TheTalkingMule
Distributed Energy Enthusiast
Don't forget all electricity production from diesel is already moving to solar. Every island in the world is shuttering diesel generators and desalinators.
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Well, diesel consumption did decline 147 kb/d in 2016. So something is going on.
I think diesel is in a fair special market situation it is used for transport, power generation and industrial uses. This, it is in completion with gas, solar, wind and coal in power generation; electricity, gasoline, natural gas, and fuel oil in transportation; and competing with all this in industrial uses. Also diesel passenger vehicles are having emissions problems and falling out of favor. China for example burn diesel for power and is presently deploying electric and CNG powered buses and other heavy vehicles. I estimate that electric buses alone has displaced about 68 kb/d of demand in 2016, but clearly much more is going on because diesel consumption fell 232 kb/d in total.
So basically there is alot of competition chipping away at diesel demand. Setting aside heavy EVs, demand growth is thin. This sets the stage for a couple of doublings of heavy EVs to tip over to negative growth. At this time I think it is a fair bet that diesel consumption will be lower in 2020 than it was in 2015. Even without Tesla Semis, I think BYD, Proterra and other heavy EV makers are on a path to substantial growth in this space. Tesla is actually playing catch up. Proterra is already developing a motorcoach with 600 mile range. In my estimation that is just as impressive as an electric semi with 600 mile range.
So heavy EVs are a huge blind spot for oil analysts. Just today I was tweeting with Alhajji, and his perspective was that heavy EVs were ignorable because they weren't able to meet the needs of fleet managers. There is a lot of attitude out there that EVs are just not capable of heavy duty. Well, developments in electric buses just does not bear this out. New 116k EV buses just in China in 2016 already displaces more diesel than all 774k new passenger EVs displaces gasoline. This is about 3 to 1, special 75 kb/d diesel versus 25 kb/d gasoline. I think both will double about once per 24 months. How many times does this need to double before the oil industry takes notice? By 2020, heavy EVs could be knocking out 300 kb/d of diesel demand. That's pretty huge for a product that is already showing demand growth weakness.
This will be fun to watch, in part because it is a prelude for peak demand in gasoline. BTW, residual fuel oil is already post peak. Saudi Arabia is importing it for power burn as a cheaper alternative to burning crude.
I'm trying to wrap my head around this. Does this exporting of refined product set a floor for wholesale gasoline/diesel prices? But if both China and the US are exporting refined products, doesn't that simply lower the products value thereby reducing the price of those products? Seems pretty contradictory to me. I'm overlooking something aren't I?
ValueAnalyst
Closed
I'm not seeing what you are. EIA shows heavy YoY YTD increase in distillate (which inclides diesel) demand. See the graph at the bottom of This Week In Petroleum Distillate Section
ValueAnalyst
Closed
I was making reference to the BP Statistical Review. The graph you reference is just for US consumption, which has come up a bit in recent years owing to the collapse in price. Reduction of consumption in China is the big driver of global decline. China is exporting about 300 kd/d diesel (Reuters) while US is exporting 1100 kb/d distillates (EIA). Saudis Arabia is also exporting about 300 kb/d diesel. With all this export competition the domestic price of diesel will remain low. Moreover, due to price elasticity of demand when the export price drops to low we should expect domestic consumption to increase. The excess must go somewhere! Thus, an increase in domestic consumption need not be an indicator of healthy demand global or domestic.
FWIW, BYD battery capacity
BYD current battery capacity is about 14GWh, is expected to reach 16GWh by the end of this year, Qinghai 10GWh production capacity is currently under construction.
【重磅】工信部装备工业司公开征求《企业平均燃料消耗量与新能源汽车积分并行管理暂行办法（征求意见稿）》意见
BYD current battery capacity is about 14GWh, is expected to reach 16GWh by the end of this year, Qinghai 10GWh production capacity is currently under construction.
【重磅】工信部装备工业司公开征求《企业平均燃料消耗量与新能源汽车积分并行管理暂行办法（征求意见稿）》意见
Ohh, I just realized something,
MIIT is proposing its rules in an even stricter format (1 year, no banking), than the Chinese air lobby groups are targeting (3 year banking).
There can only be one reason why.
(and we can listen to the ROW squeal)
Carmakers call on China to ease NEV targets
I've stated elsewhere that the impact is zero, because Hyperloop is still a fantasy of people who have not done their research (I'm looking at you, Elon, you didn't do your research here). I'm waiting for them to come out with a version which fixes the fundamental technical and economic problems before I'll start considering it. This might well be possible but they haven't started yet.
And that puts the possible date of a *functional* Hyperloop so far in the future that electric airplanes will already be plying the skies. (There are some very impressive ones in the 14-seater category which have already been revealed and seem technically sound for short flights.)
So ignore Hyperloop for oil modeling.
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FWIW, it's not just oil; it was previously true with gold mining, copper mining, gem mining, etc. Any country which can dig the majority of its wealth out of the ground rather than having to work for it seems to develop high corruption.
