Shorting Oil, Hedging Tesla

[jhm]

It's economics - bad for one is good for another (up until the bad pushes somebody out of business). People doing trucking are happy with the lack of a bad price move in diesel against them!

But not so good for refiners and sellers of diesel Or at least not as good as some were thinking it might turn into (at least so far).

My puzzlement here is that I know that of among oil products diesel is most strongly linked to GDP and the health of the general economy. IMO was going to create a certain shock for diesel that is not really linked to the general economy. So see diesel demand flat like this really does cause me to worry about the general economy. Maybe it is more limited. For example, we do know that the auto sector is down, dispite growth in EV sales. This alone could reduce demand for transport of autos whether by truck, ship or rail. But also the trade war is causing soy beans and other ag products to rot in silos or left unharvested. This too reduces demand for tractors, trucks, ships and trains. So both ag and auto sectors need less diesel and heavier fuels. What else is not shipping? All of this could be spoiling the economy and diesel demand.

It's enough for me to stroke my beard and type, "Hmm."

 

[jhm]

http://www3.weforum.org/docs/WEF_the_speed_of_the_energy_transition.pdf

I would recommend that people read this report on the two narratives of energy incumbents and energy outsiders.

As good summary is here harry benham on Twitter.

I think this helps sort out the lines of debate. I think it nearly deconstructs the imbumbents' narrative as self-serving propaganda.

 

[jhm]

I find that the chart above is a useful test to see where your own convictions lie. For me, my thinking aligns well with the rapid narrative in all but one of the the questions.

That exception, it turns out is regarding the impact of society on policy action. I want to believe that this impact can be "significant." But my pessimism about the kind of propaganda war being waged on these very issues leaves me very discouraged about the public having a positive impact here. I'd like to believe we live in healthy democracies, but it looks like powerful interest are pulling near all the puppet strings.

So this is why I am more focused on investment, technology and economics. For example, it is a whole lot easier to get someone excited about buying a Tesla than to undo the brainwashing of climate denialism.

I want to believe, but in the meantime...

 

[ggies07]

So this is why I am more focused on investment, technology and economics. For example, it is a whole lot easier to get someone excited about buying a Tesla than to undo the brainwashing of climate denialism.

My in laws are ultra conservatives who hate Hilary, voted for Trump, and don't believe that we are the cause for the Earth warming up. DRIVES. ME. NUTS.

BUT, I let them drive my 3 when I got it last Thanksgiving and they loved it. Now the mother-in-law is thinking about getting an X due to safety design and software (Autopilot and eventual FSD).

I just gave her a big SMILE.

 

[adiggs]

I find that the chart above is a useful test to see where your own convictions lie. For me, my thinking aligns well with the rapid narrative in all but one of the the questions.

That exception, it turns out is regarding the impact of society on policy action. I want to believe that this impact can be "significant." But my pessimism about the kind of propaganda war being waged on these very issues leaves me very discouraged about the public having a positive impact here. I'd like to believe we live in healthy democracies, but it looks like powerful interest are pulling near all the puppet strings.

So this is why I am more focused on investment, technology and economics. For example, it is a whole lot easier to get someone excited about buying a Tesla than to undo the brainwashing of climate denialism.

I want to believe, but in the meantime...

I'm in the same general boat. So I also stay focused on the economics.

I'm also of the belief that if the economics don't work (like really don't work - not like kind of neutral, or kind of don't work), then we're hosed as a species. If solar and wind today were an order of magnitude more expensive than they actually are, then the resistance to adoption would be so high that I'm confident the resistance to adopt today would be too high.

More importantly, again focusing on the economics, I'm not confident that the species as a whole even COULD pay the necessary economic price to shift away from mine and burn, even if we'd made the decision and had the will to do so. Thankfully, that isn't where we're at.

The technology and economics are in place, today, for light duty vehicles (and the transition is happening), and the technology and economics look to me like they are at least at the proof-of-concept stage, with scaling of manufacturing starting in the next year or two for commercial vehicles. That's not everything that needs to transition, but they are the big two in a long list.

 

[adiggs]

My in laws are ultra conservatives who hate Hilary, voted for Trump, and don't believe that we are the cause for the Earth warming up. DRIVES. ME. NUTS.

