Shorting Oil, Hedging Tesla

[adiggs]

Now that covid has dropped to nearly zero in the US, and all the US frackers have sold tons of crude futures contracts, how huge do you think our oversupply will be around Memorial Day? I'm calling another <$0 WTI day before July 4th.

I agree with the overall tenor - especially that at least some US frackers have sold most of their future production for at least a few years out at really awesome prices. They will have the ability to mine as much as they can. Or at least close up shop and sell off their futures contracts to somebody else for a nice profit (I don't trade futures - I assume that they can work that way at least).

I also agree with the massive oversupply, but the <$0 WTI day required a set of very specific market circumstances that, my understanding, has been removed. Specifically a huge amount of the monthly contracts being traded by a single entity (like 1/3rd of the market), that could not under any circumstances take physical delivery, with the trades happening in a public and programmed fashion that the rest of the market could easily front run. That entity (SCO) doesn't work that way any longer; it also isn't a good proxy for trading the spot market any longer either.

Really really low $/bbl prices - I think we'll need another war as an antidote for that.

 

[mspohr]

Germany is about 80x more capitalist than the US right now. Especially when it comes to energy markets and energy companies.

Yes, their government set the regulatory framework to scale renewables globally, but the extent of their govt effort was the equivalent of one sheet of paper.

I have to image the government intervention ideas you have in your head are far more along the lines of government managing the actual execution of the transition. That would go.....poorly.

Renewables plus storage are the most robust, cheapest, and easiest sources of energy to scale. That's why the global marketplace is adding wind/solar/storage almost exclusively when the option is available.

We need to focus on making sure our markets function with less corruption and that's it. Watch what Germany does over the next 6-8 years. Wouldn't surprise me at all if they've mostly completed their 2035 plan by 2030. That's precisely how the first phase went.

Germany is run as a "social democracy" so it has a lot more rules and regulations which take into account social costs/benefit. (Witness all of the regulations which held up the Berlin Gigafactory by six months) The US has barely restrained capitalism where greed is allowed to overrule any social damage/benefit. Unrestrained capitalism is a cancer on society.

I don't think I would want the government to manage the actual execution of wind/solar/batteries so you imagined wrong. (My head is a complex place so you shouldn't try to make up stuff about what I think.)

 

[TheTalkingMule]

Really really low $/bbl prices - I think we'll need another war as an antidote for that.

Back when we used to talk about oil in this thread, I used to rant to @jhm about how incentivized our society will be to create WWIII. Purely to extend the relevance of oil an extra decade. It was around 2017/18 when oil demand was peaking in the US.

I was dead sure the Saudis we're gonna run out of money and lose power by 2020, and/or we'd all slip into a Cold/Hot WWIII reality for a few years.

Turns out the transition to sustainable abundance is already in full swing and having it's impact on society. Putin invades, and rather than WWIII, the entire world turns it's back on Russia. Even China to some degree. Wild times.

Here we are a couple weeks later waiting for Putin to back down or be exited in some fashion, having galvanized the world around getting along without Russia's oil exports. Well guess what? Come summertime all that delicious Russian oil will still be in the marketplace, flowing just as if this never happened.

And global demand will have peaked 3 years ago.

And Iran will be exporting.

And US frackers, now run by the ruthlessly efficient oil majors, can drill and pump profitably beyond our pre-covid max rate.

That is an absolute mess. Especially if you understand we were already in a global perma-glut before any of this even started.

 

[Doggydogworld]

There is no real crude oil shortage and demand has not recovered from the pandemic. Nor is it likely to.

January US consumption was 20.62 million bpd. That's the highest January I could find going back 15 years. People here have been talking about demand peaking. But so far only Covid has interrupted the steady demand growth.

About five years ago I predicted a 2027 global demand peak. I said only millions of Robotaxis displacing personal cars could accelerate that. Turns out I was too optimistic.

 

[Spacemanspliff]

We can build out wind, solar and storage to cover all of our energy needs in less than ten years and it will give us much lower energy cost than nuclear, coal, NG, fossils without the environmentally destructive pollution.
Of course, this would require a large mobilization of investment and the incumbent fossils will oppose it with all of their economic and political power.