On top of this, for the real corner-cases of diesel use, such as certain high-intensity-usage (18 hours a day) applications of farm tractors, or antique specialty diesel vehicles which aren't in production any more but will continue to be used, biodiesel exists and works. It's the only biofuel which seems to have a significant standalone market; probably because the diesel engine was originally designed to run on vegetable oil, so it doesn't require retrofits, and the gasoline engine wasn't designed to running on anything else. Biodiesel is still more expensive than petroleum diesel, but for these specialty applications, the fact that it produces less troublesome local pollutants is enough to make many people pay the premium. In the farm case, the ability to generate it locally is a plus. This isn't a significant part of demand but it just goes to show that diesel is being attacked in every single market, even the niche ones.
Here's a nice chart I pulled from EIA. This tells the story of US net imports over the last 20 years. What is most striking is the abrupt peak of product net imports (yellow line) that happened in 2006. This date also marks the peak of domestic petroleum consumption as well as an early point in the shale revelution. So there really was a lot of change happening at the time.
Note that the peak in crude net imports (green line) was quite flat, hard to perceive at the time, but that the peak in products (yellow line) was much more abrupt. Moreover, in recent years net import of crude seems to be stabilizing if not actually increasing, while net import of product maintains a near linear descent. So the US seems to be getting increasingly oriented toward export of products.
Also note that the US became a net exporter of distillates (dark brown line) in 2007 and this is about -1.2 mb/d net import currently. Finished Motor Gasoline became a net export about 2010. The US is still a net importer of gasoline blending components which this data source does not net out, but doing so yeilds that the US just became a net exporter of Total Gasoline. However, there is a meaninful difference between finished gasoline and blending components in that only finished products are ready for actual consumption.
Looking at net imports is nice way to see what sort of products are produced in excess of domestic consumption. Total Net Imports of Crude Oil and Petroleum Products into the U.S. At this point, there really is not much of any final product that that the US imports net. Crude (4.1 mb/d), gasoline blending components (0.7 mb/d), and unfinished oils (0.3 mb/d) remain as net imports, but these are all inputs to ultimate products, not consumer products. The implication here is that US refinery capacity is in excess of domestic consumption across all products. Refiners are increasingly dependent on export markets for marginal demand, and managing stock levels is about determining how much to export at given price.
Saudi Arabia also wants to compete in these product export markets, not just crude exports. It is possible that they may be developing a US crude import strategy around competing in the product space. The blend of crude used in refineries may have implications for the mix of products coming out. So there may be strategic consideration about impacting the product mix through withholding heavy crude. Sure there are other producers of heavy crude that may step in to supply US refiners, but Saudi refiners may need that crude. By selling crude to a country like the US or China, the Saudis may be foregoing an opportunity to produced a final product. Naturally they may want a bigger slice of the supply chain. For example, Tesla does the same thing by being extremely vertically integrated. If Tesla were to sell a battery pack to another automaker, it would forego the opportunity to produce a full car itself. So producers like Saudi Arabia need to be thinking about how to be in the most profitable segments of the supply chain. If refining is where the profit is, then the Saudis may well see the US and China increasingly more as competitors than customers.This also explains why Aramco would want to own the largest refiner in the US.
Seems gentle enough. Norway will get to 100% by 2025 and other countries to 100% by 2030.
Are they able to trade NEV credits with other manufacturers? That would smooth things out a bit. It would also give a boost to committed EV makers like Tesla.
TankerTrackers.com on Twitter
This is pretty amazing if accurate. T China may have been stockpiling crude at a rate of 0.66 mb/d last year and 1.88 mb/d this year.
If this is true, the market is nowhere near balance. Moreover, global consumption is already is decline.
Is this credible?
This is pretty amazing if accurate. T China may have been stockpiling crude at a rate of 0.66 mb/d last year and 1.88 mb/d this year.
If this is true, the market is nowhere near balance. Moreover, global consumption is already is decline.
Is this credible?
I would tend to believe it. There's no way of being sure, but there were a lot of rumors that China was filling its strategic petroleum reserve (for military purposes). Nobody knows how large this reserve is or what quantity they were targeting.
That said, I don't understand how they're calculating this and they may have underestimated Chinese domestic demand.
Wouldn't it be ironic if 'someone' was secretly pumping it back into the ground to 'run it through the system' creating (false)demand.
Inverse cracking--
slick willie oil punking--
dc_h
Active Member
TheTalkingMule
Distributed Energy Enthusiast
Ugh, this next decade will be mess. Is there a ranking of the most ready-to-fail oil nations?
I'll make one! I'll make one!
(1) Venezuela. Already collapsed.
(2) Saudi Arabia. Too many structural problems to explain in one line.
(3) Angola. Complete mess until 2002 due to decades-long civil war; mostly supported by oil revenue now.
(4) Iraq. Already unstable.
(5) Libya. Already unstable
(6) Bahrain. Serious internal conflicts, not much going for it
(7) Kuwait. Almost as bad as Saudi Arabia.
(8) UAE. Not actually unified and got caught in a huge diplomatic fraud against Qatar recently.
(9) Qatar. Getting caught in the Saudi Arabian crossfire.
(10) Colombia. Unstable due to the drug war to start with.
(11) Algeria
(12) Kazakhstan
(13) Russia
(14) Oman.
Some of this is just gut instinct.
I think Brunei, Canada, and Norway are unlikely to collapse. I think Azerbaijan, Iran, Bolivia, Ecuador, Ghana, Indonesia, and Malaysia are also unlikely to collapse, though more likely than Canada or Norway.
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