Let's try to link the recent events back to the situation with oil production and pricing

[Jan van Eck + 7,558]

The astonishing developments around the world resulting from the release from China of that nasty virus, and the resulting economic collapses, also has a key in the way Oil was handled.  

Let's step back a moment:  the world oil markets were in full swing, lots of oil being produced, bought and sold, and heavy competition for market share and customers.  One result was the dramatic development of U.S. shale oil.  Another has been the development of Canadian heavy oils, known generically as "oil-sands."  While this has caused dislocations in the world oil markets, I find it difficult to grant credibility to the argument that this was somehow a big negative.   Consumers in particular benefit from lots of oil supplies.  Equally, the world petrochemical industry, plastics, benefits hugely from lower feedstock pricing, and expecially from low natural-gas feedstock pricing, from which natural gas so many polyolefins are fabricated. 

Along comes the Corona-virus and the world is turned up-side down.  It has been an unmitigated, total disaster.  Are the Mainland Chinese responsible?  But of course. OK, that said, the responses of various politicians has been inept.  The worst responses, pastr China itself and its ossified Communist Pary apparata, lies to Italy, where absolutely unreal stupid decisions were made, leading to mass infection and lots of deaths.  I suspect you could say the same about Iran, but that is a closed society so the extent of governmental bureaucratic stupidity is undisclosed. 

There are lots of contacts, specifically air travel, between Italy and the USA, and also Montreal, which has a large emigrant community.  And you have this air travel from China, which you have to assume brought the disease also into the USA and Canada.  Bingo, North America is infected.  Did the politicians screw it up?  Yup, they did.  I remain unconvinced that it was somehow a macabre intent to collapse Western civilization.  You do have to give some credence to incompetence.  

The collapse of the economic structure has led to the collapse of the US oil production industry, with lots of shut-downs ald lots of economic pain.  the reaction of various Governors in shutting down entire State economies made no sense at all, and in my view was incompetent, but hey, if you are in that job, and if in some city such as New York the people are dying at a thousand a day, with the grotesque sound of the corpses thudding into the refrigerated trailers, and photos of those mass burials in trenches, with the coffins double-stacked in the trench, then it gets to you, and so "lock-down" becomes entrenched.  The whole thing is one big mess.  

Now in such a shutdown, with millions out of work and money pressures building like no tomorrow, and ordinary people without the funds to pay their mortgages or car payments and looming mass defaults everywhere, with big outfits like Hertz Cal rental going bankrupt and hundreds of thousnad sof new cars headed for the auction block, and people struggling to find food, and the food banks running dry and the US Army now distributing army rations of "Meals Ready to Eat," the stage is set for s societal conflagration.  Could this have been foreseen by the leadership?  But of course.  Did the collective leadership fail in their duties?  But of course. 

One man is killed.  That in itself is not that remarkable:  lots of people are killed, some few by the Police, most by other ordinary people, in everything from domestic disputes to gang events to robberies.  This time, it explodes into mass societal violence.  How much of that violent reaction is due to the collapsed economy?  I would suggest:  quite a lot. 

So: would the West as a collective society, and I include Europe and Canada and Japan in that, be better off with its own independent energy, and specifically oil and gas energy?  I think so.  But there is no cohesive policy in place to substitute "world oil" by American and Canadian oil, and equally for natural gas.  This I blame on the inept politicians.  Look at Boston, a city that cannot get enough gas for heating fuel for winter, so it imports LNG.  But because of the Jones Act, something passed a century ago, no LNG tanker not built in the USA can bring gas from Louisiana to Boston, so the Boston supplies of LNG come from -- Russia!   Now, that is idiotic.  A reasonable federal government bureaucracy would simply issue a Waiver for that US gas to be tankered to Boston.  That, I submit, is rational.  But, the USA has an irrational bureaucracy, what others call the "Deep State," and it refuses to be respoinsive to the needs of the people. 

