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ValueAnalyst
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https://www.bloomberg.com/news/arti...-manager-andurand-says-300-oil-not-impossible
https://www.wsj.com/articles/as-oil-soars-few-hedge-funds-are-left-to-profit-1528277401
Andurand has been bearish and bullish on oil at approximately the right times. Surging energy prices will help Tesla by driving people to Model 3 and other Tesla products, but eventually Tesla needs to ramp Semi production and offer autonomous ridesharing service in order to end the world's addiction to oil. Elon's comments at the Shareholder Meeting around accelerating pace of improvements to Autopilot was encouraging, although I don't know what it means that Tesla had to take shortcuts to get to on/off-ramp capability. Most bulls at the moment do not expect FSD until 2022 or later. Three years after Tesla achieves FSD could be the peak for global oil demand.
https://www.wsj.com/articles/as-oil-soars-few-hedge-funds-are-left-to-profit-1528277401
Andurand has been bearish and bullish on oil at approximately the right times. Surging energy prices will help Tesla by driving people to Model 3 and other Tesla products, but eventually Tesla needs to ramp Semi production and offer autonomous ridesharing service in order to end the world's addiction to oil. Elon's comments at the Shareholder Meeting around accelerating pace of improvements to Autopilot was encouraging, although I don't know what it means that Tesla had to take shortcuts to get to on/off-ramp capability. Most bulls at the moment do not expect FSD until 2022 or later. Three years after Tesla achieves FSD could be the peak for global oil demand.
I have seen very little progress since Nov 2016 (actually, I think Elon only backpedalled on FSD since then). I'd be happy to be contradicted but I now expect Tesla to enable FSD only on highways for a few years. Autopilot driver assistance might improved significantly (detecting road and traffic signs, understanding priorities, etc) but a full FSD program with no human drivers won't probably be available for many years. However, this does not prevent Tesla from launching its car sharing service to allow anyone to rent a Tesla (either owned by the company, by leasing institutions or by individuals).
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My understanding is that March update was a major leap forward. Do you disagree?
My point relevant to this thread is that an "FSD program with no human drivers" would amplify annual EV production's impact on global oil demand by allowing EV's to be used multiple times more than today's cars. If FSD does not happen in the coming years, then Tesla will need to ramp its production of Model 3/Y to 20+ million annual level, along with 500,000+ annual Semi production, before it can even stop the annual growth in global oil demand, and FSD would accelerate this future by a number of years. Because of this, a successful FSD ridesharing service is by far the most critical component of Tesla's mission, in my opinion.
ValueAnalyst
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Oil Boom Bottlenecks Are Costing U.S. Investors $1 Billion a Day
As previously discussed: takeaway capacity constraints will limit US production's ability to meet rising global oil demand growth.
See 2019:
As previously discussed: takeaway capacity constraints will limit US production's ability to meet rising global oil demand growth.
See 2019:
TheTalkingMule
Distributed Energy Enthusiast
China’s Bombshell Solar Policy Shift Could Cut Expected Capacity by 20 Gigawatts
Here's an interesting bit. China cuts solar subsidy by 7.82USD/MWh. This is due to subsidy shortfalls. I think this just means that the subsidies have be oversubscribed relative to allocated budget. Energy analysts are thinking this is will have a big impact. I have a few thoughts about how that worry may be overstated.
If storage were in sight, I think there are other policy direction that would be worth considering. For example, rather than cutting the subsidy place a requirement that 10% of the solar power receiving the full feed-in tariff must be stored and discharged from a storage system. We are talking about utility scale solar where the grid is already getting alot of distributed solar coming on line. So it seems sensible that the utility scale solar can complement the DG solar and stored solar does that. Furthermore this sort of policy can have a time table that advances the fraction. Stored by say 10% each year, and in 10 years the only solar still getting a subsidy would be 100% stored. The unstored solar just won't need any subsidy by that point in time. This policy would solve the oversubscription problem if the storage requirement was costly enough to shrink subscriptions.
Here's an interesting bit. China cuts solar subsidy by 7.82USD/MWh. This is due to subsidy shortfalls. I think this just means that the subsidies have be oversubscribed relative to allocated budget. Energy analysts are thinking this is will have a big impact. I have a few thoughts about how that worry may be overstated.
