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New NASA Study Solves Climate Mystery, Confirms Methane Spike Tied to Oil and Gas

NASA study finds oil and gas industry as source of 68% of methane emissions. Methane emissions have been on the increase as more gas is being used for power generation and as fracking has increased.

This research casts doubt on whether replacing coal with natural gas is an effective strategy for fighting climate change. Methane is a much more potent warming gas than carbon dioxide even if it is removed more quickly. So increasing methane in an effort to decrease carbon dioxide seems to be a tradeoff between faster climate change and longer lasting climate change.

Replacing coal with renewables and natural gas peakers with batteries would seem to be a more direct route to heading off climate change.

But there are other disturbing implications.

There are renewable sources of natural gas, but methane is methane. Much of the mathane emission problem is around handling and distributing gas, not the actual combustion of gas. So while RNG may be net zero carbon when combusted, it can still be a serious source of methane emissions along the way.

A carbon tax may well backfire if it unwittingly leads to an increase in methane. We should probably recalibrate our language to advocate for a greenhouse gas emissions tax or GHG tax, rather than a carbon tax. A political problem here is that much of the oil and gas industry has been warming up to a carbon tax, but to parse this out this gives oil and gas the upper hand against coal. A comprehensive GHG tax would not so easily throw coal under the bus to the benefit of natural gas. Rather, it would disadvantage all fossil fuels with respect to renewables and storage. Of course, a narrow carbon tax may still be a shrewd divide and conquer political strategy, but I suspect that it is risky.

Methane emissions also cast doubt on oil and gas as feed stock for plastics and other petrochemicals. The problem is that drilling for oil or gas is itself a major emission of methane, and so is piping it to processing and petrochem plants. So the oil industry has been promoting the idea that it will have long lasting growth markets in petrochem, but even this may be at odds with slowing climate change.

As transportation becomes electrified, this will reduce carbon dioxide emissions. However, methane emission could remain and become the relatively more significant problem. The complexity of trying to halt all GHG emissions could impede progress into deep decarbonization. So we need to be very careful about solutions that lower CO2 at the expense of increasing methane. So far wind, solar, and batteries as well as hydro and nuclear seem most promising for reducing all GHGs. Bioenergy may have some methane issues with gasification. RNG may have issues. Hydrogen fuel cells have lots of issues. And all fossil fuels for pretty much any use is very problematic.

One nice difference between methane and carbon dioxide is that methane may not create as much long term damage as carbon dioxide. So there may be some low threshold of methane emissions that sustainable, while for carbon dioxide well need to press toward zero or even negative emissions. A future generation may be more challenged to control methane emissions than carbon dioxide. But it seems the more built up the CO2 levels are, the less leeway there could be for managing methane.

Nevertheless, the central challenge for the present generation is simply to cut fossil dependency. Switch gas for coal is not going far enough.
It's become apparent that methane is not a solution.
I installed solar panels to replace my electric with renewable. I'm now in the process of replacing my methane central heating with electric heat pump sources so I can be GHG free.
 
New NASA Study Solves Climate Mystery, Confirms Methane Spike Tied to Oil and Gas

NASA study finds oil and gas industry as source of 68% of methane emissions. Methane emissions have been on the increase as more gas is being used for power generation and as fracking has increased.

This research casts doubt on whether replacing coal with natural gas is an effective strategy for fighting climate change. Methane is a much more potent warming gas than carbon dioxide even if it is removed more quickly. So increasing methane in an effort to decrease carbon dioxide seems to be a tradeoff between faster climate change and longer lasting climate change.

Replacing coal with renewables and natural gas peakers with batteries would seem to be a more direct route to heading off climate change.

But there are other disturbing implications.

There are renewable sources of natural gas, but methane is methane. Much of the mathane emission problem is around handling and distributing gas, not the actual combustion of gas. So while RNG may be net zero carbon when combusted, it can still be a serious source of methane emissions along the way.