A few references:

Study: wind and solar can power most of the United States | John Abraham

John Abraham: Wind, solar, and storage could meet 90–100% of America’s electricity needs

www.theguardian.com

Geophysical constraints on the reliability of solar and wind power in the United States

We analyze 36 years of global, hourly weather data (1980–2015) to quantify the covariability of solar and wind resources as a function of time and location, over multi-decadal time scales and up to continental length scales. Assuming minimal excess generation, lossless transmission, and no other...

pubs.rsc.org

You’ve requested a page that no longer exists | Stanford News

news.stanford.edu

I'm not sure how to tell you we can't unless you want to get all your solar panels from China. We have 3 polysilicon producers in the US and one is currently shut down, between the other two we produce 56,000 tons annually and it takes approximately 5,000 tons to create one 1 GW of solar capacity. so thats about 11 gw in US production. It took WACKER 5 years in 2016 to build their Tennessee polysilicon production facility.

Nuclear should be apart of the future going forward, no matter of when it comes online.

 

[Spacemanspliff]

Renewables plus storage are the most robust, cheapest, and easiest sources of energy to scale. That's why the global marketplace is adding wind/solar/storage almost exclusively when the option is available.

As we watch polysilicons price only triple because... Chinas access to cheap coal has gotten more expensive.

 

[TheTalkingMule]

January US consumption was 20.62 million bpd. That's the highest January I could find going back 15 years. People here have been talking about demand peaking. But so far only Covid has interrupted the steady demand growth.

About five years ago I predicted a 2027 global demand peak. I said only millions of Robotaxis displacing personal cars could accelerate that. Turns out I was too optimistic.

The calendar year peak for US oil demand was 2018 and there's no chance we revisit that level ever. Maaaaaybe WWIII, but it would need to be a legit WW.

 

[TheTalkingMule]

As we watch polysilicons price only triple because... Chinas access to cheap coal has gotten more expensive.

A) this is the oil thread

B) We have First Solar right here in the US that could scale thin film panel production to any rate the market would like AND use far less water/energy per Watt. Materials are not an issue.

 

[mspohr]

I'm not sure how to tell you we can't unless you want to get all your solar panels from China. We have 3 polysilicon producers in the US and one is currently shut down, between the other two we produce 56,000 tons annually and it takes approximately 5,000 tons to create one 1 GW of solar capacity. so thats about 11 gw in US production. It took WACKER 5 years in 2016 to build their Tennessee polysilicon production facility.

Nuclear should be apart of the future going forward, no matter of when it comes online.

Are we going to stop buying solar from China?
Are we going to stop building US solar capacity?
Much better to invest in solar, wind, batteries than nuclear. Cheaper power, online faster.

 

[mspohr]

CA focuses on zero-emission cars as gas prices spike

The Golden State got the green light Wednesday to proceed with its nation-leading clean car program after the U.S. Environmental Protection Agency reinstated a waiver reaffirming its decades-old authority to set emission limits stricter than the federal government’s — setting the stage for California to develop auto emission rules to meet Gov. Gavin Newsom’s goal of eliminating new gas-powered cars by 2035. The move wasn’t a surprise — President Joe Biden had long hinted at plans to reverse the Trump administration’s decision to block California from setting its own tailpipe pollution standards for cars and light trucks.

 

[bruce4000]

UAE was reported yesterday to now favor OPEC pumping more oil. I think they realize that too high oil price will cause worldwide recession which as has happened before and ends up with low oil prices. Better to keep addicts supplied so they don’t kick the habit.

 

[TheTalkingMule]

UAE was reported yesterday to now favor OPEC pumping more oil. I think they realize that too high oil price will cause worldwide recession which as has happened before and ends up with low oil prices. Better to keep addicts supplied so they don’t kick the habit.

They're probably happy around $100 and would like to keep it there as long as possible. The moment Russia signs a peace accord of any kind.....6Mb/d reappears on the market.

I wonder if we should start something like the "Wheel" thread for oil? Volatility is going to be insane AND we know it's eventually going to near zero.

I guess we shoulda started in Tuesday by selling Dec 2024 barrels at $120. We'd already be up 10%!

 

[jhm]

Oil prices above $110 are definitely in economic demand destruction territory. Even oil at $80 is enough to snuff out oil demand growth.

UAE is welcome to step up production. Saudi Arabia contends with Russia for Most Evil Oil Producer status. So I'm not to thrilled with Biden trying to get the Saudis to step up production. If we cared about dying children in Yemen as much as in Ukraine, we would banning imports from Saudi Arabia already.

How does the west kick the oil addiction? One petro-thug at a time.

 

[ggies07]

Nice article...backs up what's continually discussed in here.

Have some renewable energy? An investor would like to speak with you.

After stagnating for more than a decade, demand for renewable energy investments is now surging, leading to questions about how long the current pace can continue.

www.utilitydive.com

 

[mspohr]

‘Defining moment’: how can the US end its dependency on fossil fuels?

