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Soooo they're down from spending $1.80 for each dollar of revenue to spending $0.90 for each dollar of revenue, and all they had to do was to shut down operations in every single field except the Permian, which is half conventional oil anyway?

I am so unimpressed by the shale oil guys.
They also needed to piggyback on pricing inflated by easily $15/b. If the Saudis and Wall Street weren't there to artificially juice pricing, there's no way these guys survive in a level market where WTI almost never touches 55 let alone 60.
 
I'm going to propose a different interpretation. Suppose that the markets have *finally* caught up with peak demand theory and are expecting a long-term drop in the value of oil, and that this is driving a long-term downward sloping futures curve.

The market reaction should now drive the emptying of inventory at the front end. We'll see if this is sufficient to restore front-end contango. The normal shape of the oil futures curve is humped -- contango in the short term, backwardation in the long term.
Brent Last Day Financial Futures Quotes - CME Group
Check out what is currently happening to Brent futures. There is a very slight front end contango. It starts 1 month out at $72.92, peaks 3 months out at $73.13, and falls all the way out to $65.98 in Dec 2020. It also looks to continue to decline to $60 out in 2026. So the one hump wump returns. (Dr Seuss would be proud.)

So if you bought at Dec 2020 for $66, held it to maturity and the price goes to, say, $70, this would imply just a 2.6% annual return, what you can get from US Treasuries. So it is possible that some futures investors expect Brent as low as $70 in 2020.
 
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Nice! I like the idea of measuring sales in units of MWh, which you can get to by multiplication.

i was more looking at it from the perspective of diversity.
there seems to be successful markets for battery capacity of half the standard size, and battery capacity of double the standard size.
that implies that in the near future there will be a 120/60/30 and later 200kWh cars being sold with 100kWh cars and 50kWh cars....

it also implies that globally, battery capacity will never converge (nor would we expect it to.)
 
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US commercial stockpiles up again last week....+6M barrels to 438M. With frackers buying up $70 contracts like mad, does anyone really think this glut won't tip back up to 500M barrels? Of course it will. These markets are completely rigged.
US commercial stockpiles up 6M barrels last week to 411M.
Still higher than any point in history prior to 2015.
Imports from Saudi Arabia still down 30-40% from historical averages.
OPEC+Russia still limiting production.
WTI futures still attractive enough for shale to expand.
 
i was more looking at it from the perspective of diversity.
there seems to be successful markets for battery capacity of half the standard size, and battery capacity of double the standard size.
that implies that in the near future there will be a 120/60/30 and later 200kWh cars being sold with 100kWh cars and 50kWh cars....

it also implies that globally, battery capacity will never converge (nor would we expect it to.)
Nissan LEAF will offer 200+ mile range in 2019. I think diversity will persist in the market. Even so as battery costs come down, well see ranges increase. Right now competitive ranges are like 120 miles to 310. In a few years, I think this will be 200 to 450 miles. Longer term 250 to 600. In the Model 3, the marginal price per incremental mile range is $100, and this easily is as at a 70% mark up for Tesla. If they had any real competition in this range, they could easily cut prices on incremental range and defend market share. So that's the key, as competition heats up consumers will be able to buy more range for the money, and I think they will.

Even so diversity can persist in the market because not all consumers will want to pay top dollar for maximum range. For daily family driving where about 240 miles are driven per week per car, a range of 300 miles or so is pretty accommodating allowing weekly charging and enabling long trips. So I think demand for vehicles in the 200 to 300 mile range will persist for quite a long time. Even so as the cost of vehicles in the 300 to 600 mile range come to market and eventually come down in price through competition we will see lots of demand there too. Will we see much long term demand for vehicles with less than 150 miles range? Hard to say. Certainly the used car market could supply shorter range vehicles through battery range loss. What once was a 200 mile range new becomes a 160 mile range some 10 years later. So a frugal car buyer might be quite happy with that. So one way to think about longer ranges on new vehicles is that you never actually replace the battery. As capacity falls, the car trades hands doen to increasingly frugal owners who need less range. When that used car market has a lot of inventory, perhaps there won't be much demand for new cars with shorter ranges. But here we are looking out about ten years. Fun to imagine what the market will look like.
 
