The CEO of the largest Russian bank said the age of oil was over. He is sort of right.

In January, at the prominent Gaidar Forum in Moscow, Herman Gref the CEO of Sberbank, the largest Russian bank, made a strong critical statement about the Russian economy. His main point was that the oil age was over and Russia has lost the global competition because it has not adjusted to the clean energy race.

The next day Aleksey Teksler, the Russian Deputy Minister of Energy, said in Abu Dhabi that Russia has significant renewables resources and it is taking the path of renewable energy, solar and wind in particular.

So, is the age of oil over? And is Russia taking a new turn in its energy policy.

Well, not exactly. The statement of Herman Gref touches upon two points - the high dependency of Russia on oil and gas export and the future of oil. The oil dependency is a well known weakness of the Russian economy and since the collapse of the Soviet Union there is hardly any commentator on Russia who has not said that. Some even explain the collapse of the Soviet Union with this dependency. The theory is simple - when the oil prices went up following the 1973 Arab exporters embargo the Soviet government started spending, created high social and economic expectations without reforming its economy. When the oil price tumbled down in the 80ies the government could not fulfil the expectations and the Soviet Union fell apart. Unfortunately the Russian economy was never restructured in a way that could absorb significant oil price fluctuations. Forced by the low energy export revenues Russia is now considering selling stakes in the oil company Rosneft, Mr Gref's Sberbank and other large state owned assets. However this is more of an act of desperation, which could be seen among most oil producing countries, rather than a sign of a long-term economic strategy.

More interesting is Gref's statement about the end of the oil age. Coming from the leading banker of the second largest oil exporter such view should not be ignored. It is not surprising that over a few days the YouTube video with of the statement was watched over 120,000 times even though it was only in Russian.

What would constitute an end of the oil age? Currently the world is using around 93 million barrels of oil per day (mbpd). OPEC expects that by 2040 this would increase to 110 mbpd. To start talking about a beginning of the end of the oil age we should see at least a reverse of this trend. Following the Paris climate agreement, it is appropriate to look into its implications for oil demand. The International Energy Agency (IEA) has done that in its 450 ppm scenario. It projects that by 2040 the global oil demand would fall to 83.4 mbpd. This is a downward trend though calling it an end of the oil age might be a bit premature.

Both OPEC and IEA's predict in any scenario declining oil use in the OECD countries based on saturation and efficiency - people in the economically advanced countries are not expected to buy more cars than they own now, efficiency standards are reducing the use of oil products and the population is not growing. In the rest of the world however people are rapidly moving into the middle class category, car ownership is expected to increase and population to grow.

The big question about the future of oil is the technological transformation of the transport industry. We burn about 44% of the global oil production on the road. The advance of the electric cars, and more precisely the batteries and the hydrogen cells, is a key factor. Plug-in hybrid cars will also play an important role since they have minimal petrol consumption. Some studies expect that about half of the new cars sold in 2030 in the leading electric vehicle (EV) markets would be electric, hydrogen cell and plug-in hybrid.

Strong competition is growing for the niche that Tesla is exploiting. Nearly every day, news emerges of another launch of a long-range premium EV. If the electric car succeeds in steeply lowering its cost to a level of, or even below, the internal combustion engine car, and if the issue with the driving range limit is solved then the electric car could swarm not only the rich world but it could also start dominating the new purchases in the emerging markets. This might be a big "if" though some predict a decline of cost of batteries from the current $700-800/kWh to below $200/KWh in 2020.

The spread of electric cars could be helped also by the strong growth of renewable power, which is now competitive with conventional energy in many places around the world, and it could provide both cheaper and decentralised energy for cars.

The end of the oil age would be also aided by stricter efficiency standards for the conventional cars. By 2021 all new cars in the European Union should not exceed the limit of 95g CO2 emissions per kilometre. If this standard is lowered further the oil consumption in the EU will decline even more. Inevitably, in a carbon-constrained world and globalised car industry, low carbon car standards will also spread globally.

The end of the oil age however will be slowed by the car's lifespan. Any new petrol or diesel driven car bought today is likely to be on the road for approximately 15 years. And of course cars are not the only oil products consumer. The petrochemical industry consumes about 10% of the global oil, and oil products would be difficult to take out of aviation (6%) and shipping (5%).

In other words the oil age might be over in sense of an expected steady decline of use of oil but not as an end of use of oil. At least not yet. Analysts, especially those associated with official agencies, tend to ignore technological breakthroughs. Revolutions are unpredictable and they do not usually figure in the models for the future. But as we know from personal computers, mobile phones or digital photography they do happen and then they do take over the world by storm.

We don't know how driverless cars, car sharing, services like UBER, 3D printing, videoconferencing and other innovations would affect mobility. For example a study on the impact of shared autonomous vehicles (SAV) in Texas estimates that a single SAV could replace nine conventional cars. And Google is expected to introduce self-driving vehicles next year.

Going back to the statement of the Russian banker, his alarm is justified. He is also raising a wider issue - the age of the security dominance of oil exporters is most likely over. With a wide variety of energy choices energy consumers feel much less dependent on oil and even less dependent on oil from a limited number of suppliers. The energy security agenda is unlikely to be set by oil producers again. The abundance of oil and declining demand is only one of the reasons. Much more significant might be the trends of energy technology proliferation, fuel switch and the energy cost convergence that have been supported for over two decades by increasingly ambitious low carbon policies. After the Paris climate conference these trends are likely to deepen. The future oil related confrontations might not be between oil exporters and oil importers but probably mainly among the oil exporters only. We can already see these tensions between Saudi Arabia and Iran and we might witness much more of that. The supply security scare that defined the post 1973 embargo energy policies around the world is being replaced by growing demand security concerns.

Oil prices could still go up even if the prediction for the end of the oil age is correct. If the oil production of the US declines, the conflict between Iran and Saudi Arabia turns ugly and the investors pull out of oil too rapidly the price of oil might increase again. But such volatility might not change the general trend.

As far as Russia is concerned the formula is painfully obvious - its government should introduce policies that finally drive foreword domestic economic diversification and reduction of oil revenue dependency. In that sense the statement by the Russian Deputy Minister of Energy is a logical follow up of the alarm raised by the banker. Whether both statements will remain lonely voices in the steppe remains to be seen.

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