Lithium investors should be hoping the price of oil continues to rise and here’s why.
Current Oil prices have reached their highest point since the end of 2015 settling in around ~$63 dollars (USD). According to a number of new online pieces, oil prices could potentially reach ~$80 (USD) in 2018. Higher oil prices would likely lead to higher prices at the pump. Higher prices at the pump could likely increase consumers interest in vehicles that do not rely on gas such as electric vehicles. Any increase in Electric Vehicles from consumers could further mobilize car makers to increase their EV production plans which would in turn further increase Lithium demand. After all, those who follow our site closely and those who have only recently joined us, should be closely monitoring the EV market which is the major catalyst for Lithium Demand.
A proof of this theory can be found from only a few years back in 2007 and 2008. Back then, Oil was skyrocketing. Oil was at over $100 (USD) at the time and peaked at $140 (USD). Throughout this particular time, Jonah, who worked at the U.S. Department of Energy, remembers well the extreme interest in cars which were not reliant on gasoline. It was very often the “water cooler” conversation and one which was covered by all the main street news sources.
Of course, $80 oil is not the same as oil at $100 or peaking at $140. Yet, if oil would rise about $20 (USD) which is what some are predicting, gasoline prices could creep towards $3.00 (USD) in the United States. From a consumer psychological standpoint, there’s something very different about paying gas prices of $2.50 (current U.S. average) compared to $2.75, $2.99 or $3.00. If gas prices quickly rise, it’ll be interesting to see if conversations increase around the U.S. and around the world for that matter, around electric vehicles.
On a final note, Lithium miners and the Lithium investment story, is clearly a niche story. Increasing oil prices which would increase conversations around the clean energy automotive industry, could further increase exposure to this extremely exciting space. Should that happen, look for Lithium stocks to quickly rise as investors will look for spaces which would benefit from an increase in the clean energy automotive space!