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Nissan LEAF will offer 200+ mile range in 2019. I think diversity will persist in the market. Even so as battery costs come down, well see ranges increase. Right now competitive ranges are like 120 miles to 310. In a few years, I think this will be 200 to 450 miles. Longer term 250 to 600. In the Model 3, the marginal price per incremental mile range is $100, and this easily is as at a 70% mark up for Tesla. If they had any real competition in this range, they could easily cut prices on incremental range and defend market share. So that's the key, as competition heats up consumers will be able to buy more range for the money, and I think they will.

Even so diversity can persist in the market because not all consumers will want to pay top dollar for maximum range. For daily family driving where about 240 miles are driven per week per car, a range of 300 miles or so is pretty accommodating allowing weekly charging and enabling long trips. So I think demand for vehicles in the 200 to 300 mile range will persist for quite a long time. Even so as the cost of vehicles in the 300 to 600 mile range come to market and eventually come down in price through competition we will see lots of demand there too. Will we see much long term demand for vehicles with less than 150 miles range? Hard to say. Certainly the used car market could supply shorter range vehicles through battery range loss. What once was a 200 mile range new becomes a 160 mile range some 10 years later. So a frugal car buyer might be quite happy with that. So one way to think about longer ranges on new vehicles is that you never actually replace the battery. As capacity falls, the car trades hands doen to increasingly frugal owners who need less range. When that used car market has a lot of inventory, perhaps there won't be much demand for new cars with shorter ranges. But here we are looking out about ten years. Fun to imagine what the market will look like.
a real world, admittedly single instance example. about 1-2 years ago a 20 year old or so, member of EVADC gave a talk about a trip in his Nissan Leaf from Towson, Maryland, USA to Boston massachusettes (about 400+ miles, 650kilometers) to visit his ladyfriend. He had at least one or two instances of "Battery too hot to charge" as he was using the DC fast charge options. it was about a 2.5 day trip up and back, but "love laughs at lox myths". (Boston, bagles and lox) )my point is, the Leaf needs temp control on the battery for long range trips, or it's a city car
 
a real world, admittedly single instance example. about 1-2 years ago a 20 year old or so, member of EVADC gave a talk about a trip in his Nissan Leaf from Towson, Maryland, USA to Boston massachusettes (about 400+ miles, 650kilometers) to visit his ladyfriend. He had at least one or two instances of "Battery too hot to charge" as he was using the DC fast charge options. it was about a 2.5 day trip up and back, but "love laughs at lox myths". (Boston, bagles and lox) )my point is, the Leaf needs temp control on the battery for long range trips, or it's a city car
Interesting. I did not know that is a challenge with charging a Leaf. I suppose even for a city car there are advantages to having a large enough battery that you only need to charge about once or twice a week. Specifically, in urban settings finding daily or nightly parking with charging can be a challenge. So a battery big enough for weekly charging obviates need for lots of charging infrastructure.

I believe eventually it will be common for retail outlets to use cheap charging as customer reward program or simply to attract shoppers. For example, my Kroger (supermarket) card rewards me with opportunities to save 5 to 20 cents per gallon on gas, but as I drive only EVs this reward is now useless to me. Eventually, Kroger will want to add charging to its reward program. Cars with near weekly ranges will be able to make really good use of promotional charging opportunities. Cars with a mere daily range could shop daily to get the same advantage. Of course, some bargain hunters would be up for that too.
 
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Nissan LEAF will offer 200+ mile range in 2019. I think diversity will persist in the market. Even so as battery costs come down, well see ranges increase. Right now competitive ranges are like 120 miles to 310. In a few years, I think this will be 200 to 450 miles. Longer term 250 to 600. In the Model 3, the marginal price per incremental mile range is $100, and this easily is as at a 70% mark up for Tesla. If they had any real competition in this range, they could easily cut prices on incremental range and defend market share. So that's the key, as competition heats up consumers will be able to buy more range for the money, and I think they will.

