Shorting Oil, Hedging Tesla

[jhm]

Could you please expand on this assumption: 100 GWh Gigafactory costing $10B. It seems to me that Tesla is on track to achieve 1.5x capacity with less cap-ex?

My point was to work in simple units, not to get hung up on the specifics of the Sparks Gigafactory. It's how this scales up in aggregate that matters to the oil industry. IMO we should not be using a "Gigafactory" as a unit of capacity, as they will all have different GWh capacities, and even this will change over time. So we should be discussing in production units of GWh or TWh per year.

The cost per GWh/yr capacity of $100M is also nominal. We don't know what the costs will actually prove to be around the globe, and it does not matter much for the argument I am making. Spending $1 per virtual barrel in reserve is a whole lot cheaper than $10 to $20 looking for the next barrel of crude or gas. I suspect that Tesla will drive down the cost of building out a Gigafactory (think of Gigafactory as a product), but that would only make my argument stronger.

At this nominal value, it should be clear that, once the world is adding about 650 GWh of capacity per year, oil reserves are obsolete. Any addition to oil or gas reserves at that point will only increase stranded assess among oil and gas reserves. In deed, oil reserves are a 60 year supply and therefore already mostly stranded assets. So already, every new barrel discovered implies that another barrel will be stranded.

Since you are an oil bull, you really need to understand the fundamental shift that has happened here. If there is no economic value in adding a barrel to oil reserves, then the scarcity of oil falls apart as a means to hold up the value of oil. The Saudis think they can price their reserves at $8/b, but this only holds up if the reserve replacement cost is in excess of $8/b. So what I show is that it is in reality less than $1/b. The longer reserve holders sit on their reserves, the more value they will lose. The value of reserves comes down to what can be produced in just the next 10 or so years. Reserve holders are increasingly under pressure to liquidate as quickly as possible without tanking the oil price entirely. How do you work off a 60 years supply, when the world will never need more than about half of it? This is why we are in a glut that will not end. We have a massive glut of oil and gas reserves that have already been made obsolete by batteries and renewable energy.

 

[ValueAnalyst]

My point was to work in simple units, not to get hung up on the specifics of the Sparks Gigafactory. It's how this scales up in aggregate that matters to the oil industry. IMO we should not be using a "Gigafactory" as a unit of capacity, as they will all have different GWh capacities, and even this will change over time. So we should be discussing in production units of GWh or TWh per year.

The cost per GWh/yr capacity of $100M is also nominal. We don't know what the costs will actually prove to be around the globe, and it does not matter much for the argument I am making. Spending $1 per virtual barrel in reserve is a whole lot cheaper than $10 to $20 looking for the next barrel of crude or gas. I suspect that Tesla will drive down the cost of building out a Gigafactory (think of Gigafactory as a product), but that would only make my argument stronger.

At this nominal value, it should be clear that, once the world is adding about 650 GWh of capacity per year, oil reserves are obsolete. Any addition to oil or gas reserves at that point will only increase stranded assess among oil and gas reserves. In deed, oil reserves are a 60 year supply and therefore already mostly stranded assets. So already, every new barrel discovered implies that another barrel will be stranded.

Since you are an oil bull, you really need to understand the fundamental shift that has happened here. If there is no economic value in adding a barrel to oil reserves, then the scarcity of oil falls apart as a means to hold up the value of oil. The Saudis think they can price their reserves at $8/b, but this only holds up if the reserve replacement cost is in excess of $8/b. So what I show is that it is in reality less than $1/b. The longer reserve holders sit on their reserves, the more value they will lose. The value of reserves comes down to what can be produced in just the next 10 or so years. Reserve holders are increasingly under pressure to liquidate as quickly as possible without tanking the oil price entirely. How do you work off a 60 years supply, when the world will never need more than about half of it? This is why we are in a glut that will not end. We have a massive glut of oil and gas reserves that have already been made obsolete by batteries and renewable energy.

Let me set the records straight: I'm an oil bull only in 2017/18, and a bear in the longer term.

Thank you for the detailed response, but you haven't answer my question. How did you estimate cost of 100 GWh capacity at $10B.

Your estimate seems way too high given what Tesla has/plans to spend on Gigafactory 1, and the likely cost efficiencies with next-gen Gigafactories.

 

[jhm]

Let me set the records straight: I'm an oil bull only in 2017/18, and a bear in the longer term.

