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TheTalkingMule
Distributed Energy Enthusiast
How are we concerned about expansion of conventional capex when:
OPEC+Russia is desperately holding together a supply cut
Shale is pumping at rates equal to the US in the 70s with little sign of slowing
All global electricity from oil/diesel is quickly being shuttered
China is sitting on a 1Bb+ reserve
Electric buses are being discussed in every major US city
OPEC is manufacturing an export shortfall to the US
and domestic supplies STILL look like this....
We have 5-15 years until global demand peaks and there are dozens of countries desperately dependent on oil revenue. If anything, it's starting to look like we have no avenue to one or two major final price spikes as we approach permanent demand decline.
I think everyone is simply buying into the Saudi narrative as we head toward the Aramco IPO. The real world is showing the exact opposite of what they're peddling. Legit global instability could account for some of this price action, but that also can lead to the global recession that's overdue.....
ValueAnalyst
Closed
A few points of divergence in our thinking:
- CAFE standards don’t really matter to GLOBAL oil demand;
- I think GM will file for bankruptcy by 2020;
- Oil prices could rise way above $80. I see $100 later this year (Brent);
- I don’t see a surge in oil CapEx until after $100+ Brent, but not sure how that will happen with higher interest rates, so maybe after the next recession?
- Hopefully by then Tesla will be pumping out millions of cars with Level 5 autonomy, so oil CapEx plummets, but too early to speculate that far out.
ValueAnalyst
Closed
Looks like all of the majors won all of the bids they made... no collision whatsoever
This is another reason why I think oil prices will have to rise: at current prices, nobody wants to drill offshore, which comprises 30% of global oil supply with high decline rates...
Unless Tesla can produce 100 million EV’s with level 5 autonomy by 2025, and all of them participate in Tesla Network 24/7, which I don’t think is likely, offshore oil production will need replenishment, so prices will need to rise to $100+ to incentivize CapEx into long-cycle offshore production.
Investment in offshore has been non-existent for four years now, which is a first, and it is scary for global energy supply picture beyond 2020. You can’t jist turn the flip on and off with long-cycle projects. It takes years of planning, so oil majors need sustainable high oil prices to decide to invest now for 2020+ oil supply.
Even though solar + batteries is a cheaper and cleaner option, the supply of that also takes a long time. When will the next round of Gigafactories ramp to full production? 2025?
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all energy from oil is "quickly" shuttered? do you understand what kind of time frames you are talking about?
electric buses are discussed, yes, and sometimes even implemented.. they will be a rounding error in the global demand figure
and dont believe everything you hear about the spare capacity in SA and Russia.. its more likely pretty small and only a hollow threat
and lastly, despite the glorious shale, inventories are lower then normal and will begin to draw even more now
Big coal no more
The industry once ruled Europe. Now it’s struggling to survive.
3/20/18, 2:00 PM CET Updated 3/25/18, 12:41 PM CET
The coal lobby used to be a Brussels power player. No more.
Big coal no more
The industry once ruled Europe. Now it’s struggling to survive.
3/20/18, 2:00 PM CET Updated 3/25/18, 12:41 PM CET
The coal lobby used to be a Brussels power player. No more.
Big coal no more
ValueAnalyst
Closed
Same will happen to Oil & Gas. I suspect once the next round of Gigafactories (hopefully including a Solar Roof one) start coming online.
you expect oil demand to grow, prices to rise, but then they will go down? you got me confused... whats the timeframe on your thinking
and do you really believe that another tesla gigafactory would make any difference whatsoever to the oil situation???
ValueAnalyst
Closed
Short-term oil bull; long-term oil bear. Longer timeframes are hard to nail down, but at some point around 2025, oil demand will start declining. Keep in mind, however, that price is a function of both demand and supply, which is even more difficult to predict beyond a couple of years.
It's not just "another Tesla gigafactory," but dozen more Tesla Gigafactories, and more from others, that will stop oil demand growth.
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TheTalkingMule
Distributed Energy Enthusiast
Electricity not energy. There was a decent market for diesel production of electricity, but it's rapidly disappearing.
