Shorting Oil, Hedging Tesla

[Reciprocity]

I don't think peak oil is as close as most. It has nothing to do with EVs and now to do with 3rd world countries becoming second world and emerging markets like China and India. They are just growing to fast from a lower level and not everyone can afford EVs so a lot cheap icev will be produced and even those that get displaced here will end up over there, meaning if resale values go down on diesel vehicles because they are being outlawed, they will end up in Africa or other growing 3rd world and emerging markets. Have you ever heard the story about the plumber who saw his old work van on TV with his logo and contact info still on the side. It was turned into an isis technical with gun mounts. These things will last decades and don't age well in terms of efficiency. Peak oil will lag peak icev by atleast a decade. Diesel will go first and is already being out sold by EVs in the US (cars only, not trucks yet). At what point does icev sales peak? Just add 10 years to that.

The one kicker here though is if diesel peaks much sooner, it could have a negative impact on gas because refining becomes less efficient which will lead to less oil demand and higher had prices. This could accelerate peak icev and ever increasing gas costs will accelerate peak oil. The more demand guess down the most expensive it will get. Which is opposite of what you would think with supply and demand. The issue is that it gets much less efficient when the economies of scale start going backwards. A well that used to produce oil that was made in into gas and diesel now must be further refined to turn the diesel into something useful like more gas. This is way less efficient. I don't think they can just dump the diesel but who knows what will will do.

Either way, the next recession will be very hard on oil as the clock ticks towards peak oil.

 

[TheTalkingMule]

I don't think peak oil is as close as most. It has nothing to do with EVs and now to do with 3rd world countries becoming second world and emerging markets like China and India.

Not so much India, but certainly China is adding far more renewables than nukes, coal or gas. I think it was something like 52% of new capacity in 2016 and probably more in 2017. Renewables plus storage are now as cheap or cheaper than building new fossil/nuke infrastructure, so that's what they're building. If anything, emerging markets moving to the next tier will accelerate overall global adoption of renewables and cause demand to peak faster.

They are just growing to fast from a lower level and not everyone can afford EVs

EVs have far less moving parts and now that battery production is cheap EVs themselves will approach the cost of ICE cars. Then you have the fuel savings plus all your new zero marginal cost electricity infrastructure will make electricity cheap. We could soon see a Chinese manufactured EV living it's life in China being half the total expense of a comparable ICE over 10 years.

 

[Reciprocity]

Not so much India, but certainly China is adding far more renewables than nukes, coal or gas. I think it was something like 52% of new capacity in 2016 and probably more in 2017. Renewables plus storage are now as cheap or cheaper than building new fossil/nuke infrastructure, so that's what they're building. If anything, emerging markets moving to the next tier will accelerate overall global adoption of renewables and cause demand to peak faster.

EVs have far less moving parts and now that battery production is cheap EVs themselves will approach the cost of ICE cars. Then you have the fuel savings plus all your new zero marginal cost electricity infrastructure will make electricity cheap. We could soon see a Chinese manufactured EV living it's life in China being half the total expense of a comparable ICE over 10 years.

They won't approach the cost of used, soon to be illegal diesel cars and trucks. Nor will they be as cheap as 10 year old icev. New EVs are a very long way from being as cheap. The main reasons is no one other then Tesla and China are even trying and Tesla isn't doing a cheap car and China won't be exporting for a while because if their deadly air pollution problem.

 

[RobStark]

French President Emmanuel Macron on Sunday

He and Modi will open a new 100 megawatt solar plant near the holy Indian city of Varanasi on Monday. The French leader will also visit the Taj Mahal in Agra later Sunday.

Will the Macrons dress like this on Sunday?

 

[RobStark]

I don't think peak oil is as close as most. It has nothing to do with EVs and now to do with 3rd world countries becoming second world and emerging markets like China and India.

Before the Berlin Wall fell 1st World meant the rich industrialized countries, 3rd World meant the poor industrializing countries, and 2nd World meant the Warsaw Pact quasi-industrialized countries.

 

[Oil4AsphaultOnly]

I don't think peak oil is as close as most. It has nothing to do with EVs and now to do with 3rd world countries becoming second world and emerging markets like China and India. They are just growing to fast from a lower level and not everyone can afford EVs so a lot cheap icev will be produced and even those that get displaced here will end up over there, meaning if resale values go down on diesel vehicles because they are being outlawed, they will end up in Africa or other growing 3rd world and emerging markets. Have you ever heard the story about the plumber who saw his old work van on TV with his logo and contact info still on the side. It was turned into an isis technical with gun mounts. These things will last decades and don't age well in terms of efficiency. Peak oil will lag peak icev by atleast a decade. Diesel will go first and is already being out sold by EVs in the US (cars only, not trucks yet). At what point does icev sales peak? Just add 10 years to that.