A carbon tax may well backfire if it unwittingly leads to an increase in methane. We should probably recalibrate our language to advocate for a greenhouse gas emissions tax or GHG tax, rather than a carbon tax. A political problem here is that much of the oil and gas industry has been warming up to a carbon tax, but to parse this out this gives oil and gas the upper hand against coal. A comprehensive GHG tax would not so easily throw coal under the bus to the benefit of natural gas. Rather, it would disadvantage all fossil fuels with respect to renewables and storage. Of course, a narrow carbon tax may still be a shrewd divide and conquer political strategy, but I suspect that it is risky.

Methane emissions also cast doubt on oil and gas as feed stock for plastics and other petrochemicals. The problem is that drilling for oil or gas is itself a major emission of methane, and so is piping it to processing and petrochem plants. So the oil industry has been promoting the idea that it will have long lasting growth markets in petrochem, but even this may be at odds with slowing climate change.

As transportation becomes electrified, this will reduce carbon dioxide emissions. However, methane emission could remain and become the relatively more significant problem. The complexity of trying to halt all GHG emissions could impede progress into deep decarbonization. So we need to be very careful about solutions that lower CO2 at the expense of increasing methane. So far wind, solar, and batteries as well as hydro and nuclear seem most promising for reducing all GHGs. Bioenergy may have some methane issues with gasification. RNG may have issues. Hydrogen fuel cells have lots of issues. And all fossil fuels for pretty much any use is very problematic.

One nice difference between methane and carbon dioxide is that methane may not create as much long term damage as carbon dioxide. So there may be some low threshold of methane emissions that sustainable, while for carbon dioxide well need to press toward zero or even negative emissions. A future generation may be more challenged to control methane emissions than carbon dioxide. But it seems the more built up the CO2 levels are, the less leeway there could be for managing methane.

Nevertheless, the central challenge for the present generation is simply to cut fossil dependency. Switch gas for coal is not going far enough.
Great post! Important insights there.

Let me just add one straw to the camel's back: Warming is in and of itself a significant source of methane release, from the immense amounts locked in tundra, permafrost, polar ice and sea bottoms.

Humans are quite adept at shooting up own feet. Figuratively.
 
Great post! Important insights there.

Let me just add one straw to the camel's back: Warming is in and of itself a significant source of methane release, from the immense amounts locked in tundra, permafrost, polar ice and sea bottoms.

Humans are quite adept at shooting up own feet. Figuratively.
Yep, with feedback effects, the whole planet could become one big shithole.

According to the NASA study, fires were a source for 16% of methane currently being released. These forest fires in the West have an impact on both carbon dioxide and methane. Clearly climate change can accelerate the loss of forrest to fires. Forrest management and agriculture become big areas of climate change concern even as fossil fuels decline.
 
Replacing India’s coal plants with solar and wind could save billions, analysis finds

About two thirds of India's coal plants are uneconomic with respect to wind and solar. India can save US $3B per year by closing down plants more than 20 years old and replacing them with renewables.

I recall that about 2 or 3 years ago India was discovering that new solar would be cheaper than new coal. This led to a slow down in new coal, but coal consumption continued strong. Now India is crossing that second critical threshold where it is economical to retire existing coal plants early. New solar is $38/MWh and new wind $41/MWh, while 65% of coal plants need over $50/MWh to operate.

So in the coming years we could see India close some 60GW of coal. Cheap batteries couldn't come at a better time to help integrate all that new wind and solar. I could see India needing some 120GW of solar and 60GW wind to replace this coal. Pairing with upto 60GW/90GWh of storage could also save on gas peakers for integration.
 
I believe he means literally as he said:
How Carbon Negative Cement Works

Yep. It works at lab scale and has been used and tested, with very good reviews. Unfortunately, it didn't get financing to build a commercial scale plant, and then the company which was trying to commercialize it got bought by a company in Australia, which is currently sitting on the patents and trade secrets and not using them. (Aaargh!)

(Maybe if enough of us make enough money on TSLA we could buy them out and get it commercialized...)

In this article, one of the cements talked about is projected to take ~200 lbs of carbon dioxide out of the atmosphere to make it (net), where current concrete adds about 1800 lbs of carbon dioxide to the air per ton (between fuel consumption and carbon fixed in the raw ingredients, and driven off in the manufacturing process).


I'm thinking that carbon negative concrete, usable in road construction, in a future world with limited asphalt available would make for a fantastically large carbon sink. If only the technology works and the cost works.

