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Bloomberg - Peak Oil and Electric Cars

Discussion in 'TSLA Investor Discussions' started by forumman83, Feb 24, 2016.

  1. forumman83

    forumman83 Member

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    #1 forumman83, Feb 24, 2016
    Last edited by a moderator: Mar 13, 2016
     
  2. flankspeed8

    flankspeed8 Member

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    I thought this was well done. Enjoyed it.
     
  3. 1208

    1208 Active Member

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    Thanks for the video but they are wrong about China. Imho China will be the biggest influence on Oil abandonment and EV adoption. They do what's right for them and its harder for Oil corporations to influence them. They already have 200m+ EVs. The impact will be sooner than they say as well, imho.

    I think Steve J. confirmed this in one of the TMC Connect things.
     
  4. flankspeed8

    flankspeed8 Member

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    Eventually, but the sheer numbers will make this difficult until you get to a point where EV's are outnumbering ICE sales. When will that happen? The U.S. is a mature market so total fleet size is pretty static as ICE are retired in lieu of EV, the impact is bigger. However in China they are putting so many new cars on the road that it is new demand. JMO

    But China should be an ideal EV market considering their pollution problems. I wonder how many miles the average Chinese driver does a day.
     
  5. R3D-83

    R3D-83 Member

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    +1 for the video! Thanks!

    I don't know... China is just piling up tens of thousands of barrels of oil daily in it's reservoirs with hundreds of millions of barrel capacity.
     
  6. GoTslaGo

    GoTslaGo Learning Member

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    #6 GoTslaGo, Feb 24, 2016
    Last edited: Feb 24, 2016
    This is their strategic reserve, which will be a military strategic reserve. They do not have the political impetus like in the US to release amounts to bring down prices for the consumer. This is their opportunity to stockpile for any military adventures they wish to pursue (south china sea anyone?).

    More EV cars would serve China's purpose to improve the environment (making citizens happier), depend less on outside power sources, and boost their own technology. Lower oil prices will help their military.

    If I was in charge over there, consumers would get EVs. PLA gets gas/diesel guzzling tanks, planes and ships.

    (last comment is not a knock on EVs, just a pragmatic allocation of scarce/imported resources...)
     
  7. TheTalkingMule

    TheTalkingMule Active Member

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    #7 TheTalkingMule, Feb 25, 2016
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    Whoops, wrong thread. Sorry
     
  8. David99

    David99 Active Member

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    I think EV have already made a bigger impact than the amount of oil they replaced. This video calculates the amount of oil that is needed to be causing the same effect. But we already see a much bigger impact. Both in the shift towards EV development and oil prices. Saudi Arabia has realized that the days of oil are numbered and demand will drop faster than expected. The have realized the change towards EVs will come faster than people thought before Tesla. So now they are pumping it out and selling as fast as they can. A positive side effect for them is that as the current low price none of the alternative oil sources (fracking and oil sand) makes economical sense. So they cash in while they and and kill their competition at the same time. Cheap oil also slows down the shift to EVs.

    So in a way peak oil has probably happened already. Not in the way originally thought, but by Tesla. I highly doubt oil prices will go up significantly again. The higher they go the faster alternative energy and EVs will be pushed. The more they try to get the oil price up, the faster they kill themselves.
     
  9. jhm

    jhm Active Member

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    So the global EV fleet stands at 1.3M at the close of 2015. If the fleet grows at 50% per year for the next 10 years then cumulative EVs hit 50M in 2024 with another 25M new one hitting in 2025. This I believe will be the death blow. The cumulative 50M knocks out 2 mbpd softening demand, and then the next 25M knocks out another 1 mbpd of oil demand.

    But what could slow down or speed this up? I have been concerned about ramping up battery capacity fast enough. If we are talking about EVs with 200+ mile range, then we need 60 kWh per car. So going into 2025, we would need 25M × 60 kWh = 1500 GWh of productive capacity. This is a out 30 Gigafactories.

    I have my doubts about scaling up production so fast, but keep in mind this ratio of 1500 GWh/yr to displace 1 mbpd of oil demand. That works out to about 4 kWh per barrel. Curiously the capex cost per kWh produced and per barrel of oil produced are both about $10. When the oil market is balanced, the industry needs to invest in a year enough to replace all the oI consumed in the year. So about $350B per year, as global consumption is about 95 mbpd. EV battery makers need to invest about 4% of what the oil industry invests to get to a level where 1% of oil demand is destroyed per year. So in this capital race, battery factory investment needs to get to about $14B or more per year.