I think it is time to get off Donald Trump's case.  He has been dealt an impossible hand: nasty disease from China, difficult Governors to contend with, an unappreciative public  (which also demonstrably does not write Letters to those Governors), and a bureaucracy, or "Deep State," that is out to wreck his administration, although there is no evidence to suggest that some other Administration would be an improvement.  OK, so Mr. Trump is inarticulate and will say things that are easily mis-interpreted, and the press gleefully jumps on his case about every little insignificant thing.  He isnot perfect.  But he is certainly trying to get a handle on it all, so let's give the man a break. 

We have to get the US and Canadian oil industries back up and running.  There are guys on here that are far more expert on this than I could possibly be, so I leave it up to them to come up with ideas.  We are collectively the national experts.  Let's find those solutions and then it is Letter-Writing time to get them implemented.  I invite Forum members to submit their ideas. 

Edited June 5, 2020 by Jan van Eck
substitute "by" for "for" as substition for world oil

[Jay McKinsey + 1,490]

2 hours ago, Jan van Eck said:

would the West as a collective society, and I include Europe and Canada and Japan in that, be better off with its own independent energy,

You mean like renewable energy?  

Australia is about to become one of the richest countries on the planet as it turns into one giant solar panel and exports that energy to Asia.

US and Canada are going to have massive off shore wind production on their Atlantic coasts and the US has solar from the Permian Basin to the Central Valley.

Europe has equal off shore wind potential in the North and Norwegian seas and solar from the Sahara.

Japan can live off of Green Meth from Darwin.

and EV's eliminate the need for oil. 

Simple.

Edited June 6, 2020 by Jay McKinsey

[Jan van Eck + 7,558]

1 hour ago, Jay McKinsey said:

You mean like renewable energy?  

Well, I did state "specifically oil and gas energy."   The reason I say so is that other sources will take considerable time to scale up.  My personal preference is for thorium reactors, that seems to be benign and holds a lot of promise.  Another possibility is dried cow manure, there is lots and lots of that about.  I am working on a project to manufacture dried manure for the boiler fuel of power plants.  Is there a place for what you describe as "renewable energy," specifically wind machines and solar panels?  Sure there is.  How fast that can be scaled up, is quite another question. 

The engineering studies I have seen indicate that that is not plausible.   I appreciate that you hae a different viewpoint.  Today, I suggest that the most rapid path forward is to develop a "domestic" West Europe/North America/Japan independent energy concept. 

The destruction of the Western economies has disastrous results, including the rioting we have seen and endured.  Time to get on with it. 

[Douglas Buckland + 6,308]

3 hours ago, Jay McKinsey said:

You mean like renewable energy?  

Australia is about to become one of the richest countries on the planet as it turns into one giant solar panel and exports that energy to Asia.

US and Canada are going to have massive off shore wind production on their Atlantic coasts and the US has solar from the Permian Basin to the Central Valley.

Europe has equal off shore wind potential in the North and Norwegian seas and solar from the Sahara.

Japan can live off of Green Meth from Darwin.

and EV's eliminate the need for oil. 

Simple.

“EV's eliminate the need for oil.”

Really?

[Jay McKinsey + 1,490]

14 minutes ago, Douglas Buckland said:

“EV's eliminate the need for oil.”

Really?

All the oil needed for gasoline and much of the diesel. 80% of oil demand? 

[Douglas Buckland + 6,308]

1 hour ago, Jay McKinsey said:

All the oil needed for gasoline and much of the diesel. 80% of oil demand? 

Do EV’s utilize any oil based components? If so, by default, they would create a need for oil.

Nonetheless, I get where you are coming from, I just do not think that it is realistic in the near future.

[Enthalpic + 1,496]

5 hours ago, Jan van Eck said:

 Another possibility is dried cow manure, there is lots and lots of that about.  I am working on a project to manufacture dried manure for the boiler fuel of power plants. 