There's a second zero-carbon concrete technology (Ferrock), but Novacem is better.
 
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Great post! Important insights there.

Let me just add one straw to the camel's back: Warming is in and of itself a significant source of methane release, from the immense amounts locked in tundra, permafrost, polar ice and sea bottoms.

Humans are quite adept at shooting up own feet. Figuratively.
for a novelization of the rapid increase of CH4, read "The Mother of Storms" by John Barnes. an "accidental" nuke into Clathrate rich tundra releases a LOT of CH4, goes into feedback loop (think monster hurricane that does not die, and "buds" off clones, catagory 6-7+) (Gilbert completely filled the Caribbean, Irma in 2017 completely covered Florida and was a Cat 5, 4x larger than Andrew back in 92 that was a cat 5) and continues releasing CH4. he has to cheat and use a "deus ex machina" to wrap up the novel, and things go to "helen gone" rapidly
 
It's become apparent that methane is not a solution.
I installed solar panels to replace my electric with renewable. I'm now in the process of replacing my methane central heating with electric heat pump sources so I can be GHG free.

Same for me but in opposite order. Replaced my natural gas heating with a geothermic heat pump a few years ago. Replaced my main car with a Tesla. Looking to replace the 2 lesser used cars with Model 3’s. Still waiting for local change of policy regarding smart metering of electricity use before deciding how to implement solar power on my house. But in about 5 years I will have replaced all of my family’s direct fossil energy use with renewable electric use.
 
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Peak Oil Demand Is A Slow-Motion Train Wreck | OilPrice.com

Finally, oil think tanks are starting to understand that peak demand means that oil reserves will lose scarcity value. They're finally seeing things we've been discussing for quite a while on this thread.

I've coined this as Peak Oil Reserves.

Great to see. The dynamic shift I'm most interested in is when these individual oil players permanently divorce themselves from cooperative supply manipulation. From a total revenue perspective, its far better for certain countries to pump like mad at various price/market balances.

Those players IMO will very rapidly unwind their supply cooperation over 2018/19 and the whole thing will be a race to the bottom on price.

If we're saying 2025-30 for peak oil demand, the cooperation breakdown has to be just around the corner. The Saudi IPO (success or failure) has to be the odds on favorite to be a cooperation tipping point.
 
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Great to see. The dynamic shift I'm most interested in is when these individual oil players permanently divorce themselves from cooperative supply manipulation. From a total revenue perspective, its far better for certain countries to pump like mad at various price/market balances.

Those players IMO will very rapidly unwind their supply cooperation over 2018/19 and the whole thing will be a race to the bottom on price.

If we're saying 2025-30 for peak oil demand, the cooperation breakdown has to be just around the corner. The Saudi IPO (success or failure) has to be the odds on favorite to be a cooperation tipping point.
That's a good insight that the OPEC game will change as this new reality of finite long-term demand sets in. I suspect the large reserveholders with more than, say, 30 years R/P will find that they in a contest to see who will be left holding the bag.

OPEC has a R/P ratio of 85 years, while non-OPEC has 25 years. The entire world is at 61 years of proven reserves, according to BP Review. My view is that only about half of these reserves will ever be demanded. So non-OPEC can just keep working their 25-year supply with little worry. But OPEC will be the big losers left holding the bag.

How will this play out internal to OPEC. Saudi Arabia and UAE have the lowest R/P ratios, 59 and 66, respectively. The other members may start pressing for a quota system that allows R/P ratios to equalize across all members. (That is what I would want if I had an R/P greater than 85.) This sort of scheme would imply production quotas in proportion to reserves. A solution close to that could enable the cartel to preserve cohesion.

But they still must compete with non-OPEC...
 
How will this play out internal to OPEC. Saudi Arabia and UAE have the lowest R/P ratios, 59 and 66, respectively. The other members may start pressing for a quota system that allows R/P ratios to equalize across all members. (That is what I would want if I had an R/P greater than 85.) This sort of scheme would imply production quotas in proportion to reserves. A solution close to that could enable the cartel to preserve cohesion.

But they still must compete with non-OPEC...