Thank you for the detailed response, but you haven't answer my question. How did you estimate cost of 100 GWh capacity at $10B.

Your estimate seems way too high given what Tesla has/plans to spend on Gigafactory 1, and the likely cost efficiencies with next-gen Gigafactories.

Oh, right. The original price estimate for the Gigafactory was $5B for 50GWh. So I doubled it. The building was only about $1B. So really most of the cost is for equipment, even if they are able to cram 3X as much equipment into the same volume of building. I should hope that Tesla has figured out how to do 10GWh for less than $1B. Moreover, there is a lot of doublings to get to 10TWh, 7 or so. So the cost of equipment can fall substantially, perhaps 10% or so with each doubling.

This is a huge opportunity for Tesla to become a lead supplier of Gigafactories. If you turn this around, $1B per 10GWh capacity could be seen a revenue stream. Imagine Tesla selling a Gigafactory to the UAE or Saudis. How much revenue could Tesla retain out of such a deal? Flipping this from a cost for Tesla to a revenue for Tesla depends on driving up massive demand for EVs and stationary batteries along with cutting the cost of producing a turn-key Gigafactory. If demand for batteries is high enough and Tesla can deliver capacity at higher value for the cost, then Tesla has a product to market. Of course, this product, Gigafactories, also have value to Tesla to own and operate. So whatever they sell them for would need to compensate for the missed opportunity to own and operate. Remember during the Gold Rush the businesses that sold picks, shovels and pans to miners made the most money. So Tesla could play either side. I suspect they'll play both.

 

[ValueAnalyst]

Oh, right. The original price estimate for the Gigafactory was $5B for 50GWh. So I doubled it. The building was only about $1B. So really most of the cost is for equipment, even if they are able to cram 3X as much equipment into the same volume of building. I should hope that Tesla has figured out how to do 10GWh for less than $1B. Moreover, there is a lot of doublings to get to 10TWh, 7 or so. So the cost of equipment can fall substantially, perhaps 10% or so with each doubling.

This is a huge opportunity for Tesla to become a lead supplier of Gigafactories. If you turn this around, $1B per 10GWh capacity could be seen a revenue stream. Imagine Tesla selling a Gigafactory to the UAE or Saudis. How much revenue could Tesla retain out of such a deal? Flipping this from a cost for Tesla to a revenue for Tesla depends on driving up massive demand for EVs and stationary batteries along with cutting the cost of producing a turn-key Gigafactory. If demand for batteries is high enough and Tesla can deliver capacity at higher value for the cost, then Tesla has a product to market. Of course, this product, Gigafactories, also have value to Tesla to own and operate. So whatever they sell them for would need to compensate for the missed opportunity to own and operate. Remember during the Gold Rush the businesses that sold picks, shovels and pans to miners made the most money. So Tesla could play either side. I suspect they'll play both.

Why are you assuming Tesla needs 2x equipment for 2x output? They're more likely to "just speed up the line" by decreasing human element and improving software.

Even if Tesla sold Gigafactories, i don't think anyone else would even know wat to do with it. More likely scenario is Tesla keeps building Gigafactories as fas as they can.

Generally speaking, I expect next-gen Gigafactories to cost less and output more.

 

[jhm]

Why are you assuming Tesla needs 2x equipment for 2x output? They're more likely to "just speed up the line" by decreasing human element and improving software.

Even if Tesla sold Gigafactories, i don't think anyone else would even know wat to do with it. More likely scenario is Tesla keeps building Gigafactories as fas as they can.

Generally speaking, I expect next-gen Gigafactories to cost less and output more.

I'm not assuming much. I just doubled Tesla's original estimate. Of course, Tesla is doing lots of creative things to get more out of the investment, but I'm not aware that they have told us what their costs really are. Until I hear something from Tesla on this, I am happy to use what is likely a very conservative estimate.

If you wish to get into the weeds about estimating the cost of the Gigafactory, I would recommend the Gigafactory investment thread. Here we are simply trying to look at impacts on the oil industry, so conservative estimates are quite sufficient.

 

[adiggs]

Why are you assuming Tesla needs 2x equipment for 2x output? They're more likely to "just speed up the line" by decreasing human element and improving software.

Even if Tesla sold Gigafactories, i don't think anyone else would even know wat to do with it. More likely scenario is Tesla keeps building Gigafactories as fas as they can.

Generally speaking, I expect next-gen Gigafactories to cost less and output more.

