Interesting article. The timeline seems aggressive to me. I think it will take longer for oil to die because developing countries will probably still use a lot of oil. Also someone has to make all the batteries for the autonomous vehicles and that will take some time.
I'm with an oil company and we have developments in oil sands. If I showed the people at work here this article it would get a pretty good laugh. Not from me though because it definitely made a lot of sense.
This article is new to me, but the topic is one we've been talking about in the Shorting Oil thread. A few points that this article does a great job of bringing out:
- Notice the graph of coal production vs. coal consumption. Coal entered into the beginning of a >10 year supply glut (more production than consumption) starting in 2005 or 2006. Every single year forward has seen more production than consumption.
- As a result, coal companies have seen 99.9% of their value disappear, EVEN WHILE the units of coal being consumed have dropped from ~1100 million short tons to ~900 million short tons. The point being - VALUE disappears from the industry long before the UNITS or volume disappears.
This point isn't made in the article, but in a separate article linked from Wikipedia - coal made up ~29% of total worldwide primary energy (vs oil at 31%) in 2014 (newest data I could find, published in 2016). The units of coal are still there, but the value in the industry (compared to how it was previously valued) has vanished.
World energy consumption - Wikipedia
http://www.iea.org/publications/freepublications/publication/KeyWorld2016.pdf
In the Shorting Oil thread we're debating when does oil enter into permant demand decrease, with an assumption that will correspond to a permanent supply glut as well. The best answer we're coming up with right now is 2022 / 2023, with the pattern that each time we see something new that changes the timing, the date gets pulled in.
Whenever it actually happens, I see that same value destruction coming to the oil & gas industry really soon. Heck, it might have already started this year.
The timeline seems aggressive to me as well
@Rammstein when I think about units or quantity of energy coming from O&G. The point I like to make is to separate value from units / quantity.
I see big increases in energy consumption in the developing countries coming as well - energy systems provide humans dramatic improvements in quality of life and productivity, and are critical to each of us that doesn't live in extreme poverty. There are a lot of people consuming a lot less energy than the developed world, so there's a lot of room to grow that worldwide energy demand.
The problem for the oil companies is that countries that don't have the well developed fossil fuel distribution infrastructure are likely to do some math, and decide to buy energy production in the form of solar and wind installations (competitve or cheaper today than building a new build coal, and in some cases natural gas plant), rather than buying that infrastructure or building big elaborate central electricity power production and distribution systems. Good for solar and wind, and battery etc.. storage. Not good as a demand creator for fossil fuel.
Thanks for posting that article
@Starno - I'm going to cross post to the Shorting Oil thread.
