dc_h
Active Member
Nice story in Bloomberg about wind passing coal in Texas this year and 2020. Shutting down big coal plants and new wind coming online not needing subsidies.
Bloomberg - Are you a robot?
Bloomberg - Are you a robot?
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Michael Liebreich has post this on Twitter.
These data suggest that divestment may be working. The basic idea of the strategy is to drive up the cost of capital on fossils and thereby deprive them of capital.
As Tesla investors we know the drill because the foes of EVs and Tesla are seeking to slow down Tesla by driving up it's cost of capital and depriving it if possible of critical capital for expansion.
These data suggest that divestment may be working. The basic idea of the strategy is to drive up the cost of capital on fossils and thereby deprive them of capital.
As Tesla investors we know the drill because the foes of EVs and Tesla are seeking to slow down Tesla by driving up it's cost of capital and depriving it if possible of critical capital for expansion.
Bloomberg - Are you a robot?
This tells a good story.
I'm pretty irked, however, that Tesla was dropped from the analysis for not being a "major auto maker." Seems ridiculous in an analysis to understand who the major EV makers are.
This tells a good story.
I'm pretty irked, however, that Tesla was dropped from the analysis for not being a "major auto maker." Seems ridiculous in an analysis to understand who the major EV makers are.
Here is a simple way to frame oil disruption via EVs.
Consider how the 80/20 may apply global fleet of vehicles. This fleet stands at about 2 billion vehicles and consumes about 50 million barrels per day of motor fuel. The 80/20 rule would suggest that 20% of the fleet, 400 million vehicles, consume about 80% of the fuel, 40 million barrels per day. That's a demand replacement ratio of about 1 b/d to 10 vehicles.
Once EV technology becomes sufficiently advanced and economical, this 20% of high consumption vehicles will be replaced first. That is the economics are most favorable for high consumption needs, and this will dominate demand as the first 400 million EVs hit the road. Certainly commercial vehicles, shared vehicles and vehicles used for heavy commutes are well represented in this first 400 million.
By the end of this year, the EV fleet will reach about 8 million. So 400 million is 50-fold growth of this fleet. Growing at 40% to 50% each year arrives at 400 million sometime between 2029 and 2031. So by 2030 nearly 40 mb/d of motor fuel demand could be displaced.
But looking more near term this 8 million EV fleet, 3 million of which is added in 2019, could soon be displacing 800 kb/d cumulatively and 300 kb/d incrementally.
Moreover, in just 4 years, by 2023, the EV fleet grows to 40 million up from about 27 million in 2022. This displaces about 4 mb/d cumulatively and 1.3 mb/d incrementally.
This would suggest that oil demand peaks by 2023 or 2022. This is substantially earlier than what I have maintained for several years, but this argument takes seriously the possibility that the highest consuming vehicles will tend to get replaced soon. Now we can say that the 80/20 rule suggest that demand could peak within 4 years.
Consider how the 80/20 may apply global fleet of vehicles. This fleet stands at about 2 billion vehicles and consumes about 50 million barrels per day of motor fuel. The 80/20 rule would suggest that 20% of the fleet, 400 million vehicles, consume about 80% of the fuel, 40 million barrels per day. That's a demand replacement ratio of about 1 b/d to 10 vehicles.
Once EV technology becomes sufficiently advanced and economical, this 20% of high consumption vehicles will be replaced first. That is the economics are most favorable for high consumption needs, and this will dominate demand as the first 400 million EVs hit the road. Certainly commercial vehicles, shared vehicles and vehicles used for heavy commutes are well represented in this first 400 million.
By the end of this year, the EV fleet will reach about 8 million. So 400 million is 50-fold growth of this fleet. Growing at 40% to 50% each year arrives at 400 million sometime between 2029 and 2031. So by 2030 nearly 40 mb/d of motor fuel demand could be displaced.
But looking more near term this 8 million EV fleet, 3 million of which is added in 2019, could soon be displacing 800 kb/d cumulatively and 300 kb/d incrementally.