Not a bad idea, you can have multiple value streams: waste disposal, energy, and fertilizer. Charge people to haul away their shit, burn it for energy, sell the ashes / partially treated water for the fertilizer content.

Ideally you need it to handle industrial chicken farm, hog and cattle feedlot waste. Much of this "manure" is more like liquid sewage so would require dewatering before burning, but as aforementioned the water fraction may contain compounds of value.

[Eyes Wide Open + 3,555]

17 hours ago, Jan van Eck said:

The astonishing developments around the world resulting from the release from China of that nasty virus, and the resulting economic collapses, also has a key in the way Oil was handled.  

Let's step back a moment:  the world oil markets were in full swing, lots of oil being produced, bought and sold, and heavy competition for market share and customers.  One result was the dramatic development of U.S. shale oil.  Another has been the development of Canadian heavy oils, known generically as "oil-sands."  While this has caused dislocations in the world oil markets, I find it difficult to grant credibility to the argument that this was somehow a big negative.   Consumers in particular benefit from lots of oil supplies.  Equally, the world petrochemical industry, plastics, benefits hugely from lower feedstock pricing, and expecially from low natural-gas feedstock pricing, from which natural gas so many polyolefins are fabricated. 

Along comes the Corona-virus and the world is turned up-side down.  It has been an unmitigated, total disaster.  Are the Mainland Chinese responsible?  But of course. OK, that said, the responses of various politicians has been inept.  The worst responses, pastr China itself and its ossified Communist Pary apparata, lies to Italy, where absolutely unreal stupid decisions were made, leading to mass infection and lots of deaths.  I suspect you could say the same about Iran, but that is a closed society so the extent of governmental bureaucratic stupidity is undisclosed. 

There are lots of contacts, specifically air travel, between Italy and the USA, and also Montreal, which has a large emigrant community.  And you have this air travel from China, which you have to assume brought the disease also into the USA and Canada.  Bingo, North America is infected.  Did the politicians screw it up?  Yup, they did.  I remain unconvinced that it was somehow a macabre intent to collapse Western civilization.  You do have to give some credence to incompetence.  

The collapse of the economic structure has led to the collapse of the US oil production industry, with lots of shut-downs ald lots of economic pain.  the reaction of various Governors in shutting down entire State economies made no sense at all, and in my view was incompetent, but hey, if you are in that job, and if in some city such as New York the people are dying at a thousand a day, with the grotesque sound of the corpses thudding into the refrigerated trailers, and photos of those mass burials in trenches, with the coffins double-stacked in the trench, then it gets to you, and so "lock-down" becomes entrenched.  The whole thing is one big mess.  

Now in such a shutdown, with millions out of work and money pressures building like no tomorrow, and ordinary people without the funds to pay their mortgages or car payments and looming mass defaults everywhere, with big outfits like Hertz Cal rental going bankrupt and hundreds of thousnad sof new cars headed for the auction block, and people struggling to find food, and the food banks running dry and the US Army now distributing army rations of "Meals Ready to Eat," the stage is set for s societal conflagration.  Could this have been foreseen by the leadership?  But of course.  Did the collective leadership fail in their duties?  But of course. 

One man is killed.  That in itself is not that remarkable:  lots of people are killed, some few by the Police, most by other ordinary people, in everything from domestic disputes to gang events to robberies.  This time, it explodes into mass societal violence.  How much of that violent reaction is due to the collapsed economy?  I would suggest:  quite a lot. 

So: would the West as a collective society, and I include Europe and Canada and Japan in that, be better off with its own independent energy, and specifically oil and gas energy?  I think so.  But there is no cohesive policy in place to substitute "world oil" by American and Canadian oil, and equally for natural gas.  This I blame on the inept politicians.  Look at Boston, a city that cannot get enough gas for heating fuel for winter, so it imports LNG.  But because of the Jones Act, something passed a century ago, no LNG tanker not built in the USA can bring gas from Louisiana to Boston, so the Boston supplies of LNG come from -- Russia!   Now, that is idiotic.  A reasonable federal government bureaucracy would simply issue a Waiver for that US gas to be tankered to Boston.  That, I submit, is rational.  But, the USA has an irrational bureaucracy, what others call the "Deep State," and it refuses to be respoinsive to the needs of the people. 