The moment a 5 year window for peak oil becomes consensus, all that breaks down. There's no scenario where you're better off slowing the pumps, especially if you have no quick path to other lines of revenue for your teetering economy. How long could you stare at a slowly burning pile of Amazon gift cards?

Once we hear CNBC or Bloomberg say peak oil demand will certainly occur 2024-2029, it's prison rules and every gal for herself.
 
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The moment a 5 year window for peak oil becomes consensus, all that breaks down. There's no scenario where you're better off slowing the pumps, especially if you have no quick path to other lines of revenue for your teetering economy. How long could you stare at a slowly burning pile of Amazon gift cards?

Once we hear CNBC or Bloomberg say peak oil demand will certainly occur 2024-2029, it's prison rules and every gal for herself.
You may be onto something with a 5 year window. The tact that Oxford Institute and BP are taking here is to emphasize how flat the peak will be. I view this more as propaganda play than a serious analytic view. As propaganda, it admits that an annual peak could happen soon, but the peak will be so drawn out that it does not really matter what year is the real peak. Thus, you can't really fit the peak into any 5-year window; you need something much wider.

But I view this all as posturing. It is trying to engineer expectations that the decline of oil will be really slow, even if the peak comes much sooner than they've been telling the public to believe.

From a modeling perspective, how flat the peak is depends on what is driving the peak, and this is where EV disruption is really important. The fuel displacement from EVs sold in 2017 will be about 225kb/d combining diesel and gasoline. Underlying growth in oil demand is about 1300 kb/d each year. So how many doublings are needed to create a peak. One doubling, 450 kb/d. Two doublings, 900 kb/d, three 1800 kb/d. So the peak will come between 2 and 3 doublings of current EV sales levels. So this is easily 4 to 7 years out, 2021 to 2024.

Maybe this looks flat going into the peak, but the fall off post peak will be much more abrupt. The reason why is that the EV disruption will still be doubling rapidly. By the fourth doubling, EVs whack off 3600 kb/d of demand, so there is a net loss of demand around 2.3 mb/d in a single year. This fourth doubling could arrive some time between 2025 and 2029, 8 to 12 years past 2017. So the fourth doubling will be quite traumatic for the oil industry. The peak will definitely not remain flat for long, as Oxford suggests. To get to a slow fall off, the modeler has to imagine that it take a really long time to go from third doubling to fourth. Just to stretch that out to four years implies that EV sales can't grow more than 19%/y. It is hard to fathom what would slow down EV sales growth as they go from about 10% new car market share to 20%. At this point you've got batteries under $100/kWh and charging infrastructure mushrooming everywhere. Even critical mineral markets will have gone through a boom cycle massively expanding supply. Also vehicle autonomy will be a thing. So this is no time for growth in the EV market to put on the skids for no good reason. As EV penetration reaches about 50%, we will see a slow down due to a rapidly saturating market, but this would be after a fifth doubling. Saturation is not much of a drag going into thr fourth doubling. Waiting for market saturation to slow things down is like waiting for a run away freight train to slow down once it gets all the way down the mountan to level tracks.

All this can be seen with simple mathematical models like exponential or logistic. Surely the analysts at Oxford and BP know all this, but they choose to put out nonsense to suggest a flat peak to the public. It simply defies the logistic growth curve that EV adoption will lilely follow through the next 4 doublings.

The problem that these analysts have is that they have been misleading the public for years, but as critical events approach rapidly they have to change their forecasts and try to hang onto a presumption of credibility. So now we are at the place where these obscurantists must pitch a flat peak theory because the peak year is coming up fast.
 
Here is a cool US forecast from EV-Volumes - The Electric Vehicle World Sales Database

USA-G-12-2017.png


Hello, Model 3!
 
You may be onto something with a 5 year window. The tact that Oxford Institute and BP are taking here is to emphasize how flat the peak will be. I view this more as propaganda play than a serious analytic view. As propaganda, it admits that an annual peak could happen soon, but the peak will be so drawn out that it does not really matter what year is the real peak. Thus, you can't really fit the peak into any 5-year window; you need something much wider.