Moreover, in just 4 years, by 2023, the EV fleet grows to 40 million up from about 27 million in 2022. This displaces about 4 mb/d cumulatively and 1.3 mb/d incrementally.
This would suggest that oil demand peaks by 2023 or 2022. This is substantially earlier than what I have maintained for several years, but this argument takes seriously the possibility that the highest consuming vehicles will tend to get replaced soon. Now we can say that the 80/20 rule suggest that demand could peak within 4 years.
TheTalkingMule
Distributed Energy Enthusiast
- That's if manufacturing can maintain a 45% growth pace
- That's without a significant global recession slowing investment
+ That excludes continued erosion on other fronts like electricity production and continued MPG improvement
+ That's without a significant global recession in 2021 pulling the peak forward 18 months.
We are right in the window now, could be as soon as 2021 or as late as 2027. Wonderful stuff.
adiggs
Well-Known Member
Yeah, I actually think that the anticipation of recession could be beneficial. Central banks keep interest rates low which good for investors ramping up battery supply and EV buyers wanting to lock in operational savings. Additionally business will want to tighten up their operational expense structure to weather a potential recession adding more urgency for more low opex fleets.
An example here is this recent 100k vehicle order from Amazon for Rivian vans. This is not just about going carbon neutral by 2040. Locking in a low opex fleet is a hedge against recession and competition from other parcel services also locking in lower cost structures. It's also a hedge against higher oil and gas prices. In logistics the lowest cost structure wins.
TheTalkingMule
Distributed Energy Enthusiast
This is a sentiment I've been trying to express for years now and still can't really articulate. Once cheap renewables became a reality around 2010 there certainly wasn't an immediate shift off oil, but I feel like some universal economic equation did completely reverse. We're at the point now where ANYTHING that's done to try and maintain status quo will only hasten disruption.
Interest rates kept low so fracking can be maintained? The renewable energy and EV transition relies on financing literally all cost up front, so the advantage to transition is exponentially greater.
Interest rates go up? Fracking ends, oil skyrockets, and the economic case for EVs/renewables is exponentially more apparent.
It's like fossil interests are caught in quicksand and wriggling(in any direction) only makes it worse. I think this speaks to the original @jhm theory that major producers like Saudi Arabia are better off in ALL scenarios to extract oil to maximum capacity thru the end. That is by definition the optimal total revenue strategy and something all parties will move toward, if they haven't already.
Edit to add: I'm sitting here hoping for rain....so my solar panels can rinse off the construction dust from across the street. There's no such thing as bad weather anymore.
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At our local EV meetup yesterday, there was a lady from the County Sanitation dept with one of their Chevy Bolts. They have about 10 right now and are adding more Bolts to their fleet.
She said that by far the biggest benefit to them was the almost zero maintenance that EVs required.
BTW, the Pareto principle (80/20 rule) can be pressed further. It is based on a power law which allows it to be applied repeatedly. The 20% of the top 20% also consume 80% of the 80%. This is the 64/4 rule.
To summarize
2B (100%) consume 50 mb/d (100%) implies 40 EVs to offset 1 b/d.
400M (20%) consume 40 mb/d (80%) implies 10 EVs to offset 1 b/d.
80M (4%) consume 32 mb/d (64%) implies 2.5 EVs to offset 1 b/d.
This progression probably cannot be taken further without violating the physical capacity limits of ordinary vehicles. That is, can find 16M vehicles consuming 1.6 barrels, 67 gallons per day? Long haul semis going 400 miles per day could hit this market, but are there really 16 million them?
The key objection to going this far out is that the mix of current EV models is not really optimized to target these extremes first. For example, Tesla probably not prioritizing the Semi over the Model Y, but if they wanted to have optimal impact on fuel consumption that is what they should be doing.
Even so, if the oil industry were butting into peak supply problems and the price of oil soaring above $100/b, I would bet that EV makers would become lazer focused on heavy duty vehicles.
