Last week, the price of crude oil dipped to a 12-year low selling for under $30 a barrel -- a far cry the pre-recession peak of around $147. On Jan. 16 it was reported that a town in northern Michigan was the first place in the country to start selling gas at under a buck a gallon in a purported local price war. Meanwhile, the national average price for gasoline is running at just $1.89 a gallon.

This is the culmination of a protracted downward price trend due to a global oil-production glut, which according to the American Automobile Association saved Americans more than $115 billion during 2015, with drivers pocketing savings of more than $550 each.

Perhaps unsurprisingly, some American car buyers seem to have taken this as a signal to forgo the economical compact car, and start buying SUVs again. Ford said ahead of last year’s Los Angeles auto show that it predicts the market for SUVs will grow to 40 percent by 2020, up from around a third of the domestic U.S. market today.

But despite the return of cheap gas, all the major auto companies continue to take electrification seriously, including Ford, which recently announced they will invest another $4.5 billion to bring 13 new electrified cars to its lineup by 2020. And this week’s Economist ran a couple of articles reporting that demand for lithium-ion batteries is surging, with lithium itself being, “one of the world’s only hot commodities.” That’s remarkable with crude at today's rock-bottom prices.

For sure, robust demand for lithium and lithium-ion batteries does not depend on the transportation sector alone. The Economist details that utilities are installing “millions” of batteries as energy storage into power plants to regulate supply at times of peak of demand, as well as accommodating the "intermittency" of renewables.

The Economist cites a couple of examples in the United States alone: During 2016, a solar plant in Hawaii will be equipped with batteries, such that it will be able to supply energy after dark at a price that is cheaper than using diesel generators. Another example, AES Energy Storage won a contract in 2014 to provide a “peaker-plant” in Southern California with battery storage able to provide up to 100 Megawatts of power to the grid in times of maximum demand, which, as a company spokesman says is, “hybridizing the grid.”

But it’s not just utility grade storage that lithium-ion batteries will fulfill, but at the consumer level too. Next month, Tesla will start installing its $3,000 Powerwall to early adopters in both the United States and Australia, so that people can, at last, store the energy generated from their own solar panels.

As important as energy storage is, transportation is still a key driver of demand for batteries. Tesla, of course, plans to play in both arenas, and the completion of its so-called Gigafactory aims to supply vehicle batteries for 500,000 vehicles a year within five years.

Something else that cannot be overlooked as a driver of demand for lithium-ion batteries is China. In 2015, Chinese auto manufacturer BYD was the world’s largest seller of electric vehicles. Though China’s EV market is comprised of multitudes of electric bicycles, scooters and other “slow speed EVs,” BYD sold over 61,000 “highway capable” electric vehicles, almost all into its domestic marketplace. Furthermore demand for EVs is growing at a clip. The country as a whole, organized around the government’s “new energy” initiative, tripled the output of EVs in the first 10 months of 2015, compared with 2014 - to 171,000 units, many of which were electric buses.

Indeed, government regulation across the globe is likely to help keep the demand for batteries strong. The Economist notes emissions standards in both the EU and US markets are likely to boost demand for lithium from automakers on a long term basis.

This is all good news for the battery manufacturers - a market thus far dominated by a handful of players; South Korea’s Samsung and LG, and Japan’s Panasonic and Sony. But add to that China’s numerous battery makers, and Tesla’s entry into the picture - not to mention automakers like Toyota forging partnerships with suppliers to ensure uninterrupted supply - and the commodity price for lithium spiked in the last two months of 2015, to almost double what it was just a couple of months earlier - reaching around $13,000 a ton.

Still, the market for lithium itself is relatively small. Worldwide, sales of lithium salts according to The Economist add up to only about $1 billion a year. Which might sound surprisingly low, until you consider the amount of lithium in the average battery comprises only 5 percent of total materials used in their manufacture, and only 10 percent of total cost; a little of this important metal goes a long way.

That said, according to The Economist, Goldman Sachs, an investment bank, has described lithium as “the new gasoline.” But if it is to become that, the lithium-ion battery has to satisfy detractors, including the Argonne National Laboratory, who says the ability to provide hundreds of miles driving range, be rechargeable in minutes, and provide power at a cost comparable with natural gas is, “beyond reach” of lithium-ion technology.

Perhaps that’s changing, however. Chevrolet’s boss, Mary Barra, in unveiling the automaker's new Bolt EV asserts the new car’s battery has “cracked the code” in terms of combining long range with affordable price - and it would indeed appear poised to be a breakthrough product if production vehicles achieve the promised 200-mile range for around $30,000 after incentives.

In addition, Samsung announced at this year’s North American International Auto Show that they have developed a prototype “High-Density” battery that will offer a driving range of 600 kilometers (373 miles) on a single charge, with an energy-density 20 to 30 percent improved over today’s - and slated for production in 2020.

There is a saying that the stone age didn’t end because we ran out of stones. So perhaps it’s not premature to say the growth of lithium-ion battery technologies in the face of cheap fossil fuels might allow an analogous saying: the end of the oil age will not be because we run out of oil. Time will tell.

Image courtesy of the author