I think the two of you are focusing on two different things @ValueAnalyst, for two different reasons. They're related, but it leads to you talking past each other.

The way I understand @jhm's assumption, he's not trying to be as accurate as possible - he's trying to be directionally correct because the focus is on a way of thinking about the impact on the oil & gas industry, and hydrocarbon reserves in particular.

Using his very conservative assumption of $10B to buy 100GWh of capacity, he arrives at a conclusion in which a company like Tesla that is building these kinds of GF, is buying for $1 the equivalent of proven reserves in the O&G business where they spend at least $8. If his conclusion were that today it is roughly 1:1, then digging deeper into the specific GF assumptions would be warranted - it would change the argument from "take your financial resources you're investing exploring for oil reserves, and start building battery factories" and change it to "it might be better today, and it might be better soon, but it's cost competitive right now".

All of the points you're making are in violent support and agreement with the purpose of this analysis - arguably @jhm's assumptions are egregiously conservative and he's not just overstating the cost for these new kinds of reserves Tesla is building - he's HUGELY overstating the cost (it might reasonably be closer to $0.50 today, and trending down towards $0.25 for instance)..

It doesn't change the conclusion - one reading of which might be "the most efficient "finder" of new energy in the world today is Tesla, by about an order of magnitude (or more, but probably not 2 OOM) over the existing very large entities in the O&G business" (that have made this their business for a century).

Lowering an important input cost by an order of magnitude is always a good starting point for disrupting an industry. (that's my own addition )

 

[ValueAnalyst]

I think the two of you are focusing on two different things @ValueAnalyst, for two different reasons. They're related, but it leads to you talking past each other.

The way I understand @jhm's assumption, he's not trying to be as accurate as possible - he's trying to be directionally correct because the focus is on a way of thinking about the impact on the oil & gas industry, and hydrocarbon reserves in particular.

Using his very conservative assumption of $10B to buy 100GWh of capacity, he arrives at a conclusion in which a company like Tesla that is building these kinds of GF, is buying for $1 the equivalent of proven reserves in the O&G business where they spend at least $8. If his conclusion were that today it is roughly 1:1, then digging deeper into the specific GF assumptions would be warranted - it would change the argument from "take your financial resources you're investing exploring for oil reserves, and start building battery factories" and change it to "it might be better today, and it might be better soon, but it's cost competitive right now".

All of the points you're making are in violent support and agreement with the purpose of this analysis - arguably @jhm's assumptions are egregiously conservative and he's not just overstating the cost for these new kinds of reserves Tesla is building - he's HUGELY overstating the cost (it might reasonably be closer to $0.50 today, and trending down towards $0.25 for instance)..

It doesn't change the conclusion - one reading of which might be "the most efficient "finder" of new energy in the world today is Tesla, by about an order of magnitude (or more, but probably not 2 OOM) over the existing very large entities in the O&G business" (that have made this their business for a century).

Lowering an important input cost by an order of magnitude is always a good starting point for disrupting an industry. (that's my own addition )

That makes sense. We all agree on that part. I'm just trying to understand how much capex will be needed to build the next-gen gigafactory (terafactory?), because I think Tesla may need to build half of the 100, and I think they can do it by 2030.

Most investors don't realize this, but when Model 3 ramps up to 10,000 units per week, Tesla will be generating more cash than needed to build 50 Gigafactories in 15 years, so 3-4 gigafactory starts per year, so say $5B per year, given that they can also take on tens of billions of non-dilutive debt.

 

[neroden]

That makes sense. We all agree on that part. I'm just trying to understand how much capex will be needed to build the next-gen gigafactory (terafactory?), because I think Tesla may need to build half of the 100, and I think they can do it by 2030.

Most investors don't realize this, but when Model 3 ramps up to 10,000 units per week, Tesla will be generating more cash than needed to build 50 Gigafactories in 15 years, so 3-4 gigafactory starts per year, so say $5B per year, given that they can also take on tens of billions of non-dilutive debt.