At any rate, I point this progression out to show that there are much more aggressive assumptions one could be making. To talk of the 10 EV per 1 b/d displacement efficiency available to the first 400M may be conservative to apply it to the first 40M EVs.
The other way to apply the power laws is to the other end of the spectrum. 64% or 1.28B of vehicles consume 4% of the fuel, 2mb/d. We really should not despair about how long it will take to replace the last 1.28B ICE vehicles with EVs. About 640 of these consume 1 barrel per day, about 24 gallons per year per vehicle. This is hardly worth registration and insurance to drive less than 1000 miles per year.
So EVs need only replace about 36% of vehicles on the road to cut fuel consumption by about 96%. Even if we do a little sensitivity test by replacing a 80/20 rule with 60/20, we still find that the first 400M have a displacement ratio of 13.33 vehicle to 1 b/d, while the last 1.28B consume 16% at a rate of 96 gallons per year. The latter group is still hardly worth insuring and registering for less than 3000 miles per year. Either way the first 40M EVs look sufficient to force oil to peak by 2023, and in practical terms less than half of the ICE fleet needs to be replaced to knock out 90% of motor fuel consumption.
To summarize
2B (100%) consume 50 mb/d (100%) implies 40 EVs to offset 1 b/d.
400M (20%) consume 40 mb/d (80%) implies 10 EVs to offset 1 b/d.
80M (4%) consume 32 mb/d (64%) implies 2.5 EVs to offset 1 b/d.
This progression probably cannot be taken further without violating the physical capacity limits of ordinary vehicles. That is, can find 16M vehicles consuming 1.6 barrels, 67 gallons per day? Long haul semis going 400 miles per day could hit this market, but are there really 16 million them?
The key objection to going this far out is that the mix of current EV models is not really optimized to target these extremes first. For example, Tesla probably not prioritizing the Semi over the Model Y, but if they wanted to have optimal impact on fuel consumption that is what they should be doing.
Even so, if the oil industry were butting into peak supply problems and the price of oil soaring above $100/b, I would bet that EV makers would become lazer focused on heavy duty vehicles.
At any rate, I point this progression out to show that there are much more aggressive assumptions one could be making. To talk of the 10 EV per 1 b/d displacement efficiency available to the first 400M may be conservative to apply it to the first 40M EVs.
The other way to apply the power laws is to the other end of the spectrum. 64% or 1.28B of vehicles consume 4% of the fuel, 2mb/d. We really should not despair about how long it will take to replace the last 1.28B ICE vehicles with EVs. About 640 of these consume 1 barrel per day, about 24 gallons per year per vehicle. This is hardly worth registration and insurance to drive less than 1000 miles per year.
So EVs need only replace about 36% of vehicles on the road to cut fuel consumption by about 96%. Even if we do a little sensitivity test by replacing a 80/20 rule with 60/20, we still find that the first 400M have a displacement ratio of 13.33 vehicle to 1 b/d, while the last 1.28B consume 16% at a rate of 96 gallons per year. The latter group is still hardly worth insuring and registering for less than 3000 miles per year. Either way the first 40M EVs look sufficient to force oil to peak by 2023, and in practical terms less than half of the ICE fleet needs to be replaced to knock out 90% of motor fuel consumption.
What happened in the early 2010s as EVs started to become competitive is that we had an oil glut in 2014. The price was hammered, and that was the only thing that could get consumption to grow sufficiently to recover from the glut.This is a sentiment I've been trying to express for years now and still can't really articulate. Once cheap renewables became a reality around 2010 there certainly wasn't an immediate shift off oil, but I feel like some universal economic equation did completely reverse. We're at the point now where ANYTHING that's done to try and maintain status quo will only hasten disruption.
Interest rates kept low so fracking can be maintained? The renewable energy and EV transition relies on financing literally all cost up front, so the advantage to transition is exponentially greater.
Interest rates go up? Fracking ends, oil skyrockets, and the economic case for EVs/renewables is exponentially more apparent.