- Subsidy shortfalls suggest over subscription which in turn suggests that solar has gotten so cheap that they former feed-in tariffs were substantially higher than needed to achieve build out goals. Hence a smaller subsidy will suffice to continue strong build out.
- The cost of solar is likely continuing to decline. A subsidy reduction of just 0.78c/kWh might not be all that significant relative to the decline in solar cost over a year or too.
- Panel production capacity is very high in China. If there is a shortfall in quantity demanded, prices will fall which will absorb a portion of the subsidy cut. Also international demand will snap up lower cost panels.
- The big boost to China's solar rollout last year was distributed solar. The subsidy cut is just to utility scale solar. So DG economics are still in play though more local coordination is needed.
- Continued expansion may depend more on developing the grid and pairing with storage than on direct solar subsidization. Thus, pulling back on solar subsidies so as to attend more to storage and grid may actually do more to sustain aggressive roll out.
If storage were in sight, I think there are other policy direction that would be worth considering. For example, rather than cutting the subsidy place a requirement that 10% of the solar power receiving the full feed-in tariff must be stored and discharged from a storage system. We are talking about utility scale solar where the grid is already getting alot of distributed solar coming on line. So it seems sensible that the utility scale solar can complement the DG solar and stored solar does that. Furthermore this sort of policy can have a time table that advances the fraction. Stored by say 10% each year, and in 10 years the only solar still getting a subsidy would be 100% stored. The unstored solar just won't need any subsidy by that point in time. This policy would solve the oversubscription problem if the storage requirement was costly enough to shrink subscriptions.
Another issue here is infrastructure for moving natural gas. There are limits to how much can be flared.Oil Boom Bottlenecks Are Costing U.S. Investors $1 Billion a Day
As previously discussed: takeaway capacity constraints will limit US production's ability to meet rising global oil demand growth.
See 2019:
I do think that infrastructure will be a key factor for oil producers as demand softens and declines. Fields with poor infrastructure will be at a disadvantage, and with a sunset in the horizon it will become even more difficult to attract investment into needed infrastructure. If the Permian is going to get this pipeline, they should get it soon. Five years latter it could be a much poorer investment profile.
Speaking of sunsets, I am about 30 miles north of Asheville right now looking over the Blue Ridge Mountains. The second photo shows Venus.
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Right, the limit here is regulatory, not operational or financial.
https://oilprice.com/Energy/Energy-General/The-Permian-Has-A-Natural-Gas-Problem.html
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I expect a surge in Brent crude oil prices to $150 to $200 by next summer, so in the next 12 to 15 months, primarily due to plunging Venezuela and Angola production, disappointing US shale oil production growth limited by takeaway capacity, time needed to ramp OPEC production even if cuts are reversed soon, as well as accelerating global oil demand growth due to both OECD and emerging country growths.
Surging oil prices will accelerate the world's transition to sustainable energy, only if Tesla can ramp Model 3 production rate to level that satisfies demand, 15,000/wk to 20,000/wk at $40,000 ASP by my estimate, and accelerates the timeline to FSD ridesharing network.
Surging oil prices will accelerate the world's transition to sustainable energy, only if Tesla can ramp Model 3 production rate to level that satisfies demand, 15,000/wk to 20,000/wk at $40,000 ASP by my estimate, and accelerates the timeline to FSD ridesharing network.
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Higher Oil Prices Might Not Destroy Demand Growth | OilPrice.com
Here's a perspective on why oil demand may still be inelastic. In short the theory goes like this:
Here's a perspective on why oil demand may still be inelastic. In short the theory goes like this:
- Ignore the acceleration of demand decline in OECD countries.
- Focus on developing economies where governments are compelled to raise subsidies on fuel in response to political pressure from consumers that are angry about higher fuel prices.
- Conclude that the politics of subsidization in certain developing countries make global demand growth robust.