FWIW, I currently expect Tesla to issue more stock as well -- only because of the degree to which the stock price has gotten "ahead of itself" and is pricing in future production already. Right now, being early to market is of tremendous value to Tesla. If Tesla can accelerate the construction of new factories by a year by issuing a little bit of stock soon at $400+/share, it'll be worth it due to getting an extra year's lead on everyone else. I don't think extra capital can advance model Y production at this point (it seems to be limited by factory design, which can't be sped up), but it could accelerate the next few Gigafactory starts (which are clones of the existing one more or less) and the semi factory. Likewise, Tesla has a serious shortage of service centers; I'm not sure to what degree service center expansion is limited by training, but to the extent that it's limited by capital, a 'big bang' deployment would be well worth it. Or it could finance mines to secure mineral supplies.

 

[adiggs]

Hey look - now at least one oil industry website is suggesting the oil majors ought to start spending some of their capital budget on renewables.

Analysts: Investment In Renewables An Opportunity For Oil Majors | OilPrice.com

Good call @jhm! I figure this is just a short hop skip and a jump away from ALSO building battery factories (or at least financing them) to increase the usability and range of use for renewables.

(NOTE: I dont really expect any significant investment in renewables by any oil majors. I expect them to cling grimly to the world that they know, continue to generate a lot of cash flow, and to watch their industry lose an order of magnitude of it's value over the next 10 years).

 

[neroden]

Congo is now report-ably at 65% of world Cobalt production!
thats greater than OPEC and NOPEC combined in oil.

hmmm Nissan/Renault is now ditching Mn for NMC, that a massive new need for Cobalt
this is becoming a hard constraint.

I'm thinking Tesla may need to actually finance its own cobalt mining operations. There are a number of juniors, and frankly the financing needs are small potatoes compared to Gigafactory costs, so they can do it, but they should probably get started. The Congo is a terrible geopolitical risk so securing pretty much any other source is wise.

 

[jhm]

That makes sense. We all agree on that part. I'm just trying to understand how much capex will be needed to build the next-gen gigafactory (terafactory?), because I think Tesla may need to build half of the 100, and I think they can do it by 2030.

Most investors don't realize this, but when Model 3 ramps up to 10,000 units per week, Tesla will be generating more cash than needed to build 50 Gigafactories in 15 years, so 3-4 gigafactory starts per year, so say $5B per year, given that they can also take on tens of billions of non-dilutive debt.

Right, I was hinting at the cost curve as being important to getting at that longterm capital requirement. Suppose the world is to hit 10TWh capacity by 2030 and Tesla builds half of that. Assuming an exponential build out, capacity needs to double every 2 years, and we've got about 7 doublings to go, which is really good from a cost decline perspective. Suppose that cost per GWh capacity declines 12% for each doubling. Suppose for convenience (and you can rescale this to whatever you like) that the cost per GWh capacity is $100M in 2015. So it falls to $93.81M in 2016, $88.00M in 2017, and so on to $38.34M by 2030. In this simplistic model, assuming we start with 55.24 GWh total capacity in 2015, the world builds out 22.88GWh at a cost of $2.15B, 32.36GWh in 2017 for $2.85B, and so on to a $112.29B investment for 2.93 TWh in 2030. This accumulates to an undiscounted sum of $449B in total investment for 9.945TWh of incremental capacity. This works out to an average cost of $45.20M per GWh capacity.

So it is the aggressive cost curve that drives the average cost down. If we assume that cost reductions per doubling are less aggressive, say 10%, then the total investment is $516B or $51.84M/GWh, or at just 6% is $674B or $67.81M/GWh. At the upper end, 15% implies $365B total and $36.66M/GWh. So the biggest unknown seems to be just how fast the whole technology can run down the cost curve. This involves both the manufacturing technology and the underlying battery technology. Also I believe that for the Gigafactory, the cost of solar, wind and geothermal are included, and certainly solar is continuing to fall in cost. So there is a lot of opportunity to drive costs down.

Also keep in mind that I did this calculation for the full 10TWh. If Tesla builds out just 5TWh, then the total investment is just half.

If Tesla grows its cash flow at say 50% while building out capacity at 41%, then cash flow gradually becomes more supportive of the investment so that the fraction to be financed decreases. But at a 12% rate of learning, the investment in capacity only grows by 32.57%. So 50% growth in cash over takes this annual investment even faster than it may seem if one ignores declining costs.

I'd also point out that few analysts will factor in a cost decline as I have do here. So the tendency is to overstate longterm capital needed for investment in renewables. This is fine if you want to throw big numbers around and make people think it really is terribly expensive to replace fossil fuels. But I do believe that all this technology really will continue to come down in cost. The actual size of the investment will be considerably less. This is really good for a Tesla investor. Imaging making only a $260B investment in Gigafactory capacity that is sufficient to replace about half of the oil industry. That is absolutely huge. Once the market starts to understand this, there will be no problem raising capital. It is the sort of situation that make a multi-trillion dollar market cap quite plausible.