It's like fossil interests are caught in quicksand and wriggling(in any direction) only makes it worse. I think this speaks to the original @jhm theory that major producers like Saudi Arabia are better off in ALL scenarios to extract oil to maximum capacity thru the end. That is by definition the optimal total revenue strategy and something all parties will move toward, if they haven't already.
Edit to add: I'm sitting here hoping for rain....so my solar panels can rinse off the construction dust from across the street. There's no such thing as bad weather anymore.
This is also why I created the chart above. I really don't think the oil industry can get real revenues back to that peak.
The oil industry along with coal and gas are in a stage where the only way they can hold onto consumption volumes is to chase lower and lower unit prices. This is why I have shifted from a peak demand (consumption) outlook to a peak meh perspective. The fossil industries can keep over investing and forcing consumption as long as they are willing to lose money. That's the Meh of the whole thing. It's a futile effort. Once investors recognize just how meh the whole oil industry has become, they will pull back. Only the pull back of investments will lead to both lower production and consumption.
So I think we need to look at revenue fall off before we worry about consumption fall off. I am optimistic that renewables and EVs are already gutting fossil revenues.
And this does get back to some of my earlier thinking about the oil industry allowing competitive prices to rule. The effort OPEC puts into cutting production to maintain and price above competitive market equilibrium is counter productive for the long run. But I don't mind because the unforced error benefits EVs.
Nice, and that benefit holds up even if the price of gasoline falls.
Makes me think there are three levels of price parity.
Total Cost of Ownership parity based on purchase price + maintenance + fuel cost.
Sticker price parity based on purchase price alone.
Between these two could be Overhead parity based on purchase price + maintenance cost.
So the advantage of reaching Sticker price or Overhead parity is that buyers don't need to worry about fuel prices as purchasing criterion. Electricity per mile is reliably cheaper than gasoline per mile. But TCO parity depends on how big the savings is.
RPT-COLUMN-Bearish signal for crude as China closes in on filling oil storage: Russell
This is really interesting. Remember when we used to discuss China's strategic petroleum reserve and how it was propping up oil prices through the glut?
The author estimates that China will stop filling in about 100 days when it reaches a 90-day import level. But this shock is not what is so interesting to me.
Forecasters have fine tuned their estimates of "demand" to a range between 650 kb/d and 900 kb/d. But some 856 kb/d of this demand is actually a build to Chinese stockpiles, not real consumption at all.
Hmm, how much is global consumption actually growing?
This is really interesting. Remember when we used to discuss China's strategic petroleum reserve and how it was propping up oil prices through the glut?
The author estimates that China will stop filling in about 100 days when it reaches a 90-day import level. But this shock is not what is so interesting to me.
Forecasters have fine tuned their estimates of "demand" to a range between 650 kb/d and 900 kb/d. But some 856 kb/d of this demand is actually a build to Chinese stockpiles, not real consumption at all.
Hmm, how much is global consumption actually growing?
TheTalkingMule
Distributed Energy Enthusiast
Well the bullshit IEA forecast has been whittled 2019 growth estimates down from 1.6Mb/d to 1.1Mb/d, so by the end of the year it should be just around......856kb/d. You'd think there'd be flashing lights and sirens going off.
dc_h
Active Member
The 80-80-20 rule is why I keep beating the dead horse commercial sprinter story. 1 million commercial sprinters would offset 20 million cars worth of gasoline. 100,000 UPS sprinters, 100,000 DHL, 100,000 Fedex and Amazon sprinters. There’s dozens of brewers, commercial food and retailers out there who are driving these things full time every day. Small urban and suburban buses would have a huge outsized impact.
adiggs
Well-Known Member
I don't know where the fuel cost / mile works out, but UPS is making a pretty sizable commitment to shifting their fleet to Natural Gas, especially including "Renewable Natural Gas".
UPS is converting ground fleets to renewable natural gas - FreightWaves
From what I got here:
UPS Makes Largest Purchase Of Renewable Natural Gas Ever In The U.S.