But I view this all as posturing. It is trying to engineer expectations that the decline of oil will be really slow, even if the peak comes much sooner than they've been telling the public to believe.

"2040" might as well be nothing to an entrenched oil party, but "2025-2030" is reality and needs to be addressed.

All this can be seen with simple mathematical models like exponential or logistic. Surely the analysts at Oxford and BP know all this, but they choose to put out nonsense to suggest a flat peak to the public. It simply defies the logistic growth curve that EV adoption will lilely follow through the next 4 doublings.

The problem that these analysts have is that they have been misleading the public for years, but as critical events approach rapidly they have to change their forecasts and try to hang onto a presumption of credibility. So now we are at the place where these obscurantists must pitch a flat peak theory because the peak year is coming up fast.

We see it with the IEA renewable energy "projections" every year. These folks are using their 1986 models and adjusting them as needed when their reality is proven to be off base. No one is even bothering to look forward a handful of years. Folks predicting a slow oil decline can't accept China, India and other rapidly developing nations leapfrogging old infrastructure for new. It's not that the fossil infrastructure growth plan are being shifted, they are(or will) completely pivot away from it. African nations can't afford to build out both paths in parallel like the US and Germany, so at some point very soon anything fossil needs to be completely abandoned for cheaper 100% EV/renewables infrastructure.

And it all feeds back on itself to accelerate transition. If anything, the downswing in oil could be even more stark than coal.
 
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You may be onto something with a 5 year window. The tact that Oxford Institute and BP are taking here is to emphasize how flat the peak will be. I view this more as propaganda play than a serious analytic view. As propaganda, it admits that an annual peak could happen soon, but the peak will be so drawn out that it does not really matter what year is the real peak. Thus, you can't really fit the peak into any 5-year window; you need something much wider.

But I view this all as posturing. It is trying to engineer expectations that the decline of oil will be really slow, even if the peak comes much sooner than they've been telling the public to believe.

From a modeling perspective, how flat the peak is depends on what is driving the peak, and this is where EV disruption is really important. The fuel displacement from EVs sold in 2017 will be about 225kb/d combining diesel and gasoline. Underlying growth in oil demand is about 1300 kb/d each year. So how many doublings are needed to create a peak. One doubling, 450 kb/d. Two doublings, 900 kb/d, three 1800 kb/d. So the peak will come between 2 and 3 doublings of current EV sales levels. So this is easily 4 to 7 years out, 2021 to 2024.

Maybe this looks flat going into the peak, but the fall off post peak will be much more abrupt. The reason why is that the EV disruption will still be doubling rapidly. By the fourth doubling, EVs whack off 3600 kb/d of demand, so there is a net loss of demand around 2.3 mb/d in a single year. This fourth doubling could arrive some time between 2025 and 2029, 8 to 12 years past 2017. So the fourth doubling will be quite traumatic for the oil industry. The peak will definitely not remain flat for long, as Oxford suggests. To get to a slow fall off, the modeler has to imagine that it take a really long time to go from third doubling to fourth. Just to stretch that out to four years implies that EV sales can't grow more than 19%/y. It is hard to fathom what would slow down EV sales growth as they go from about 10% new car market share to 20%. At this point you've got batteries under $100/kWh and charging infrastructure mushrooming everywhere. Even critical mineral markets will have gone through a boom cycle massively expanding supply. Also vehicle autonomy will be a thing. So this is no time for growth in the EV market to put on the skids for no good reason. As EV penetration reaches about 50%, we will see a slow down due to a rapidly saturating market, but this would be after a fifth doubling. Saturation is not much of a drag going into thr fourth doubling. Waiting for market saturation to slow things down is like waiting for a run away freight train to slow down once it gets all the way down the mountan to level tracks.

All this can be seen with simple mathematical models like exponential or logistic. Surely the analysts at Oxford and BP know all this, but they choose to put out nonsense to suggest a flat peak to the public. It simply defies the logistic growth curve that EV adoption will lilely follow through the next 4 doublings.