- Demand growth in OECD has been negative since about 2007. If this decline accelerates by say losing an extra 200kb/d in response to tight supply and higher price, it does not follow that the developing world is growing to jump ahead an extra 200kb/d above long term growth trends just to make up for it. Moreover that does nothing to correct the tightness if the market. So incremental losses of demand in OECD markets do represent serious loses in global demand that can not simply be dismissed. Moreover, the elasticity of demand is determined by the marginal consumer who is most likely to cut consumption in the face of higher prices. In non-OECD markets persist in creating a tight market and pushing up prices, this will serve to induce even greater consumption declines in OECD markets. This, the elasticity of global demand really depends more on the elasticity of OECD markets than other less elastic markets. So the diversion away from OECD is really misleading and is at odds with a basic economic understanding of demand elasticity.
- Not all non-OECD countries will respond politically to increase fuel subsidies as prices rise. Notably China has a very different strategy. They have been securing their supply with massive reserves and have been pushing EVs and renewable energy like no other country. If a government feels compelled to raise subsidies whenever fuel prices rise, then it would do well to erect very aggressive policies to promote EVs and renewables to power them. Simply replacing old metro buses with electric buses becomes cheaper than direct subsidization of fuel consumption. This is especially true where motorization rates are really low, i.e. where most people use public transport if they use any transport at all.
- Even in country like India where the politics of subsidization can for the government into increasing subsidies, this puts more strain on public spending which hurts economic growth on other ways, so that what was just a fuel demand problem morphs into a general economic demand issue. Subsidies cannot make up for slowing down the national economy. Indeed they can only make it worse. In terms of the global economy, national subsidization is a market distortion that pushes consumption into places where it is less economically productive. This economic inefficiency is a drag on the whole global economy. Thus, growth in demand for oil is made less certain by increased risk of slow down in global GDP.
TheTalkingMule
Distributed Energy Enthusiast
Reality is that on a net basis we're seeing the opposite. I assume substantial subsidies exists in places like India that are primarily consumers, but I have to think any rise is more than offset by subsidy cuts in petro-states like Saudi Arabia, Russia and Venezuela. What are they going to do moving forward? Their budgets absolutely require that they lower fuel subsidies, and this trend should only feed back on itself and accelerate. Saudi gas prices have more than doubled and are sure to be raised again.
Taking a look at the globe as a whole, I don't think there's any way to conclude demand will be skyrocketing soon....perhaps ever again. The only real angle to significant growth is if India can't coordinate the regions enough to electrify everything and build out solar+storage. China sure as hell has all that under control and ramping like mad. The end to growth is already in sight there.
Bulls have just taken over the narrative and every piece of eroding demand is conveniently ignored. Venezuela exports are down 600k/day, but no one seems to mention our imports from them are down by an even greater amount. Do we seem to be struggling for supply? Same with Saudi Arabia. Our domestic production has neutered any effort on their part to limit global supply or even efforts to directly affect US supply.
Saudi Arabia uses up to 1M barrels of oil per day to run generators for air conditioning in the summer. Those barrels need to be sold now and replaced with solar, it would be budgetarily insane not to. No one brings that up when talking about Iran possibly dipping by 300k barrels per day and how that's going to roil markets beyond belief.
We almost have to get a massive blip to $200 before all is said and done, I just don't see how the math works until at least 2020.
That's a good point. I had over looked oil exporting countries where very heavy energy subsidies are being cut. And they need to because 1) they need to diversify economies not to be so dependent, 2) the price of oil has fallen and not nearly so supportive of public funding, and 3) renewables are getting ridiculously cheap. UAE is looking at solar under $20/MWh. KSA burns alot of crude for power. Come 2020 they're will be a glut of residual fuel oil on the market that ships can no longer use. So I think the Saudis will shift from burning crude to residual fuel when it becomes cheaper per Btu. But apart from that the shift is to natural gas and solar.
But back to the main point, there is a whole lot of places where demand is growth is drying up. Pointing to a few miserable countries where politicians will secure re-election by subsidizing fuel is not going to make up for that. It's a bit like Trump forcing US rate payers to buy some amount of coal generated power in the US is not going to make up for the decline in coal just about everywhere else. All it will do is put a drag on the US economy, kill jobs in renewables and force US residents to spend more on health care dealing with respiratory illnesses.
New Study: Climate Change Could Be the Ultimate Civilization Killer | OilPrice.com
Here's a surprising article to see on OilPrice.com. Irina Slav is the author.
Here's a surprising article to see on OilPrice.com. Irina Slav is the author.
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