Nah, 3rd world countries will skip fossil fuels, because of the infrastructure required. I don't recall if jhm mentioned it here or if I read it elsewhere, but having visited cambodia last year, gasoline/diesel is MUCH too expensive to continue to use. Their gasoline was ~$5/gal, while their electricity (from a central _diesel_ generator) was 15 cents/kwh - RETAIL! It's funny how that math worked, but points to how inefficient their distribution infrastructure was. That inefficiency leaves an opening for renewables to take over. Solar is already starting to take a foothold there (despite all the rain), so that places like Africa (which receives huge investments by the chinese solar industry) would easily side-step fossil fuels entirely.

 

[Reciprocity]

Nah, 3rd world countries will skip fossil fuels, because of the infrastructure required. I don't recall if jhm mentioned it here or if I read it elsewhere, but having visited cambodia last year, gasoline/diesel is MUCH too expensive to continue to use. Their gasoline was ~$5/gal, while their electricity (from a central _diesel_ generator) was 15 cents/kwh - RETAIL! It's funny how that math worked, but points to how inefficient their distribution infrastructure was. That inefficiency leaves an opening for renewables to take over. Solar is already starting to take a foothold there (despite all the rain), so that places like Africa (which receives huge investments by the chinese solar industry) would easily side-step fossil fuels entirely.

Really, so they are going to buy a model 3 or nah?

Here is time math. $2000 car, $5-10/g gas or $25000 car and electricity equivalent to $1.50/g gas. This is 3rd world. Not a bad neighborhood in LA.

 

[mspohr]

Really, so they are going to buy a model 3 or nah?

Here is time math. $2000 car, $5-10/g gas or $25000 car and electricity equivalent to $1.50/g gas. This is 3rd world. Not a bad neighborhood in LA.

The cost of fuel Trump's the cost of the vehicle

 

[Oil4AsphaultOnly]

Really, so they are going to buy a model 3 or nah?

Here is time math. $2000 car, $5-10/g gas or $25000 car and electricity equivalent to $1.50/g gas. This is 3rd world. Not a bad neighborhood in LA.

please visit a 3rd world country and then review what you think their options are. The choice is more like $10k for a used 3 year old toyota camry, or $10k for a natively produced electric called the Ankor EV. Germany is working on the TUM electric truck for Africa - under 10k Euros.

 

[jhm]

Hydrogen made by the electrolysis of water is now cost-competitive and gives us another building block for the low-carbon economy

This is a really nice blog on the economics of electrolyzers. The hydrogen market is already 50Mt per year. Mostly from steam reforming natural gas, this market contributes over 1% of GHG emissions. So the rise of electrolyzers could reduce emissions by as much and consume about 15% of the electricity produced globally. This 15% is good consumption because it can consume the lowest priced power on the market, increase renewable penetration and help stabilize the grids of the world. It helps to set a floor on the price of electricity so that renewables are spared value erosion.

Also note that the author expects the cost of electrolyzers to drop to about $0.85/W with increased scale. Compare that to a 100MW/400MWh Tesla Powerpack system with large scale pricing at $1/W. Now these both put a floor on the price that a renewable generator would need to accept on the power market. But they export into two distinct markets. The electrolyzer exports to the industrial gas market, while the batteries exports into the peak power market over the next 24 hours or so. The peak power market is likely to be more valuable than the gas market, so it may be worth spending a bit more on batteries. But both are important put options for the renewable power generator. The capex on both function as the cost of the put options. The strike prices are then based on the price of hydrogen and the price of near term peak power. The later can change substantially on an hour by hour basis. So think of a put option where the strike price is variable. But the price of hydrogen is likely to be much more stable, and hydrogen itself is quite storable. So both put options while be valuable at different times.

Yet electrolyzers and batteries are both in competition with each other as dispatchable load which put a floor on power spot prices and shore up the value of renewables. If there are too many batteries, then peak prices fall, and batteries lose value. This would make electrolyzers incrementally more valuable than adding more batteries. So what we see here is that electrolyzers will place a limit on how much battery storage a grid will need.

So analysts that were projecting that grids might need as much as 90 DAYS worth of battery storage for deep decarbonization really need to redo their analyses. I think that with electrolyzers in play, it would be really hard to determine need for even 18 hours of storage. Basically, batteries and other storage will need to balance power out over the next 24 hours. Whatever generation is in surplus to that will be absorbed by electrolyzers. And if there is a looming deficit, electrolyzers will drop offline, increasing net generation. Beyond that if there is still a deficit, then gas generators will fire up. Thus, while electrolyzers are generating hydrogen, the grid is a producer of gas. When backup gas generators kick in, the grid is a consumer of gas. A carbon negative grid is obtained once it has enough renewables and electrolyzers to be a net producer of gas over the whole year.