Even so diversity can persist in the market because not all consumers will want to pay top dollar for maximum range. For daily family driving where about 240 miles are driven per week per car, a range of 300 miles or so is pretty accommodating allowing weekly charging and enabling long trips. So I think demand for vehicles in the 200 to 300 mile range will persist for quite a long time. Even so as the cost of vehicles in the 300 to 600 mile range come to market and eventually come down in price through competition we will see lots of demand there too. Will we see much long term demand for vehicles with less than 150 miles range? Hard to say. Certainly the used car market could supply shorter range vehicles through battery range loss. What once was a 200 mile range new becomes a 160 mile range some 10 years later. So a frugal car buyer might be quite happy with that. So one way to think about longer ranges on new vehicles is that you never actually replace the battery. As capacity falls, the car trades hands doen to increasingly frugal owners who need less range. When that used car market has a lot of inventory, perhaps there won't be much demand for new cars with shorter ranges. But here we are looking out about ten years. Fun to imagine what the market will look like.

One source of very long range demand will be pickup trucks and SUVs (like Model X) with tow packages. I'm really hoping that Tesla brings battery upgrade options to market, because my 90 KWh Model X turns into a Leaf (old style) for range when I hook up the truck bed utility trailer. 330 wh/mi turns into 650 wh/mi or worse (admittedly, improvable with a different trailer, but its still bad).

For serious towing - upper end of the towing capacity of the vehicle, and heading out to the boonies and back - I'd LOVE to have a 200 or 300 KWh battery pack so I can get 200-300 miles of actual towing range.

Yeah - there's a market for really big battery packs in the consumer market.
 
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One source of very long range demand will be pickup trucks and SUVs (like Model X) with tow packages. I'm really hoping that Tesla brings battery upgrade options to market, because my 90 KWh Model X turns into a Leaf (old style) for range when I hook up the truck bed utility trailer. 330 wh/mi turns into 650 wh/mi or worse (admittedly, improvable with a different trailer, but its still bad).

For serious towing - upper end of the towing capacity of the vehicle, and heading out to the boonies and back - I'd LOVE to have a 200 or 300 KWh battery pack so I can get 200-300 miles of actual towing range.

Yeah - there's a market for really big battery packs in the consumer market.
If there is the option of a battery "fanny pack" like was discussed back in 2012 for a west coast of US, California to washington run of 500+ miles. like the ?battery swap? for the Tesla Semi's
EVDL Archive / Forum Interface - Electric Vehicle Discussion List
 
One source of very long range demand will be pickup trucks and SUVs (like Model X) with tow packages. I'm really hoping that Tesla brings battery upgrade options to market, because my 90 KWh Model X turns into a Leaf (old style) for range when I hook up the truck bed utility trailer. 330 wh/mi turns into 650 wh/mi or worse (admittedly, improvable with a different trailer, but its still bad).

For serious towing - upper end of the towing capacity of the vehicle, and heading out to the boonies and back - I'd LOVE to have a 200 or 300 KWh battery pack so I can get 200-300 miles of actual towing range.

Yeah - there's a market for really big battery packs in the consumer market.
Truly. The pickup market proves that many people are willing to pay a premium for power, heft and the ability to tow. It seems natural that this market would also value big batteries. Also the ability to power your worksite or campsite is a plus. When Musk queried folks on Twitter about electric truck features, 240V AC outlets were a strong response. So I can totally see batteries in the 200 to 300 kWh range being well received by this market. (Solar caps, toppers and tonneaus too.)
 
Asia's Insatiable Oil Demand

https%3A%2F%2Fblogs-images.forbes.com%2Frrapier%2Ffiles%2F2018%2F07%2FRegional-Oil.jpg


Chinese demand has increased by 5.0 million BPD over the past decade, by far the most of any country. But Chinese per capita demand is still only 3.3 barrels per person per year.