 

[jhm]

Hey look - now at least one oil industry website is suggesting the oil majors ought to start spending some of their capital budget on renewables.

Analysts: Investment In Renewables An Opportunity For Oil Majors | OilPrice.com

Good call @jhm! I figure this is just a short hop skip and a jump away from ALSO building battery factories (or at least financing them) to increase the usability and range of use for renewables.

(NOTE: I dont really expect any significant investment in renewables by any oil majors. I expect them to cling grimly to the world that they know, continue to generate a lot of cash flow, and to watch their industry lose an order of magnitude of it's value over the next 10 years).

I called this?
Actually, if they would just take my virtual oilfield approach to heart, they could use that as a template for how to invest in new energy as a reserve replacement. In principle, oil majors could take the capital that they would otherwise spend on exploration and invest it in a basket of new renewable energy instead of wasting it on exploration. As they exhaust their reserves, they build up an even bigger portfolio of renewable energy.

Of course, a lot of oil shareholders won't go for that. So the next best strategy is to return capital and run off the balance sheet.

 

[ValueAnalyst]

Right, I was hinting at the cost curve as being important to getting at that longterm capital requirement. Suppose the world is to hit 10TWh capacity by 2030 and Tesla builds half of that. Assuming an exponential build out, capacity needs to double every 2 years, and we've got about 7 doublings to go, which is really good from a cost decline perspective. Suppose that cost per GWh capacity declines 12% for each doubling. Suppose for convenience (and you can rescale this to whatever you like) that the cost per GWh capacity is $100M in 2015. So it falls to $93.81M in 2016, $88.00M in 2017, and so on to $38.34M by 2030. In this simplistic model, assuming we start with 55.24 GWh total capacity in 2015, the world builds out 22.88GWh at a cost of $2.15B, 32.36GWh in 2017 for $2.85B, and so on to a $112.29B investment for 2.93 TWh in 2030. This accumulates to an undiscounted sum of $449B in total investment for 9.945TWh of incremental capacity. This works out to an average cost of $45.20M per GWh capacity.

So it is the aggressive cost curve that drives the average cost down. If we assume that cost reductions per doubling are less aggressive, say 10%, then the total investment is $516B or $51.84M/GWh, or at just 6% is $674B or $67.81M/GWh. At the upper end, 15% implies $365B total and $36.66M/GWh. So the biggest unknown seems to be just how fast the whole technology can run down the cost curve. This involves both the manufacturing technology and the underlying battery technology. Also I believe that for the Gigafactory, the cost of solar, wind and geothermal are included, and certainly solar is continuing to fall in cost. So there is a lot of opportunity to drive costs down.

Also keep in mind that I did this calculation for the full 10TWh. If Tesla builds out just 5TWh, then the total investment is just half.

If Tesla grows its cash flow at say 50% while building out capacity at 41%, then cash flow gradually becomes more supportive of the investment so that the fraction to be financed decreases. But at a 12% rate of learning, the investment in capacity only grows by 32.57%. So 50% growth in cash over takes this annual investment even faster than it may seem if one ignores declining costs.

I'd also point out that few analysts will factor in a cost decline as I have do here. So the tendency is to overstate longterm capital needed for investment in renewables. This is fine if you want to throw big numbers around and make people think it really is terribly expensive to replace fossil fuels. But I do believe that all this technology really will continue to come down in cost. The actual size of the investment will be considerably less. This is really good for a Tesla investor. Imaging making only a $260B investment in Gigafactory capacity that is sufficient to replace about half of the oil industry. That is absolutely huge. Once the market starts to understand this, there will be no problem raising capital. It is the sort of situation that make a multi-trillion dollar market cap quite plausible.

Your cost and speed assumptions are still way too high, partly because:

You're ignoring the ability to borrow tens of billions of debt and accelerate the buildout (and therefore cash flow generation).

Also, as soon as with Model Y, Tesla plans to achieve step-change improvement in productivity, speed, and capex requirement.

My estimate: Tesla alone will have 25 TWh annual battery production capacity by 2030 for a total cost of $250B. That's 50 Gigafactories at avg cost $5B each and 500 GWh avg production (alien dreadnought and higher energy density).