I think it is time to get off Donald Trump's case.  He has been dealt an impossible hand: nasty disease from China, difficult Governors to contend with, an unappreciative public  (which also demonstrably does not write Letters to those Governors), and a bureaucracy, or "Deep State," that is out to wreck his administration, although there is no evidence to suggest that some other Administration would be an improvement.  OK, so Mr. Trump is inarticulate and will say things that are easily mis-interpreted, and the press gleefully jumps on his case about every little insignificant thing.  He isnot perfect.  But he is certainly trying to get a handle on it all, so let's give the man a break. 

We have to get the US and Canadian oil industries back up and running.  There are guys on here that are far more expert on this than I could possibly be, so I leave it up to them to come up with ideas.  We are collectively the national experts.  Let's find those solutions and then it is Letter-Writing time to get them implemented.  I invite Forum members to submit their ideas. 

You once posted on the fine art of being straight to the point..The fine art of being blunt.

Breaking up two corporate eddities would bring most of this charade down.

Att...world's largest media conglomerate.

Amazon world's largest retailer along with ownership of perhaps the most vocal left leaning media outlet.

Behind-the-scenes has anyone noticed it is not the politicians making news it is the news media itself. After the totally botched Muller Investigation and the impeachment game the politicians have disappeared. Since then it has been a one sided conversation of hate with no critical dialogue of any sort.

Pelosi is makes small gestures of handing out money and Schiff is claiming sovereign immunity.

This world is full of people and people do not have a singular opinion on any subject. Yet the press by itself does a one singular opinion and in a world of reporters all struggling to set themselves apart from the pack. The message is fear/hate or you will not survive.

Amazon...if that company was cut up within 6 month's ...American retail on main street would have a resurgence never seen in this country...I do believe Amazon now owns 45% of the retail market....that number defies imagination.

And to the heart of the matter..The US auto industry...it was the first victim of Obama's world social order. 

Do those three things and we have a whole new game in the world a whole new order.

And of course the above is strictly a opinion your mileage may vary.

 

[0R0 + 6,251]

On 6/6/2020 at 12:44 PM, Eyes Wide Open said:

And to the heart of the matter..The US auto industry...it was the first victim of Obama's world social order. 

You are correct in criticizing Obama, but he is not any different from other socialist "progressives" in not caring about the outcomes of policy, but only the "virtue signals" it creates in the self appointed "elite" crowd as it measures against their dogma. He was hardly   alone in a string of Democrat presidents and congresses to betray the union workers who always had a big hand in putting them in office. Just like the black and latino populations, the Dems expect them to automatically vote for them. So they need not be considered.

 

On 6/6/2020 at 12:44 PM, Eyes Wide Open said:

Amazon...if that company was cut up within 6 month's ...American retail on main street would have a resurgence never seen in this country...I do believe Amazon now owns 45% of the retail market....that number defies imagination.

They are nowhere near that share of total retail sales, but in online retail alone, general retail sales were $1.07 Trillion non food non auto non gas in Q1, but Amazon's revenue was $71 billion in retail sales.. That is about 1/3 of non-store retail. So they are 7% of the market. Granted they are not in some markets at all, so doubtless their sales account for a higher portion of those markets than that. But Walmart was the one to drain Main street of its retail ops. Best Buy Target and other stores (Williams Sonoma e.g.) have seen a double to tripling of online orders during the pandemic. Amazon was up 8%..

On 6/6/2020 at 12:44 PM, Eyes Wide Open said:

Do those three things and we have a whole new game in the world a whole new order.