Democrats hope climate measures in Build Back Better will be resurrected amid Russia’s invasion of Ukraine – but green groups want Biden to go even further

www.theguardian.com

Environmental groups and progressive Democrats are aiming to build upon the backlash to Russia’s invasion of Ukraine by ending the era of fossil fuel dependency and help address the unfolding climate crisis. “This moment is a clarion call for the urgent need to transition to domestic clean energy so that we are never again complicit in fossil-fueled conflict,” said Ed Markey, the Democratic senator who helped devise the Green New Deal platform. The climate measures in Biden’s moribund Build Back Better legislation may now be resurrected, Democrats hope, with several of the party’s senators unveiling a flurry of bills to ensure renewable energy replaces the banned Russian oil imports and to tax oil companies enjoying a financial bonanza from oil prices that have soared due to the crisis in Ukraine.

 

[engine ear]

'The cheapest way to ship green hydrogen is via e-methane — we will help wean Germany off Russian gas'

Ambitious project to import five million tonnes of H2 a year as synthetic green CH4 — and convert it back to hydrogen — is accelerated in response to Ukraine cr

www.rechargenews.com

Interesting idea and nonintuitive. The concept is the best way to ship hydrogen it to convert it to methane at the source, and then at the destination convert methane back to hydrogen, and capture the co2. The co2 gets shipped back, maybe on the same ship, and is used at the source to convert more hydrogen to methane. So the carbon is a closed loop system.

At first glance I wondered why not just use methane at the destination which already has an established market, but I realized it is much easier to capture co2 at a central facility and then distribute hydrogen than it is to capture co2 at all the points of use. And if you don't capture the co2 then it is no longer economic to do the hydrogen to methane conversion.

Not entirely sure you can do all these conversions economically, but interesting concept to ship green power.

 

[engine ear]

Maersk secures green fuel supply for 12 methanol-powered boxships

Maersk has signed several separate deals to secure green fuel supply for its fleet of twelve new methanol-powered vessels.

www.offshore-energy.biz

Container shipping giant Maersk is planning to use green methanol to power ships.

"The Power-to-X project with Maersk will expectedly be powered by approx. 1.2 GW of new onshore wind and solar PV". They mention US Gulf Coast. I wonder if it is related to the project that wants to produce methane rocket fuel for SpaceX in Texas.

 

[mspohr]

World leaders are afraid to ban Russia’s oil. Ukraine’s only hope is ordinary people | Oleg Ustenko

Russian oil is funding the invasion of Ukraine and the murder of innocent people, just as money from the sale of blood diamonds fuelled brutal civil war in Africa. We must cut off this funding at source. This trade can and must be stopped through pressure brought by you, the consumer, on companies and governments. Vladimir Putin sells 5m barrels of crude oil per day, a large share of which goes to Europe. Today, as EU leaders gather to discuss the crisis, we call on people everywhere to boycott Russian oil now.

Let’s make it easy for them. We are organising a coalition to track the tankers that transport Russian oil and tell you where they are. The Russians will try to hide this information, but we will tell you where the ships are. Last week, Shell bought a shipment of Russian oil, reportedly because it was available at a discount of just under $30 per barrel. The public backlash was immediate, and on 8 March, Shell pledged to no longer buy Russian oil. We need all oil companies to do the same.

 

[mspohr]

 

[mspohr]

The U.S. Government Doesn’t Control Domestic Oil Production. But It Should.

The oil and gas industry won't increase production because it's enjoying the profits from high prices.

theintercept.com

There are two important things to remember about how oil and gas production work: The government doesn’t place any production limits on oil and gas companies, and there’s no such thing as an immediate production increase.

But then we get to the real reasons oil companies aren’t drilling: It’s not government intervention, it’s a combination of money, labor, and materials (shocking, I know).

But even if labor were not a concern and the government threw all its resources into solving the industry’s material shortage problem, oil and gas executives don’t want to increase production because the high prices are working for them financially at the moment. They’ve said so explicitly, out loud and in public.

Which brings us to the elephant in the room: the United States’s supposed energy independence. As a net exporter of oil and gas, that’s what the country was promised by industry. But you can’t have independence if you are ruled entirely by global commodity markets. The other big oil-exporting countries are able to use their production capabilities to protect themselves from sudden price changes because their fossil fuel industries are nationalized.

But an export ban is not a terrible long-term plan. And since the industry is accusing the government of meddling with production anyway, why not call its bluff and start a real conversation about nationalizing the industry and marching it toward a transition to renewable energy? What we’re seeing now is an entirely unmanaged transition, unfolding in real time. It’s painful, and the future is completely unclear, but none of that has to be true.