RNG is methane captured at landfills and other similar situations. The lovely thing being that the methane can be injected into the existing NG infrastructure, and then used elsewhere as compressed (or not) NG.
This seems like the sort of low infrastructure cost step forward that can help with shifting the fuel used in commercial trucking, while avoiding a really big shift and necessary infrastructure build out to get electric trucks going in serious volumes. If NG is enough cheaper than diesel, then this might be an economic alternative to full electrification for a decade or 2.
UPS is converting ground fleets to renewable natural gas - FreightWaves
From what I got here:
UPS Makes Largest Purchase Of Renewable Natural Gas Ever In The U.S.
RNG is methane captured at landfills and other similar situations. The lovely thing being that the methane can be injected into the existing NG infrastructure, and then used elsewhere as compressed (or not) NG.
This seems like the sort of low infrastructure cost step forward that can help with shifting the fuel used in commercial trucking, while avoiding a really big shift and necessary infrastructure build out to get electric trucks going in serious volumes. If NG is enough cheaper than diesel, then this might be an economic alternative to full electrification for a decade or 2.
mblakele
FSD Beta (99)
Problem is it’s open-cycle: burning that bio-methane puts CO2 into the atmosphere. It’s impractical to capture exhaust from a vehicle. Vehicles and their infrastructure are likely to be leak-prone, too, putting methane into the atmosphere.
I like the idea of renewable methane; but it should be consumed at fixed, large-scale facilities like power plants, where it’s more practical to capture the CO2. This works best if you have a power-to-methane plant next door, turning excess renewable energy + water into H2, then add CO2 to produce more methane. The idea is to close the loop: don’t emit CO2; recycle it.
Foothill Transit Electric Bus Testing | Transportation Research | NREL
This might help a bit. In transit bus testing BEV buses are about 4 times as fuel efficient. The tricky thing is keeping the charging costs down. The Foothills Transit district has been paying 20c/kWh. This seems painfully high to me. This is at parity then with $14.65/mmBtu for distributed natural gas. So the BEV was just modestly cheaper to fuel than the CNG.
A basic problem with the BEVs that we tested is that they had small batteries that needed to be recharged frequently throughout the day. They were probably exposed to demand charges as well as higher mid-day prices. They also needed alot of charging hardware distributed. I suspect the technology will progress to larger batteries that can take advantage of off peak charging in centralized lots. They were using about 23 kWh per hour, so a 300kWh battery might only need nightly charging. At any rate, I think there are alot of opportunities for the total cost of charging to come down substantially. So with scale up, the economic comparison against CNG only gets better.
mspohr
Well-Known Member
The $47 Trillion Death Sentence For Oil & Gas | OilPrice.com
Around 130 international banks, all present at the UN climate change summit in New York, have committed themselves to decrease their support and investments in the oil and gas sector the coming years. The banking groups have signed the so-called Principles for Responsible Banking, which entails a promise by financial institutions to fully support the implementation of the Paris Agreement, by decreasing hydrocarbon investments while promoting renewables. This statement is going to be a major earthquake for oil and gas companies, threatening upstream and downstream operations worldwide, forcing oil & gas producers to either reduce their impact on the environment or to seek new sources of investment. It is already becoming more difficult for oil and gas companies to find new financing, and on top of this, a large group of institutional investors, representing a value of $11 trillion, are already actively divesting their oil and gas assets.
Around 130 international banks, all present at the UN climate change summit in New York, have committed themselves to decrease their support and investments in the oil and gas sector the coming years. The banking groups have signed the so-called Principles for Responsible Banking, which entails a promise by financial institutions to fully support the implementation of the Paris Agreement, by decreasing hydrocarbon investments while promoting renewables. This statement is going to be a major earthquake for oil and gas companies, threatening upstream and downstream operations worldwide, forcing oil & gas producers to either reduce their impact on the environment or to seek new sources of investment. It is already becoming more difficult for oil and gas companies to find new financing, and on top of this, a large group of institutional investors, representing a value of $11 trillion, are already actively divesting their oil and gas assets.
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