produce pure electric cars.

As for OPEC, the longer oil and gas maintain their dominant share of energy supplies, the longer its members will have to build up their overseas assets and develop alternative sources of income.

On the other hand, if this view is even half correct and the shift away from oil and gas is slower than currently predicted, there will be profound consequences for us all, not least for investment strategy.

For one thing, there will be more resistance to governments using environmental arguments to pursue political objectives. You can already see this in the concerns about the discontinuation of sales of gas boilers and stoves.

Saying this does not mean you take a position on this issue. For the record, we have a few heat pumps and own a Prius.

It is simply to point out that if the pace of the global oil and gas transition proves to be slower than their current policies expect, governments will struggle to maintain popular support.

Next, we must be aware that we are no longer in a world where the West decides or even has a major influence on what everyone else should do. The US is still important and it is quite possible that it will remain the largest economy despite the challenge from China. But the emerging world as a whole continues to gain ground against the so-called advanced countries.

Note that since Russia invaded Ukraine, India has joined China as its main oil market.

In terms of investments, there are a number of implications. For starters, a slower transition away from oil and gas will help the U.S. economy. The US has been the world’s largest oil producer since 2018 and has increased its dominance. It now pumps out almost a fifth of the world’s total supply.

That is certainly not the only reason for the strong recovery that the economy has made after the pandemic, the fastest growth of all G7 countries, but it is certainly one.

It will also lead to a rethink of ethical investing. You can understand the reasons why some funds don’t want to invest in fossil fuels.

However, if that choice hinders Western companies’ investments in oil and gas exploration, it increases the relative position of OPEC and other non-Western suppliers.

Finally, from a purely financial perspective, it makes investing in Western oil companies a much better proposition. They’re in a growing market, not a shrinking market, and you get a big dividend yield.