Part of the point here is that CV19 marks the end of the world order. It was heading to a brick wall due to demographic factors that were about to kick in in the next two years and really break off trend to the downside very hard by 2025. Instead, they are breaking now. The bottom line is that a world with only NAFTA, France Turkey and Argentina are industrialized countries with a consumer demographic, while Germany, Japan, China, Korea, Taiwan, E. Europe, S. Europe Russia Thailand Malaysia and others are heavily moving into later middle age and mass retirement means that they are all competing for a really small pie that will continue shrinking as they stop being effective markets for each other's exports. They can't all export their way into the future when the demand market to import it all are shrinking most places and only growing for a quarter of it. At least 1/3 of export production needs to disappear in order to balance the market. Otherwise, industrial exports are a loss making business globally,.not capable of earning its cost of goods sold, commodity inputs, paying workers nor earning a profit on the capital invested, not to speak of remaining financially viable or solvent. . 

Closing off China would solve the problem for the rest of the world.

Regionalizing supply chains as all businesses are proclaiming that they are doing now,  would pretty much duplicate China's sole source production capacity and would result in China being effectively cut off just the same, as it enjoys few, if any advantages in costs except for the capital put in place (at a loss).

China also has a large problem keeping itself together economically as one country. In this map from Peter Zeihan's prior book, The Accidental Superpower, he points out the economic roles and standing of China's various provinces. Essentially, all of China but for Guangdong (and HK and Macao) invest more than they consume and earn from exports. Shanghai and Beijing are balanced with investment just a bit larger than consumption and exports, which are similar in scale to consumption. Guangdong is the export income producer for China and the source of the excess that can be invested into the rest of the country (mostly in the form of useless duplication of existing infrastructure). Beijing and Shanghai are self sustaining and export enough to cover mos of their consumption. Jiangsu and Zhejiang on the coast are also near self sufficient. But the rest of China lives off the excess of the coastal cities and is a burden on them. So long as the population saving for retirement (45-60) is bigger than that which is retired (55 and 60 and older) then the flows being dispersed into the hinterlands for malinvestment will not be noticed because nobody is cashing it out. But in 2025, the cash out starts as more people are retired as are saving for retirement. Then the investments in the vast majority of China have to stop and the leading provinces, mainly Shanghai and Guangdong, will find the rest of China to be  a huge burden.

That is a point we may have just reached already anyway with CV19.

The centrifugal forces to break up China are already at play. The productive provinces are being damaged by Beijing's policy moves that are threatening their ability to export, while the "Work from Home" movement is threatening their real estate based finances and that same infrastructure they paid for so dearly for decades, now makes the annihilation of real estate values due to migration out of the city cores to the provincial periphery's tier 2 cheap cities. That is a move from >40X income apartments to 10X income apartments. I am not seeing how this can be overcome, as state and central government revenue come predominantly from the sale of land for real estate development. So a breakdown in demand for Tier 1 cities means both no state+provincial revenue, and no banking system without massive recapitalizaiton.

The end of China's economy is thus pulled forward to now...

[0R0 + 6,251]

On 6/6/2020 at 12:54 AM, Jay McKinsey said:

All the oil needed for gasoline and much of the diesel. 80% of oil demand? 

No. EVs require more oil in their production because of the extensive use of plastics and repeated heat forming and advanced polymers that have multiple production steps. The Tesla cars don't breakeven in carbon footprint relative to ICE cars till they hit 100k miles. The others are worse.

So when your old jalopy Tesla EV is at breakeven you might actually see enough of them on the road to reduce oil consumption by 20%.

[Dan Clemmensen + 1,011]

3 minutes ago, 0R0 said:

No. EVs require more oil in their production because of the extensive use of plastics and repeated heat forming and advanced polymers that have multiple production steps. The Tesla cars don't breakeven in carbon footprint relative to ICE cars till they hit 100k miles. The others are worse.

So when your old jalopy Tesla EV is at breakeven you might actually see enough of them on the road to reduce oil consumption by 20%.