BUT, I let them drive my 3 when I got it last Thanksgiving and they loved it. Now the mother-in-law is thinking about getting an X due to safety design and software (Autopilot and eventual FSD).

I just gave her a big SMILE.

Meet people where they're at.

Another good reason to drive electric is that the energy is produced locally, and helps end our economy's foreign dependence on oil. Oil that seems to come with a body count / military cost to procure it.

So it's a national security and MAGA solution too.

 

[ggies07]

I find that the chart above is a useful test to see where your own convictions lie. For me, my thinking aligns well with the rapid narrative in all but one of the the questions.

I agree and this part from the report is an example of how the rapid side is working:

Section 3.2.2 New technologies

New technologies will be developed to address the more intractable hard-to-solve sectors, such as petrochemicals or airlines

Those of us on here already know that the tech Tesla acquired from Maxwell is close to the figure that Elon thinks is necessary for airplanes to switch over to batteries.

 

[Doggydogworld]

I agree and this part from the report is an example of how the rapid side is working:



Those of us on here already know that the tech Tesla acquired from Maxwell is close to the figure that Elon thinks is necessary for airplanes to switch over to batteries.

The "tech Tesla acquired from Maxwell" is a method to coat electrodes without solvents. It saves a few bucks during manufacturing. The stuff about 300-500 Wh/kg is almost entirely Maxwell posturing. They don't have any special chemistry. If you invent a 500 Wh/kg chemistry, however, they're confident they can get their DBE process to work with it. Probably.

Their DBE process might allow thicker electrodes which could provide higher energy density. But thicker electrodes create other problems, e.g. C rate. Maxwell marketing folks make some claims here, but the test data shown was not impressive.

There's also the possibility that someone, somewhere will invent electrode powders that provide great performance but are incompatible with all liquid solvents for some reason. Maxwell could possibly get their process to work with these unnamed miracle powders and build high density cells that no one else can match. Don't hold your breath on that one.

People need to quit guzzling the Maxwell Miracle Battery KoolAid. DBE is a manufacturing process. It can save some money and floor space, assuming they can scale it up. They've been trying for a decade with battery partners like Li-FUN, to no avail.

Wh/kg has pretty much stalled out. Despite all the goofy "35% improvement coming" talk, Model 3's 2170s have the same specific energy as the 18650s in the 2012 Model S. Li-ion improvements have come in the areas of cycle life and C rate. Cost, too, though that's hard to nail down.

 

[ZachF]

At the risk of posting something on-topic:

The world is investing less in clean energy

[...]

Last year the Chinese government slashed investment subsidies. In April it said it would give priority to wind and solar projects that can generate power at the lowest prices. (China also has a third of the world’s wind turbines.) This has contributed to a fall of 60% in Chinese investment in renewable energy in the past two years (see chart). American clean-energy investment has also declined. In Europe, greenish countries such as France, Germany and the Netherlands are spending less, especially on relatively expensive projects such as offshore wind.

[...]

Although investment in clean energy is down, production of it continues to rise. A dollar’s worth of solar-power investment yields about four times as much capacity as it did ten years ago. The capital costs of wind energy have fallen similarly. Over the decade, renewable-energy capacity has quadrupled. Half of that increase was from solar. Yet renewables are still a long way from replacing fossil fuels. That is especially true of coal in Asia. Despite China’s efforts to go green, it remains the world’s biggest consumer and producer of coal, which still accounts for three-fifths of its energy mix. India is building lots of coal-fired power plants; in South-East Asia the share of coal in electricity generation is on the rise. The world’s fuel palette still has too much black and too little green.​

It would be interesting to see an "Inflation adjusted" version of that graph considering cleantech is dropping like 10-20% per year in price... My point being that even though cleantech investment may be down in the last few years, it's probably actually up in real terms, and nominal decreases may be a result of a global economy that seems to want to go into recession.

 

[ZachF]

Tverberg is a hack. Inspite of being an actuary, she has very unsound reasoning. She refuses to accept that renewable energy is cheap and scalable. She seems to have a deep need for the world to end with the fossil age.

Yep. For the last few years her "predictions" have basically been production of everything collapsing tomorrow (no joke).

Here is a prediction of hers from around 2009 for laughs:

 

[jhm]

It would be interesting to see an "Inflation adjusted" version of that graph considering cleantech is dropping like 10-20% per year in price... My point being that even though cleantech investment may be down in the last few years, it's probably actually up in real terms, and may be a result of a global economy that seems to want to go into recession.