Saudi Arabia burns nearly 1M barrels of oil a day in summer to generate electricity.
Reciprocity
Active Member
Roughly, how many KWh is 1M barrels of oil?
Edit: found it .. 1.7 TWh. But I'm sure there is some loss in converting it.
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RobStark
Well-Known Member
It is not a GF, a municipality converting their bus fleet to EV,one EV car line but it is death by a thousand cuts for oil demand.
Norway's Electric Ferry Is So Impressive That 53 More Were Ordered
thanks for explaining.
you are right about the difficulty of predicting such complex things. i do, however, believe that it will take much more time for electric vehicles to make a noticeable dent in oil demand. a growing population, especially in countries like india, will raise demand more than some EVs will lower it imo
ValueAnalyst
Closed
I agree with you on India, and I would add that, on top of growing population, the per-capita income level in India is at a critical point for energy demand growth. This trend will be important to watch going forward.
On EV's: I would normally agree with what you said, but consider the following two factors:
First, geofenced Level 4 autonomy in metropoles (so not even Level 5) could translate to a lot more miles traveled on an EV, whereas oil analysts seem too focused on the number of EV's that can possibly be produced in the next few years. Combined with this, consider that today's automobiles are used only 5% of the time, and the rest of the time, they are parked. If, however, autonomy advances quickly, then say one million EV's produced each year with Level 4 autonomy could translate to effectively 10x to 20x miles traveled on each autonomous EV. In other words, vehicle autonomy amplifies the impact of each EV on oil demand.
Second, consider Tesla Semi. A semi truck on average drives 68,155 miles per year, which is six times of the 11,254 miles that an average car travels on average per year. This, however, is only one part of the equation. The second important piece of the puzzle is that an average car gets nearly 24 miles per gallon, which is four times the 6 miles per gallon a semi truck gets on average. Putting the two pieces together, a semi truck consumes four times the amount of fuel per mile and drives six times as many miles per year. In other words, a semi trucks uses 24 times the amount of fuel as a car per year. In yet other words, by replacing one internal combustion engine semi truck, Tesla eliminates as much oil demand as it would have by replacing 24 cars.
I had previously estimated that at least 36.5 million cars per year would need to be replaced by all-electric vehicles in order to stump the relatively consistent annual growth in oil demand. Considering the two factors above, however, it may take one million Tesla's on Level 4 Tesla Network along with a few hundred thousand Tesla Semi's to get the job done.
The adoption of Tesla Network will be slow and Tesla Semi production ramp exponentially (read: slowly), so I had previously estimated that oil demand would continue to growth until 2030, but who knows. The most recent Autopilot update seems to have surprised everyone, and since vehicle autonomy is the key to the above math, I may have to adjust my timelines.
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it says "..With over a 1 MWh battery, two 450 kW electric motors from Siemens and 1.2 MW fast charging .." so is that like 10, Tesla 100kW batteries? it's vague about battery size
so, like 500-600 Tesla 100kW batteries, as a start....
These are all good and logical thoughts. However, they require alot of innovation and progress (autonomy/Semi batteries) as well as execution by tesla (semi, tesla network etc.) Ones belief about If/when this will happen changes the whole argument, and since I´m more on the skeptical side in regards to autonomy/Tesla Semis i agree with your points in general, but believe their impact will be a lot smaller and later than you think
TheTalkingMule
Distributed Energy Enthusiast
US inventories are far above normal. Prior to March 2015 they've never even approach current levels.
mspohr
Well-Known Member
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New renewables cheaper than existing coal or natural gas.
Coal is dead. Oil is next.
Study: wind and solar can power most of the United States
Study: wind and solar can power most of the United States | John Abraham
ValueAnalyst
Closed
These are all good and logical thoughts. However, they require alot of innovation and progress (autonomy/Semi batteries) as well as execution by tesla (semi, tesla network etc.) Ones belief about If/when this will happen changes the whole argument, and since I´m more on the skeptical side in regards to autonomy/Tesla Semis i agree with your points in general, but believe their impact will be a lot smaller and later than you think
Yes, I agree with you that the long-term scenario I laid out includes high execution risk, and the short-term looks bullish for oil prices.
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