I have not seen an actual technical analysis of this for a long time. If you can point me to one I would appreciate it. To a crude first approximation, the vehicle price is a proxy for the "carbon cost" cost of a new vehicle. All the money you pay goes round and round (salaries, etc.) and each dollar ultimately gets spent by someone on fossil carbon.  An expensive ICE will have a higher initial carbon cost than a cheap EV and vice versa. Price paid also works for maintenance.

Fuel costs, not so much, because currently the ICE pays road taxes as part of the gasoline cost and the EV carbon running cost is heavily dependent on where the electricity comes from. Therefore, running costs are better evaluated based on actual carbon use rather than price paid for fuel.

[0R0 + 6,251]

14 minutes ago, Dan Clemmensen said:

I have not seen an actual technical analysis of this for a long time. If you can point me to one I would appreciate it. To a crude first approximation, the vehicle price is a proxy for the "carbon cost" cost of a new vehicle. All the money you pay goes round and round (salaries, etc.) and each dollar ultimately gets spent by someone on fossil carbon.  An expensive ICE will have a higher initial carbon cost than a cheap EV and vice versa. Price paid also works for maintenance.

Fuel costs, not so much, because currently the ICE pays road taxes as part of the gasoline cost and the EV carbon running cost is heavily dependent on where the electricity comes from. Therefore, running costs are better evaluated based on actual carbon use rather than price paid for fuel.

The most recent accounting I saw was from a reference on one of the forum threads maybe 2 months ago or perhaps longer.

Edited June 7, 2020 by 0R0

[Jay McKinsey + 1,490]

56 minutes ago, 0R0 said:

No. EVs require more oil in their production because of the extensive use of plastics and repeated heat forming and advanced polymers that have multiple production steps. The Tesla cars don't breakeven in carbon footprint relative to ICE cars till they hit 100k miles. The others are worse.

So when your old jalopy Tesla EV is at breakeven you might actually see enough of them on the road to reduce oil consumption by 20%.

The carbon footprint is from the mining and processing of components and it is always assumed that all of that energy will be fossil. But in reality the energy for the supply chain will become greener and greener. 

Gasoline and Diesel demand will head to zero and we are only going to see a marginal rise in petrochemical production because oil producers will be struggling to find a market for their product and some of that growth will be due to plastics in EVs. 

 

[0R0 + 6,251]

Just now, Jay McKinsey said:

The carbon footprint is from the mining and processing of components and it is always assumed that all of that energy will be fossil. But in reality the energy for the supply chain will become greener and greener. 

Gasoline and Diesel demand will head to zero and we are only going to see a marginal rise in petrochemical production because oil producers will be struggling to find a market for their product and some of that growth will be due to plastics in EVs. 

 

Even if you take out the diesel from the miners, which is what they are doing, the breakeven will still be far from the purchase. I am aware of the miner's conversion to CNG and all downhole equipment to electric. They are also trying to go PV electric for the rest of their fleet, but the solutions  so far look rather limited and cumbersome, and require far more coordination than I have seen miners employ successfully. But yes, Diesel is the evil cost that just won't go away and they want off of it ASAP. They are lucky to get 1/2 the shipments sent towards them, they get stolen on the way.

But that is not the majority of the oil related input into an EV. The materials shipping is part of it. So I can give you a grudging 30% reduction in oil consumption by autos from EVs at some far away point in the far future, But that is not really a major deal. It is the demographically driven contraction of demand from China and Europe and the Asian Tigers as their boomers retire, leaving behind a much smaller Millennial generation to take over. (US Millennials 1980 -2000, are a larger group than boomers). That is 1/3 less oil consumption from that alone by 2030, add in NG consumption displacing bunker fuel and NGLs displacing naphtha for polymers. So expect 40-44% less oil demand by 2030 as your baseline. 

Note that the Demographics of the developed and newly industrialized world are transitioning to being worse than they were during the great depression, as there is no large "GI" generation youngsters for them. Demand is collapsing outside of NAFTA. It is terminal. If the unlikely decision by India, Philippines and Indonesia to industrialize more aggressively - no sing of that on the horizon.   