    The thing that makes the battery supply requirement so high is that in an EV with a large battery pack, one does not cycle the whole pack daily. Suppose a PHEV has a 10 kWh good for upto 40 electric miles per day. If fully utilized 25 M PHEVs could displace 1 mbpd, but this only requires 250 GWh of batteries. Thus, we about 0.68 kWh per barrel. Thus the battery production capacity requirement is about a sixth of that of pure EVs.

    I suspect that tradional automakers will persist in trying to compete with EV using plug in hybrids. This is not such a bad thing from the viewpoint of displacing oil. Suppose Tesla has about 20% of the total EV market in 2025, and other automakers spit between pure EVs and PHEVs. Thus 15 M EVs need 900 GWh/yr capacity while 10M PHEVs need 100 GWh/yr. Thus, 1000 GWh is needed. This is about 2.75 kWh per barrel. So plug in hybrids can bring about oil demand peak one year early. So 2024 could be the end. Hybrids also help minimize fuel consumption even when the are burning gas. So this improves the displacement. Pushing this further 80% PHEV could bring supply requirement to 500 GWh/year. This could bring the peak another 2 years soon, 2022.

    With this, I am feeling more optimistic that oil could enter perpetual decline in 2023. It depends largely on the mix of PHEVs.
     
  10. Festerfeet

    Festerfeet Member

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    #10 Festerfeet, Mar 2, 2016
    Last edited: Mar 2, 2016
    Average mileage per year in China is 13,500 miles (20,000 km) so 36 miles per day for car owners. http://www.unep.org/transport/gfei/autotool/case_studies/apacific/china/CHINA%20CASE%20STUDY.pdf

    This may be why companies like BYD are heavily focused on the PHEV market for cars. How many are plugged in and charged overnight? This is something I have been asking myself.
     
  11. McRat

    McRat Active Member

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    #11 McRat, Mar 2, 2016
    Last edited: Mar 2, 2016
    But there is the baby with the bathwater problem. It is also killing algae, synthetic diesel (natural gas), and CNG, which are more eco-friendly ICE propellants than raw petroleum is. Less sulfur, less CO2, less NOx.

    Someday, EV powertrains will be the norm for passenger cars, but it will be a very long time before they can replace ICE completely. Jet aircraft, ships, towing vehicles, heavy trucks, farm equipment, construction equipment will be ICE for the foreseeable future. You simply cannot have an electric infrastructure that can replace liquid fuel for these applications.

    So cleaner alternatives in ICE technology will always be a good thing.
     
  12. jhm

    jhm Active Member

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    You don't have to worry about low oil prices displacing natural gas opportunities in transportation. Oil trades at 2 to 4 times the price of natural gas per unit of energy. So as the price of one goes down the other goes down seeking an equilibrium around 3 times.

    Consider the currently oil is at $34.40/b and natural gas at $1.636/MMBtu. Also 5.55 MMBTU / b. So the oil to gas ratio is at 34.40÷1.636÷5.55 = 3.78. This is a little at the high side so either oil needs to come down or natural gas needs to come up a bit.

    So if you operate a fleet with both diesel and CNG vehicles, you will utilize more CNG when the ratio is high and less when it is low. This kind of switching behavior pushes the oil to gas ratio to equilibrium. Both oil and natural gas are in a glut.
     
  13. McRat

    McRat Active Member

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    But due to processing, storage, transportation, etc, CNG and biofuels cannot currently be self-supporting below IIRC $4 per gallon petro equivalent.

    As long as petro fuel prices are deflated, the smaller companies (where innovation often happens) are dying in the alternative fuel segment.
     
  14. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    And alternative fuels often come with a high social cost in the form of polluted water, earthquakes, deforestation, etc. (because we don't make corporations clean up the messes they cause).
     
  15. McRat

    McRat Active Member

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    The day when electricity can power commercial aircraft and heavy equipment is far, far away. Unless we just write off these uses to stay petroleum forever, you will need synthetic liquid fuel. The energy density is just too high to avoid it.
     
  16. jhm

    jhm Active Member

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    #16 jhm, Mar 3, 2016
    Last edited: Mar 3, 2016
    There are lots of CNG vehicles on the road, especially heavy vehicles like busses. Waste Management has been systematically replacing their fleet with CNG trucks. I see no problem there, and that is specifically what I was addressing.