Right, when you use metrics like GW installed, that keeps going up. We get more clean energy per invested dollar than ever before. This is the tech led deflation I've been talking about.

It's very unsettling for the sector. Companies like BP are under pressure to try to shift some of their investments from fossil to renewables. But they find the return is not as attractive in renewables, and frankly not as much capital is needed in that space. They'd like to divest $1 from fossil investment to $1 in clean tech and so maintain their balance sheet. But in aggregate it's more like divest $2 from fossils to invest $1 in clean tech. This is a recipe for shrinking balance sheets across the energy sector.

To be clear, in my view, our problem is that too much capital is still being invested in fossils. This is killing profitability both for fossils and renewables. If somehow we went on an investment diet for fossils, prices for all energy would go up and renewables would surge in volume.

BTW, there is a growing expectation that we will see natural gas fall below $2/mmBtu. This is insanely cheap. It would create bankruptcies in coal and gas, while impeding renewables.

 

[ZachF]

Also, Saudi Aramco facilities in Buqayq are on fire... Some of the largest in the world.

Reports of explosions and gunfire.

 

[ZachF]

 

[TheTalkingMule]

Saudi exports to the US hit an all-time low last week. Brent is set to drift back down below $60 and perhaps plummet from there.

Surprise! Another supply line attack! All these incidents lining up precisely when Brent is about to tank smells awfully suspicious.

Saudi Arabia reportedly shuts down half its oil production after drone attack

 

[mblakele]

It would be interesting to see an "Inflation adjusted" version of that graph considering cleantech is dropping like 10-20% per year in price... My point being that even though cleantech investment may be down in the last few years, it's probably actually up in real terms, and nominal decreases may be a result of a global economy that seems to want to go into recession.

That's a point worth emphasizing. The article made it too, and I quoted this text just below the chart: "Although investment in clean energy is down, production of it continues to rise. A dollar’s worth of solar-power investment yields about four times as much capacity as it did ten years ago. The capital costs of wind energy have fallen similarly."

 

[TheTalkingMule]

The talking heads have Brent shooting up $5-10 on Sunday. How convenient.

Saudi talking about offloading stored supply to help stabilize "the market". How convenient considering China demand is flattening and exports to the US have sunk to nothing.

There's no money in refining right now, correct? So how is this anything other than the absolute best thing that could happen for SA? The market was already in a place where all these actions make economic sense for SA, even with Brent cheaper. They were weeks from being forced to take these actions, now Brent is magically $10 higher. How convenient.

 

[tivoboy]

There is so much supply, if the suppliers don’t want it to spike, it won’t spike for long. Spot will probably go up <5$ pb by Sunday night IMHO, but I don’t think we’ll see it hold more than a few days.

 

[EVNow]

Wh/kg has pretty much stalled out. Despite all the goofy "35% improvement coming" talk, Model 3's 2170s have the same specific energy as the 18650s in the 2012 Model S. Li-ion improvements have come in the areas of cycle life and C rate. Cost, too, though that's hard to nail down.

Not according to this.

I wondered also and did some calculations:

Based on
Tesla Model 3 Battery Pack & Battery Cell Teardown Highlights Performance Improvements | CleanTechnica

Jack Rickard’s measurements:
Model S pack density = 126.7 Wh / kg
Model 3 pack density = 159.5 Wh / kg

So Model S pack weighs 100,000 Wh / 126.7 Wh / kg = 790 kg
100 kWh Model 3 pack would weigh 100,000 / 159.5 = 627 kg

So just replacing Model S pack with a Model 3 pack scaled to 100 kWh should result in;
790 kg - 627 kg = 163 kg or 360 lbs.

 

[EVNow]

Saudi exports to the US hit an all-time low last week. Brent is set to drift back down below $60 and perhaps plummet from there.

Surprise! Another supply line attack! All these incidents lining up precisely when Brent is about to tank smells awfully suspicious.

Saudi Arabia reportedly shuts down half its oil production after drone attack

And very convenient to blame Iran too.

 

[kbM3]

Not according to this.

To be fair, most of those advantages are in the pack. The Model 3 cell only had slightly higher gravimetric energy density. Not sure about Volumetric.