[Eyes Wide Open + 3,555]

55 minutes ago, Jay McKinsey said:

The carbon footprint is from the mining and processing of components and it is always assumed that all of that energy will be fossil. But in reality the energy for the supply chain will become greener and greener. 

Gasoline and Diesel demand will head to zero and we are only going to see a marginal rise in petrochemical production because oil producers will be struggling to find a market for their product and some of that growth will be due to plastics in EVs. 

 

wrong thread ...to many threads...

Edited June 8, 2020 by Eyes Wide Open

[Eyes Wide Open + 3,555]

2 hours ago, 0R0 said:

You are correct in criticizing Obama, but he is not any different from other socialist "progressives" in not caring about the outcomes of policy, but only the "virtue signals" it creates in the self appointed "elite" crowd as it measures against their dogma. He was hardly   alone in a string of Democrat presidents and congresses to betray the union workers who always had a big hand in putting them in office. Just like the black and latino populations, the Dems expect them to automatically vote for them. So they need not be considered.

 

They are nowhere near that share of total retail sales, but in online retail alone, general retail sales were $1.07 Trillion non food non auto non gas in Q1, but Amazon's revenue was $71 billion in retail sales.. That is about 1/3 of non-store retail. So they are 7% of the market. Granted they are not in some markets at all, so doubtless their sales account for a higher portion of those markets than that. But Walmart was the one to drain Main street of its retail ops. Best Buy Target and other stores (Williams Sonoma e.g.) have seen a double to tripling of online orders during the pandemic. Amazon was up 8%..

Part of the point here is that CV19 marks the end of the world order. It was heading to a brick wall due to demographic factors that were about to kick in in the next two years and really break off trend to the downside very hard by 2025. Instead, they are breaking now. The bottom line is that a world with only NAFTA, France Turkey and Argentina are industrialized countries with a consumer demographic, while Germany, Japan, China, Korea, Taiwan, E. Europe, S. Europe Russia Thailand Malaysia and others are heavily moving into later middle age and mass retirement means that they are all competing for a really small pie that will continue shrinking as they stop being effective markets for each other's exports. They can't all export their way into the future when the demand market to import it all are shrinking most places and only growing for a quarter of it. At least 1/3 of export production needs to disappear in order to balance the market. Otherwise, industrial exports are a loss making business globally,.not capable of earning its cost of goods sold, commodity inputs, paying workers nor earning a profit on the capital invested, not to speak of remaining financially viable or solvent. . 

Closing off China would solve the problem for the rest of the world.

Regionalizing supply chains as all businesses are proclaiming that they are doing now,  would pretty much duplicate China's sole source production capacity and would result in China being effectively cut off just the same, as it enjoys few, if any advantages in costs except for the capital put in place (at a loss).

China also has a large problem keeping itself together economically as one country. In this map from Peter Zeihan's prior book, The Accidental Superpower, he points out the economic roles and standing of China's various provinces. Essentially, all of China but for Guangdong (and HK and Macao) invest more than they consume and earn from exports. Shanghai and Beijing are balanced with investment just a bit larger than consumption and exports, which are similar in scale to consumption. Guangdong is the export income producer for China and the source of the excess that can be invested into the rest of the country (mostly in the form of useless duplication of existing infrastructure). Beijing and Shanghai are self sustaining and export enough to cover mos of their consumption. Jiangsu and Zhejiang on the coast are also near self sufficient. But the rest of China lives off the excess of the coastal cities and is a burden on them. So long as the population saving for retirement (45-60) is bigger than that which is retired (55 and 60 and older) then the flows being dispersed into the hinterlands for malinvestment will not be noticed because nobody is cashing it out. But in 2025, the cash out starts as more people are retired as are saving for retirement. Then the investments in the vast majority of China have to stop and the leading provinces, mainly Shanghai and Guangdong, will find the rest of China to be  a huge burden.