In the U.S., we consume about 22 barrels per person per year. That is partially a result of a more mobile and affluent population, but U.S. consumption also drives a much larger economy. To put U.S. demand in perspective, though, if China's per capita demand were as high, it would be nearly as great as the entire current global demand.

In second place for the largest increase in oil demand over the past decade is India, which has seen its demand increase by 1.7 million BPD. Third place will probably be a surprise to many. Saudi Arabia has increased its oil demand by 1.5 million BPD over the past decade. These three countries were the only ones to experience demand growth over over one million BPD over the past decade.

The largest decrease in demand over the past decade was in Japan, which saw oil demand decline by 1.0 million BPD. Second place will be another surprise, as the U.S. saw oil demand decline by 800,000 BPD. Italy was third with a decline of 493,000 BPD, while the entire EU saw demand fall by 1.7 million BPD.
 
One curious thing is that total energy investment has been declining. The cost per Watt installed for renewable keep going down. So as renewable investments come to dominate total energy investments, the trend to lower investments each year should persist. This is one way in which the total fossil peak is important. Leading into that peak and more rapidly past that peak investments in fossils will decline. But does that mean that investments in renewables will pick up? I don't think so. Total energy investments will fall.

So this situation speaks to a basic challenge that an oil major faces through the transition. Even if they want to reinvest in renewables, that will become a shrinking market. And there are many non-fossil investors already investing in the renewable space. So a certain amount of oil major capital must simply be returned to shareholders as these corporations shrink into a more renewables dominated world.

That said, I think there are massive investment opportunities within the battery supply chain from minerals to Gigafactories. So far this is not really counted as energy investments, but in a very real sense it ought to be. To replace motor fuel, you need the media that enables renewable electricity to power vehicles. This media (batteries) is as much a part of the new energy system as power generators and grid hardware. Moreover, the growth of batteries could be much faster than anything currently in renewable energy and would serve as a natural hedge to an oil major against the risk of oil demand loss to batteries.

Curiously, the 2018 BP statistical review included for the first time mineral reserve estimates for battery minerals. This suggests to me that BP is at least looking at battery supply chain investment opportunities. Now if Tesla could just bring this Gigafactory as a product thing to market, we might be surprised as to who would want to invest.
 
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I said *ten years ago* that the correct move for an oil company was to kill exploration and development, pump the existing cheap-to-pump wells, sell the product, build up enough of a reserve to clean up all the environmental obligations, and feed the rest back to stockholders in dividends in a slow liquidation. They just won't do it though.
 
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Asia's Insatiable Oil Demand

https%3A%2F%2Fblogs-images.forbes.com%2Frrapier%2Ffiles%2F2018%2F07%2FRegional-Oil.jpg


Chinese demand has increased by 5.0 million BPD over the past decade, by far the most of any country. But Chinese per capita demand is still only 3.3 barrels per person per year.

In the U.S., we consume about 22 barrels per person per year. That is partially a result of a more mobile and affluent population, but U.S. consumption also drives a much larger economy. To put U.S. demand in perspective, though, if China's per capita demand were as high, it would be nearly as great as the entire current global demand.

In second place for the largest increase in oil demand over the past decade is India, which has seen its demand increase by 1.7 million BPD. Third place will probably be a surprise to many. Saudi Arabia has increased its oil demand by 1.5 million BPD over the past decade. These three countries were the only ones to experience demand growth over over one million BPD over the past decade.

The largest decrease in demand over the past decade was in Japan, which saw oil demand decline by 1.0 million BPD. Second place will be another surprise, as the U.S. saw oil demand decline by 800,000 BPD. Italy was third with a decline of 493,000 BPD, while the entire EU saw demand fall by 1.7 million BPD.
Pretty much once demand growth in China slows up enough, global demand starts to fall. This is the point that Rapier, a peak demand denier, refuses to see.