The problem that these analysts have is that they have been misleading the public for years, but as critical events approach rapidly they have to change their forecasts and try to hang onto a presumption of credibility. So now we are at the place where these obscurantists must pitch a flat peak theory because the peak year is coming up fast.
I think you're overlooking something with your "doubling" logic. Suppose that currently EVs save 225kb/d in 2017, as you say above. Then you say "1 doubling, 450kb/d". But that's wrong, because the existing EVs from 2017 are STILL saving their 225 kb/d, while the new double-lot of EVs save a further 450kb/d. Then the next doubling, we're still saving the old 675 kb/d, and saving another 900kb/d during that period. Unless I misunderstood you, you're counting only the rate of new EVs, and not the cumulative sum of all EVs to that point... and for a while, at least, most EVs will continue to be driven, so we don't have to think about the ones being retired.

Really what's happening is that we care about the integral (the area under the curve) not the adoption curve itself. Since the growth is exponential, so is the integral, but with an appropriate multiplicative factor added. If the doubling period is 2 years, this basically means that it all happens 2 years earlier. (I think. Tired. Hard day.)
 
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I think you're overlooking something with your "doubling" logic. Suppose that currently EVs save 225kb/d in 2017, as you say above. Then you say "1 doubling, 450kb/d". But that's wrong, because the existing EVs from 2017 are STILL saving their 225 kb/d, while the new double-lot of EVs save a further 450kb/d. Then the next doubling, we're still saving the old 675 kb/d, and saving another 900kb/d during that period. Unless I misunderstood you, you're counting only the rate of new EVs, and not the cumulative sum of all EVs to that point... and for a while, at least, most EVs will continue to be driven, so we don't have to think about the ones being retired.

Really what's happening is that we care about the integral (the area under the curve) not the adoption curve itself. Since the growth is exponential, so is the integral, but with an appropriate multiplicative factor added. If the doubling period is 2 years, this basically means that it all happens 2 years earlier. (I think. Tired. Hard day.)
Right, I am not doing this on a cumulative basis because I want to know how much demand changes in a single year. The cumulative is necessary for modeling the level of demand.
 
From Gregor.us

Homework for everybody here.
_________

If you’d like to understand better how the introduction of electric vehicles will affect the oil market at the margin, then you should read Oil Fall, a three part series that explains how wind and solar power will jailbreak the powergrid, and find their way into global transportation.

Part one, California ICE, is now released and follows the beginnings of this story from California, which is now producing 20 percent of its electricity consumption from wind and solar power alone, and, which is at the forefront of electric vehicle adoption.

From the introductory, first chapter:

We have long assumed the most dangerous moment for the oil industry will arrive when demand for its products enters permanent decline. That’s understandable. However, by the time global oil demand actually enters outright decline, the damage to oil prices and the oil industry will have been underway for some years. The pivotal moment for the oil industry—indeed for all capital intensive industry—is not the decline, but rather, the transition from positive annual growth to zero growth, or a flatline.

Oil Fall is the story of how near we are to that moment of zero growth. For some, the story will seem improbable. For others, inevitable. It’s a story that begins in California, will soon run through China, and eventually will distribute its thermodynamic savings, and economic change, across the world economy. These three phases of the story will be laid out over three short book installments. And the first, which you are about to read, is called California ICE

…What’s about to happen in California, and the United States, and then the world more generally with China as a foundational leader, is that electricity—long trapped behind an insurmountable wall—is going to find its way into the transportation sector. The reason to tell this story now is that we are poised at that curious moment when, after nothing happening for a long time, everything appears to be happening at once. California is about to trigger an exceptionally powerful formula for breaking the ringfence that oil has long enjoyed over transportation: new wind and solar power constructed across the state, deployed on the back of plunging costs, is finding its way into increasingly affordable electric vehicles. The implications are exhilarating for the environment, but absolutely devastating for the oil industry, the existing car industry, and all the infrastructure that is leveraged to oil and gasoline.

But let’s not get ahead of ourselves. Oil Falldoesn’t attempt to model or forecast global oil demand declines, which may not come until the mid-point of next decade. While analysts waste their time trying to figure out, for example, when EV will ultimately take all market share of new car sales, for example, this series will concentrate on the first blow: when oil demand growth falls to zero. That single change alone will do plenty of damage— not only to oil, but to the oil industry’s influence and power.