That is a point we may have just reached already anyway with CV19.

The centrifugal forces to break up China are already at play. The productive provinces are being damaged by Beijing's policy moves that are threatening their ability to export, while the "Work from Home" movement is threatening their real estate based finances and that same infrastructure they paid for so dearly for decades, now makes the annihilation of real estate values due to migration out of the city cores to the provincial periphery's tier 2 cheap cities. That is a move from >40X income apartments to 10X income apartments. I am not seeing how this can be overcome, as state and central government revenue come predominantly from the sale of land for real estate development. So a breakdown in demand for Tier 1 cities means both no state+provincial revenue, and no banking system without massive recapitalizaiton.

The end of China's economy is thus pulled forward to now...

Yes you are correct...amazon total market share is by far less..It is e-con they dominate 

https://www.statista.com/statistics/788109/amazon-retail-market-share-usa/

 

[Dan Clemmensen + 1,011]

52 minutes ago, Jay McKinsey said:

The carbon footprint is from the mining and processing of components and it is always assumed that all of that energy will be fossil. But in reality the energy for the supply chain will become greener and greener. 

Gasoline and Diesel demand will head to zero and we are only going to see a marginal rise in petrochemical production because oil producers will be struggling to find a market for their product and some of that growth will be due to plastics in EVs. 

 

Well, maybe. A whole lot of plastics use ethane as a feedstock, and you can make ethane from CH4. This is touted as "carbon-negative" if the CH4 is  E==>CH4. Realistically, plastics don't sequester carbon for long enough, but at least it's carbon-neutral.

[Jay McKinsey + 1,490]

51 minutes ago, 0R0 said:

Even if you take out the diesel from the miners, which is what they are doing, the breakeven will still be far from the purchase. I am aware of the miner's conversion to CNG and all downhole equipment to electric. They are also trying to go PV electric for the rest of their fleet, but the solutions  so far look rather limited and cumbersome, and require far more coordination than I have seen miners employ successfully. But yes, Diesel is the evil cost that just won't go away and they want off of it ASAP. They are lucky to get 1/2 the shipments sent towards them, they get stolen on the way.

But that is not the majority of the oil related input into an EV. The materials shipping is part of it. So I can give you a grudging 30% reduction in oil consumption by autos from EVs at some far away point in the far future, But that is not really a major deal. It is the demographically driven contraction of demand from China and Europe and the Asian Tigers as their boomers retire, leaving behind a much smaller Millennial generation to take over. (US Millennials 1980 -2000, are a larger group than boomers). That is 1/3 less oil consumption from that alone by 2030, add in NG consumption displacing bunker fuel and NGLs displacing naphtha for polymers. So expect 40-44% less oil demand by 2030 as your baseline. 

Note that the Demographics of the developed and newly industrialized world are transitioning to being worse than they were during the great depression, as there is no large "GI" generation youngsters for them. Demand is collapsing outside of NAFTA. It is terminal. If the unlikely decision by India, Philippines and Indonesia to industrialize more aggressively - no sing of that on the horizon.   

One thing we agree on then is that the world has passed peak oil.

[0R0 + 6,251]

1 minute ago, Jay McKinsey said:

One thing we agree on then is that the world has passed peak oil.

There is the new oil consumption boom to

1. Work from Home far from the city in suburbia exurbia and small towns. A huge construction and infrastructure boom at least in the US. Less so in Europe and China.

2. Regionalization of supply chains, will take duplication of about $3 Trillion of capital investment to reproduce Chinese sole sourcing for both Europe and the Americas.

There are some 6 mob/d for at least 5 years to add on to whatever we recover to - and then we drift from 2025 into deep collapse of demand from Europe, the Tiger economies and China (2025 should have been the turnover point but may hae already happened - actually looks more and more like it as the economy there is not quite reviving on the demand side and unemployment remains high.