He dangles the idea that China could increase its per capita oil consumption to that of the US, even as China is doing more with EVs and renewables to make sure that never happens. Meanwhile per capita consumption in North America and Europe has been so high that there is no real economic need to increase consumption. Specifically, GDP grows in these regions while oil consumption is flat or declining. So clearly there is no rationale for China to increase per capita consumption to these levels, not even the West needs these per capita levels. Perhaps someday East and West meet somewhere in the middle, but definitely not at 22 barrels per year per person.

Another issue to bear in mind is that since demand has not be growing in the west, most of the oil consumption infrastructure is well depreciated, but in growing Asian economies investment in new capacity is needed. So the capex portion of consumer fuel prices is low in the west, but more costly in the east. Pre-existing infrastructure and a huge fleet of vehicles is a drag on how quickly the US will transition to EVs and renewables. But in growing economies there is less inertia from pre-existing infrastructure and fleets. So China is in a much better position to transition rapidly to EVs than is the US. We see inertial difference quite clearly comparing the amount of wind and solar that the two countries are installing. In the US, a lot of thermal capacity must retire or decline in utilization to make way for renewables because demand for electricity is not growing. But in China, just meeting demand growth for power creates a huge market for renewables. So growth is a two edged sword. Rapier is talks up growing consumer demand, but the flipside is that growth allows for the switch to renewable and EVs to be much more rapid, less encumbered by legacy fossil investments.

Simply put, if China grows EVs fast enough, it has nearly all the oil infrastructure it will ever need. If China were to increase per capita consumption for 3.3 barrels to 22 barrels per year as Rapier proposes, it would need about 7 times as much oil infrastructure, and it would be hugely dependent on imported oil. Why would they do that when they can manufacture everything domestically for a renewable EV future, save some non-fuel mineral imports?

I'd say that Asia's "thirst" for imported oil is quite satiable with domestic alternatives.
 
Third place will probably be a surprise to many. Saudi Arabia has increased its oil demand by 1.5 million BPD over the past decade. These three countries were the only ones to experience demand growth over over one million BPD over the past decade.
This was a crucial piece of the peak oil supply conversation not too long ago. Before we started exploding the scraps of our remaining domestic oil out of the ground, the concern was Saudi Arabia becoming a net importer if their domestic growth kept it's trajectory.

Now it's almost the opposite inside the peak demand conversation. SA will be burning nearly a million barrels a day this summer to run air conditioning for an increasingly discontented public. As the kingdom spends billions keeping the masses happy and feels the sting of ever increasing deficits, how long can they afford to bypass the far cheaper solar option?

A barrel not burned for AC and sold at $75 can buy many times more units of AC via solar.
 
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A barrel not burned for AC and sold at $75 can buy many times more units of AC via solar.
this is mildly off and on topic, BUT, University of Maryland, USA, came up with a totally Solar powered AC/dehumidification system using a countercurrent CaCl2/H2O flowing down, humid air flowing up to dehumidify/AC houses (since AC is actually mostly dehumidify)AIA Potomac Valley - What's Happening at LEAFHouse SO totally solar powered, etc
 
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Citi: The Case For $45 Oil | OilPrice.com

A curious oil bear case. Key observation is that OPEC has produced about 35 mb/d for 50 years. This was likely key to predicting the oil collapse in 2014. Suggests that OPEC is disinclined to suffer substantial market share loss.

I do wonder if the Saudis are coming to recognize that the price of oil must decline to avoid decline in demand.

We'll see how this plays out.
 
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This article Could oil prices skyrocket to $200 a barrel … or more? was at the top of https://www.realclearenergy.org/ article research accumulator today.

"Still, a new analysis has aroused other concerns. Veteran oil market-watcher Philip K. Verleger released a report from his firm, PKVerleger LLC, anticipating oil prices at $200, with the possibility of a surge to $400 per barrel, in the next 12 to 18 months.

Verleger’s focus was on an esoteric lack of diesel fuel, rather than geopolitical threats exchanged between Rouhani and Trump"