    Regarding biofuels, it basically comes down to a cheap feed stock. Using organic waste streams makes good sense. Growing energy crops is a questionable use of agricultural resources. Solar to EV produces far more miles per acre per year than any biofuel, and solar PV uses little to no water. So EVs powered by renewable energy is much better stewardship of land and water resources.

    Regarding airplanes, that will come in time. The issue we are addressing in this thread is when will oil begin to decline for loss of demand. Thus, we are talking about the high point of oil usage. That peak has to come long before the world can even contemplate the total removal of oil from energy use. One of the fundamental problems with biofuels is simply that they perpetuate the infrastructure that was design to optimize oil consumption. As long as the internal combustion engine is in use people will want to put oil products in it. However, as the world switches to electric vehicles without internal combustion engines, the oil infrastructure will whither and die. There will be no temptation to return to oil. It's going to take at least 25 years just to remove ICE from passenger autos. In that time batteries should be 4 to 6 times as much and cost 80% to 90% less. As we go down that curve, applications to aviation and shipping will make increasingly more sense. Hyperloop may even displace most travel by air. So I am not worried about trying to replace jet fuel right now. That will come in time.

    Right now the world consumes 95 mbpd. Just getting that down to 90 mbpd will require 125 M electric vehicles and upwards of 7500 GWh of batteries. It's going to take about 15 years just to get to that level. So while I can fantasize about electric aircraft, there is a huge supply challenge just for ordinary ground transportation. We'll get there, but replacing oil is an enormous undertaking. First order of business, let's get ICE off the roads and fossil fuels out of electricity generation.
     
  17. blakegallagher

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    I think there will be battery powered commercial planes before the last ice is off the road.

    - - - Updated - - -

    I don't think heavy equipment is far, far off. Mabye far off but maybe not. If you had an interchangeable battery and sold the machine with two of them. As long as the battery can charge faster than the equipment discharges it it's plausible. Maybe not today but I could see something along that line to fit some applications very well.
     
  18. jhm

    jhm Active Member

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    Right. To be clear, I am not saying that electric aircraft must wait until ICE is off the road. I am simply saying that as a matter of priority, electric vehicles and backup generators are lower hanging fruit.

    I've heard that helicopters require about two hours of maintenance for every hour of flight. If it is possible for electric helicopters to cut this maintenance requirement in half, that would be a huge savings in TCO. A really high end application like that could create a market for super high density batteries that might not yet be cost effective for autos. So the battery tech can be advanced by such niche applications. This is like how spacecraft have paid a huge premium for high efficiency solar panels. It has never been a huge market, but it stimulated R&D to search down many paths to higher efficiency solar. So extreme applications do have an important role to play in drawing the technology further. So think about how important energy density is to making an electric helicopter. Think about how much maintenance cost could be saved going electric. And these two factors can potentially drive the technology for very high density cells.

    Regarding heavy equipment, I think that sufficiently high density is already available. Battery swapping makes alot of sense. The only obstacle I see is the cost of the battery and entrepreneurship. It is helpful to identify applications that benefit in more ways from going electric than simply saving fuel, for example helicopter maintenance or ludicrous speed. Mining equipment comes to mind where there is a premium placed on breathable air. You need a compelling TCO in commercial space. As the price of batteries drops below say $100/kWh, I think the economics for heavy equipment will become broadly compelling just as they do for private autos. It would be super smart for a company like Caterpillar to partner with Tesla in developing a new generation of electric tractors.
     
  19. JRP3

    JRP3 Hyperactive Member

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    Some heavy equipment, such as excavators and cranes, use huge counterweights. So energy density is less of a concern if you simply replace dead weight with battery packs. Also, many pieces of equipment spend a lot of time idling, with short bursts of activity. I think in a number of cases an EV version would be quite practical with current technology.
     
  20. McRat

    McRat Active Member

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    The problem is with heavy equipment (the really big stuff already has electromotive-diesel powertrains), is the charging structure. Burning diesel in a portable generator has no advantage.
    A modern farm tractor runs an 8 hour shift or longer. They can carry enough liquid fuel for 8 hours, but that size battery isn't that clever in the near future. Sustained >100hp use would require a physically massive battery.

    Trivia, Porsche bid on the Tiger Tank in WWII. Ferdinand set it up for diesel-electric to eliminate the gearbox. It failed during the trials right in front of Hitler who chose a more conventional design.
     

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