Oil Fall is a three part series that will publish over the course of 2018. © All rights reserved by the author and TerraJoule Publishing. Fair use of quotes from Oil Fallare permitted, with citation of Oil Fall as the source, and the author’s name, Gregor Macdonald.
 
From Gregor.us

Homework for everybody here.
_________

If you’d like to understand better how the introduction of electric vehicles will affect the oil market at the margin, then you should read Oil Fall, a three part series that explains how wind and solar power will jailbreak the powergrid, and find their way into global transportation.

Part one, California ICE, is now released and follows the beginnings of this story from California, which is now producing 20 percent of its electricity consumption from wind and solar power alone, and, which is at the forefront of electric vehicle adoption.

From the introductory, first chapter:

We have long assumed the most dangerous moment for the oil industry will arrive when demand for its products enters permanent decline. That’s understandable. However, by the time global oil demand actually enters outright decline, the damage to oil prices and the oil industry will have been underway for some years. The pivotal moment for the oil industry—indeed for all capital intensive industry—is not the decline, but rather, the transition from positive annual growth to zero growth, or a flatline.

Oil Fall is the story of how near we are to that moment of zero growth. For some, the story will seem improbable. For others, inevitable. It’s a story that begins in California, will soon run through China, and eventually will distribute its thermodynamic savings, and economic change, across the world economy. These three phases of the story will be laid out over three short book installments. And the first, which you are about to read, is called California ICE

…What’s about to happen in California, and the United States, and then the world more generally with China as a foundational leader, is that electricity—long trapped behind an insurmountable wall—is going to find its way into the transportation sector. The reason to tell this story now is that we are poised at that curious moment when, after nothing happening for a long time, everything appears to be happening at once. California is about to trigger an exceptionally powerful formula for breaking the ringfence that oil has long enjoyed over transportation: new wind and solar power constructed across the state, deployed on the back of plunging costs, is finding its way into increasingly affordable electric vehicles. The implications are exhilarating for the environment, but absolutely devastating for the oil industry, the existing car industry, and all the infrastructure that is leveraged to oil and gasoline.

But let’s not get ahead of ourselves. Oil Falldoesn’t attempt to model or forecast global oil demand declines, which may not come until the mid-point of next decade. While analysts waste their time trying to figure out, for example, when EV will ultimately take all market share of new car sales, for example, this series will concentrate on the first blow: when oil demand growth falls to zero. That single change alone will do plenty of damage— not only to oil, but to the oil industry’s influence and power.

Oil Fall is a three part series that will publish over the course of 2018. © All rights reserved by the author and TerraJoule Publishing. Fair use of quotes from Oil Fallare permitted, with citation of Oil Fall as the source, and the author’s name, Gregor Macdonald.
Nice. I think an analysis of the lead up to zero demand growth is really important. Oil producers have always counted on a steady increase in oil demand. So many of their basic assumptions about how the market works is predicated on that. But as demand flatlines, things can go haywire in unexpected ways.
 
It looks like countries oil reserves depends on the price level, at least for Thailand,

"Energy policymakers may cut the national legal oil reserve period from 22 days to 18 if global oil prices climb above US$70 per barrel for a "long period of time".
Oil reserve period could be cut
Hmm, this is really interesting. Thai government subsidizes oil, especially diesel and cooking oil. The dictate a reserve level to producers, obstensively to mitigate risk that the government absorbs through its price caps.

So now we see this government expressing price sensitivity to oil over $70/b. They expanded the reserve requirement to 22 days when oil was around $40, and will reduce this at $70. So they are definitely using reserves to manage price volatility.

It makes me wonder what other countries are attempting to do roughly the same thing. At what price will China use its massive SPR to hedge high prices? Perhaps $70 is really the upper limit on demand growth, i.e. consumption will not grow at prices above $70.

I'd also note that since Thailand has heavy subsidies on diesel and that that diesel is critical for a functioning economy, I've got to expect the government will be inclined to favor electric buses and electric trucks. Commercial EVs will help the government mitigate its exposure to oil price volatility. Again this sort of strategy could be replicated to lots of other countries.

The Asian demand growth that the oil industry counts on may run quite thin as oil presses above $70/b.
 
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