You got to take in how profound that last statement is. Grids need to become net producers of gas. Once they achieve that, not only are they carbon neutral, they are carbon negative. Batteries can't really do that because they simply feed power back into the grid. Electrolyzers actually export power to a different market. The reduction of carbon in the gas market from importation of electrolyzed gases counts as negative emissions for the grid. Of course, one could argue that batteries in EVs also reduce transportation sector emissions and can count as negative emissions. But I think this underscores how critical electrolyzers are to deep decarbonization. Just as you can hardly decarbonize transportation without batteries, you are very hard pressed to decarbonize industrial gases without electrolyzers. The exception here is bio sourced gases, but there are enormous environmental challenges to scaling up biogas. What else is amazing here is that both pathways can help stabilize the grid and help it attract huge renewable investments.

In the near term, grids need batteries for stabilization and to replace gas peakers with stored renewables. But it is critical for electrolyzers to be proving out the technology and ramping down the cost. Both batteries and electrolyzers will stimulate demand for more wlsolar and wind power. Remember that electricity demand can grow 15% just to satisfy the hydrogen market and grow at least another 30% to satisfy the emerging EV charging market. These are enormous growth opportunities. As the costs of both batteries and electrolyzers drop, this stimulates massive growth in wind and solar.

 

[Reciprocity]

please visit a 3rd world country and then review what you think their options are. The choice is more like $10k for a used 3 year old toyota camry, or $10k for a natively produced electric called the Ankor EV. Germany is working on the TUM electric truck for Africa - under 10k Euros.

I would love to see pictures of this golf cart.

 

[RobStark]

 

[Reciprocity]

LoL.. Lambo doors. I am surprised I have not seen any ISIS fighters in those vehicles with machine guns mounted to the roofs. A man can dream.

 

[SwTslaGrl]

VWs using more diesel, failing pollution tests after recalls: study
The tainted cars were recalled by VW, but the Australian Automobile Association (AAA) said tests it commissioned on local vehicles before and after being updated showed they were still exceeding regulations in real-world settings.
"Emissions analysis... found an affected VW diesel vehicle to be using up to 14 percent more diesel after recall, and still emitting noxious emissions more than 400 per cent higher than levels observed in laboratory testing," the AAA said in a statement.
VWs using more diesel, failing pollution tests after recalls: study

 

[DurandalAI]

VWs using more diesel, failing pollution tests after recalls: study
The tainted cars were recalled by VW, but the Australian Automobile Association (AAA) said tests it commissioned on local vehicles before and after being updated showed they were still exceeding regulations in real-world settings.
"Emissions analysis... found an affected VW diesel vehicle to be using up to 14 percent more diesel after recall, and still emitting noxious emissions more than 400 per cent higher than levels observed in laboratory testing," the AAA said in a statement.
VWs using more diesel, failing pollution tests after recalls: study

Gross negligence.

 

[mspohr]

VWs using more diesel, failing pollution tests after recalls: study
The tainted cars were recalled by VW, but the Australian Automobile Association (AAA) said tests it commissioned on local vehicles before and after being updated showed they were still exceeding regulations in real-world settings.
"Emissions analysis... found an affected VW diesel vehicle to be using up to 14 percent more diesel after recall, and still emitting noxious emissions more than 400 per cent higher than levels observed in laboratory testing," the AAA said in a statement.
VWs using more diesel, failing pollution tests after recalls: study

There is no such thing as clean diesels. VW is proving this.

 

[jhm]

Swedish Copper Mine Converting Monster Trucks To Run On Electricity | CleanTechnica

30 trucks hauling copper ore burning 100 gallons diesel per hour 24/7. This is 1714 b/d of diesel consumption. Electrification with overhead wires will suffice.

Bye, bye, diesel demand.

 

[SunCatcher]

This ought to be interesting. I have wondered if this idea might be pursued one day...

Arnold Schwarzenegger to sue oil companies for 'killing people'

"We're going to go after them, and we're going to be in there like an Alabama tick. Because to me it's absolutely irresponsible to know that your product is killing people and not have a warning label on it, like tobacco."

 

[ValueAnalyst]

Herman Wang on Twitter

"Rex Tillerson was a moderating voice within the Trump administration on maintaining the #IranDeal.

With Mike Pompeo in, is the deal as good as dead?"

 

[TheTalkingMule]

Saudis remark today that the Aramco IPO is even money to float on only their domestic market.