Shorting Oil, Hedging Tesla

[ItsNotAboutTheMoney]

A remarkably good article, mostly on European gas pricing, but relevant to other fuels and various aspects of transition to renewables

Opinion: Liberalisation and decarbonisation are a recipe for volatility

Europe’s exposure to fossil fuel volatility will actually increase during the clean energy transition to net zero.

www.energymonitor.ai

Overdoing it a bit. I expect exposure to volatility to decrease over time. Europe has had a shift to natural gas that's been faster than the shift from natural gas to renewables. But that should begin to change. The UK is specifically one to watch. The rapid shift from coal is almost complete, so what's left to come is:
- the final closures of coal plants
- nuclear power attrition
- electrification of transportation
- electrification of heating, particularly from 2024/2025, (as well as potential reduction of heating demand through finally trying to do something about the housing stock)
- addition of renewables electricity generation (particularly offshore wind)
- addition of electricity storage.

To me those trends point to _lower_ volatility overall as more of the energy costs are embedded in durable renewable generation.

 

[petit_bateau]

wider energy sector news that catches my eye, or anybody elses' eyes at = Energy Sector News

 

[Spacemanspliff]

Overdoing it a bit. I expect exposure to volatility to decrease over time. Europe has had a shift to natural gas that's been faster than the shift from natural gas to renewables. But that should begin to change. The UK is specifically one to watch. The rapid shift from coal is almost complete, so what's left to come is:
- the final closures of coal plants
- nuclear power attrition
- electrification of transportation
- electrification of heating, particularly from 2024/2025, (as well as potential reduction of heating demand through finally trying to do something about the housing stock)
- addition of renewables electricity generation (particularly offshore wind)
- addition of electricity storage.

To me those trends point to _lower_ volatility overall as more of the energy costs are embedded in durable renewable generation.

So basically everything is left to come? UK and all these European countries are chewing through coal at the moment. Renewable without base load power will always have an element of volatility. I see 0 world where you can add more electrical demand to the grid while just hand waving closing coal plants and far worse nuclear power. Saying oh we will just add solar, wind, and batteries (lol) to offset all of what is currently needed and this extra demand we are creating by electrifying everything is a fairytale.

 

[TheTalkingMule]

So basically everything is left to come? UK and all these European countries are chewing through coal at the moment. Renewable without base load power will always have an element of volatility. I see 0 world where you can add more electrical demand to the grid while just hand waving closing coal plants and far worse nuclear power. Saying oh we will just add solar, wind, and batteries (lol) to offset all of what is currently needed and this extra demand we are creating by electrifying everything is a fairytale.

You know this is a Tesla forum, right?

 

[Spacemanspliff]

You know this is a Tesla forum, right?

Yup, but I don't see how one can logically see what he just wrote out as a realistically viable way forward. You would need nuclear power.

 

[mspohr]

Yup, but I don't see how one can logically see what he just wrote out as a realistically viable way forward. You would need nuclear power.

Nuclear is useless. It's expensive and inflexible. Power demand is highly variable. Base load is a myth. Power companies give away base load power at night since there is no demand.

 

[TheTalkingMule]

Now that the end is in sight, all these pricks need to do is create chaos and they get paid. No need for a semblance of order and rationality, desperation from here on out.

Oil falls 2% as Fed rate hike talk spooks risk markets

Oil prices fell about 2% on Monday, hit by investor concerns over the possibility of quicker than expected interest-rate hikes by the U.S. Federal Reserve that took down risk markets such as equities while the dollar rallied.

www.reuters.com

 

[RobStark]

Biden's EV push aligns traditional rivals oil, corn

The EV-procurement mandate, the lawmakers say, also ignores the opportunity to immediately cut costs and emissions using high-octane liquid fuels, ethanol and renewable diesel.

www.autonews.com

 

[TheTalkingMule]

Interesting article to update us on banker's current mindsets. About what you'd think, hesitant to transition.

It was nice to read at least an acknowlegement that renewables are being held back by bankers because they understand the transition will be inherently destructive to their business.

Insight: Oil and gas bankers confront their own energy transition

Can oil bankers learn renewable tricks?

www.reuters.com

But some long-time oil and gas bankers are cautious about embracing their own institutions' new focus on cleaner energy. One senior U.S. banker, who spoke on condition of anonymity, described efforts to create new advisory teams as "window dressing", noting the meagre prices paid for renewables firms versus the hefty sums in traditional energy tie-ups.

 

[UkNorthampton]

Interesting article to update us on banker's current mindsets. About what you'd think, hesitant to transition.

It was nice to read at least an acknowlegement that renewables are being held back by bankers because they understand the transition will be inherently destructive to their business.

Insight: Oil and gas bankers confront their own energy transition

Can oil bankers learn renewable tricks?

www.reuters.com

Tech, not war.

"I spend 12 hours a day reading," said MacKenzie, whose past deals include BP Plc's $48.2 billion merger with Amoco in 1999.

"As an oil and gas banker I would stay current with geopolitics, get up in the morning and click the BBC website to make sure hostilities hadn't broken out somewhere. But now I'm trying to follow the technology."