If you think that's nuts, remember that Tesla continuously proves me conservative (almost on a monthly basis now).

I'm done with this thread. See you at general discussion and gigafactory threads.

 

[dc_h]

I'm remembering a book about the history of the steel industry in the late 1980's. The point was that American steel was wiped out more by Monsanto and Dow than by Japan Inc and Korean conglomerates. BP nibbled at solar in the early 2000's and saw no sustainable business model. Instead of patiently waiting and working out the business model they walked away and joined the energy denialists. US steel did not see itself as a maker of forms and vessels, but of steel. BP and Exxon see themselves as hydrocarbon producers, rather than energy companies.
Part of what I love about TSLA is the mission to convert the world to sustainable energy. It's a big goal in a target rush environment.

 

[renim]

I'm thinking Tesla may need to actually finance its own cobalt mining operations. There are a number of juniors, and frankly the financing needs are small potatoes compared to Gigafactory costs, so they can do it, but they should probably get started. The Congo is a terrible geopolitical risk so securing pretty much any other source is wise.

I don't disagree.

Its not hard to see Cobalt doubling again in price, (at which point it approximately matches Nickel cost in NCA), and with just abit more demand, a double again, which makes it a significant cost burden for Tesla 3/Y. Unless stated otherwise, assume that the Japanese only locked up their own needs not future Tesla needs, so the S & X are ok, but the 3 & Y are s.....d

Cobalt is now about $25/lb compared to Uranium at $20/lb

what I am stating is that Cobalt has exited the important base metal category and is now a strategic metal.
There simply is not the supply available, for the current PH/EV forecasts for 2018 (let alone 2020 or 2025)
Congo has been able to ramp supply, but only Congo, only only only Congo.

>Neroden, name a Cobalt junior that you think is suitable, I'll review their resource and give you the the answer of how relevant they could be in terms of NCA. I suspect you will be disappointment.

 

[renim]

I could forsee Nickel maintaining a steady price, but Cobalt ramping back up to 2008 price levels.

better reserve supply for 2018, 2019, 2020 etc or else it will be stuck at 2017 levels

 

[renim]

FWIW
teardown of GM Bolt 60kWh battery pack
436kg total weight
68kg Al
63kg graphite
57kg steel
40kg iron
33kg copper
24kg Cobalt
24kg Nickel
22kg Manganese
10kg Lithium
95kg other

https://minerals.usgs.gov/minerals/pubs/commodity/cobalt/mcs-2017-cobal.pdf
last year, the world made enough Cobalt for 5 million GM Bolts. That is total world production, no smartphones allowed.

thats the figures for NMC, roughly double that for NCA and that is 10 million 60kWH Tesla, hard limit, no smartphones.

2016 world Cobalt production actually reduced, (hmmm price manipulation from the experts - anyone)

 

[neroden]

>Neroden, name a Cobalt junior that you think is suitable, I'll review their resource and give you the the answer of how relevant they could be in terms of NCA. I suspect you will be disappointment.

I've found it very hard to actually track down the *non-Congo* resources of most of the cobalt miners, but then I haven't spent much time on it.

This is the most comprehensive list I've found.
A Look At The Junior Cobalt Miners | Seeking Alpha

It's worth noting that Musk claimed a while back that they'd source the minerals for the Gigafactory from North America. The prices on these speculative mining companies are very low. Tesla could buy Formation (sorry, "eCobalt"), Fortune, and all the other Canadian juniors at once, and could probably finance two or three of them.

 

[Electricalcar]

The Big Oil Thread

(double meaning intended)

Sorry this is offtopic. I was trying to pm you a question about an earlier post but maybe I can't because I'm a new user? Are you able to pm me?

 

[jhm]

Is Big Oil’s Bet On Petrochemicals A Bust? | OilPrice.com

This is worth pondering. Is there really much of an opportunity for oil in plastics. There is an expected 60% growth by 2050, but this can't come anywhere close to replacing demand for gasoline and distillates.

If you eliminate demand for gasoline and distillates, could it still be profitable to extract plasticizers from crude? What do you do with all the unneeded middle distillates? I suspect that natural gas liquids would be a better feedstock.

Meanwhile the mass of plastic in the oceans comes to exceed that of fish by 2050. We are just begging for some plastic consuming microorganism to evolve and rot plastic everywhere. The ecosystem has ways of paying us back!