 

[TheTalkingMule]

Tech, not war.

"I spend 12 hours a day reading," said MacKenzie, whose past deals include BP Plc's $48.2 billion merger with Amoco in 1999.

"As an oil and gas banker I would stay current with geopolitics, get up in the morning and click the BBC website to make sure hostilities hadn't broken out somewhere. But now I'm trying to follow the technology."

Great snapshot of how much better human civilization will be in 10-20 years when oil & gas has gone the way of coal.

Until then....we are incentivize to create chaos and violence to keep prices high.

 

[UkNorthampton]

Great snapshot of how much better human civilization will be in 10-20 years when oil & gas has gone the way of coal.

Until then....we are incentivize to create chaos and violence to keep prices high.

Plus scarcity mindset, zero-sum game, stir up partisans.

If we get to abundant energy, let alone abundant robot labour.... another age will have begun. Hard/impossible to think through changes. I like it.

 

[mspohr]

Illustration of the crucial role finance plays in the destruction of our world.

 

[mspohr]

Rightwing lobby group Alec driving laws to blacklist companies that boycott the oil industry

The American Legislative Exchange Council has drafted legislation modelled on efforts to block divestment from Israel

www.theguardian.com

Since the beginning of the year, state legislatures in West Virginia, Oklahoma and Indiana have introduced a version of a law drafted by Alec, called the Energy Discrimination Elimination Act, to shield big oil from share selloffs and other measures intended to protest the fossil fuel industry’s role in the climate crisis. A dozen other states have publicly supported the intent of the legislation.

Texas has already begun compiling a list of companies to target for refusing to do business with the oil industry after the state passed a version of the law last year. Top of the list is the world’s largest asset manager, BlackRock.

 

[ItsNotAboutTheMoney]

So basically everything is left to come? UK and all these European countries are chewing through coal at the moment. Renewable without base load power will always have an element of volatility. I see 0 world where you can add more electrical demand to the grid while just hand waving closing coal plants and far worse nuclear power. Saying oh we will just add solar, wind, and batteries (lol) to offset all of what is currently needed and this extra demand we are creating by electrifying everything is a fairytale.

I missed this reply.

The major transitions that remain will reduce energy demand.
EVs reduce energy demand by 2/3. A full transition to EVs is only estimated to increase total generation requirements by 40%.
Heat pumps reduce energy demand by 2/3. Even if you powered them with natural gas generation, you'd still reduce natural gas demand. Power them with renewables, and you get the bigger benefit.

The remaining shifts from coal and nuclear power are now largely attritional, so they're not going to happen as rapidly as they have over the past 15 years.

For the USA, planned retirements for the next 10 years are mainly coal power plants, but that's only 52GW, and renewable additions are running at about 30GW per year, which is conservatively equivalent 7.5GW of nuclear generation or 15GW of coal generation being added each year. So if renewable additions are significantly outpacing the reduction in capacity of the two major declining sources, then they're going to eat into natural gas generation.

For the UK, about which I wrote, the planned additional wind generation is greater than the expected decline in nuclear generation, so it's going to eat into natural gas generation. (There's already very little coal power left).

The only realistic scenario in which the UK would be more exposed to natural gas price volatility is if the additional demand from the transition to EV is so rapid that it outpaces the growth of renewables and gas demand reduction from shifts in heating, insulation of existing housing stock and reduction in heating demand from replacement of old housing stock.

Also, I don't understand the lol about batteries.

USA has around 280M registered vehicles.
If they were all electrified with an average usable battery capacity of 60kWh, that would be 1680GWh, or 1.680TWh of energy capacity.
Divide by 4 and that would give you the equivalent of 420GW of 4-hour power capacity in the fleet.
The USA has about 205GW of natural gas combustion turbine and steam turbine, which are the typical natural gas peaker plants, with a general transition away from steam turbine. There's an additional 280GW of CCGT, which are the typical base natural gas plants.

If there were a significant transition to EVs, it would not only imply that the cost of batteries had fallen substantially, it would imply the battery manufacturing capacity would have increased to the point that it would be possible to deploy huge amounts of battery storage on the grid, at much reduced cost compared to now.

Peak US generation power was 718GW, which happened in July 2017 at 6pm ET/3pm PT.

 

[mblakele]

Who buys the dirty energy assets public companies no longer want?
from The Economist

 

[AndreP]

I'm up about $220k as of today from buying oil stocks when the pandemic hit

 

[mrmtb]

I'm up about $220k as of today from buying oil stocks when the pandemic hit

I only started adding to energy a few months ago.

 

[AndreP]

I only started adding to energy a few months ago.

View attachment 767797

The run up has honestly been insane, I expected equity prices to recover but nothing like this in this time frame

This is my one account, already took the initial investments off the table a couple months back as a risk mitigation strategy

https://imgur.com/L5fjn13

 

[Oil4AsphaultOnly]

I'm up about $220k as of today from buying oil stocks when the pandemic hit

Congrats, so you're basically trading it, or do you think there's more upside with your contrarian (for this forum anyway) position?