.

[BLA + 1,666]

On 10/5/2020 at 4:18 PM, Dan Clemmensen said:

For these core competencies, the most obvious synergy is for geothermal, not wind or solar.

I notice that you did not list retail fuel distributions and sales. I thought that was an important part of what they do?

Actually, the majors sold their retail businesses in the 2000's after Congress started looking into anti-trust violations of the oil majors.  They held a few Congressional hearings.  Oil figured they would sell the stations to get Congress off their back.  They kept the vertical integration of the upstream and downstream business.  The was the real monopolistic concern.

The Multinationals never paid much in corporate income taxes by using "transfer pricing".  They even sold the U.S. product at a loss to the offshore intermediary.  Congress had to pass legislation to stop that.  They could still sell at cost, almost as good.

The deal is they sold Stations/retail to regional operators (one buyer) .  Selling them hundreds of locations in a package deal.  They usually cut deals giving the purchaser the right to use their name (Example: Mobile , Exxon , etc) for marketing in exchange for long-term purchase contracts .

When you stop at that Mobile convenience  store to fill your tank and buy a gallon of milk , Exxon/Mobile does not own that operation. 

Edited October 8, 2020 by BLA

[Gerry Maddoux + 3,627]

1 hour ago, BLA said:

6 hours ago, Dan Clemmensen said:

What are the core competencies of an oil major?

 

Geology , Drilling, Petro Refining , Petrochemicals and Politics

You left one out: drinking good whiskey.

[Dan Warnick + 6,100]

3 hours ago, Gerry Maddoux said:

You left one out: drinking good whiskey.

I assume it's good whiskey during the good times; cheap whiskey during the bad?  They must be drinking rot-gut right now!

[Dan Clemmensen + 1,011]

11 minutes ago, Dan Warnick said:

I assume it's good whiskey during the good times; cheap whiskey during the bad?  They must be drinking rot-gut right now!

Refineries are required to mix ethanol with the gasoline. I don't care WHAT they say about "denaturing" it to make it poisonous, When you have a refinery full of highly qualified and experienced chemical engineers, there should be sufficient "vodka" for everybody. 😀

[Ward Smith + 6,615]

2 hours ago, Dan Clemmensen said:

Refineries are required to mix ethanol with the gasoline. I don't care WHAT they say about "denaturing" it to make it poisonous, When you have a refinery full of highly qualified and experienced chemical engineers, there should be sufficient "vodka" for everybody. 😀

I'd rather buy the good stuff than take a chance at removing the poison. It's pretty much all glommed together once they add the ethyl acetate or wood alcohol. Even moonshiners know to throw out the first quart or so from the still, that sht will make you blind and sick. Once it's mixed in the hooch, you can't get it back out. Or so I'm told by amateur moonshiners.  😎

[Wombat + 1,028]

9 hours ago, Dan Clemmensen said:

For these core competencies, the most obvious synergy is for geothermal, not wind or solar.

I notice that you did not list retail fuel distributions and sales. I thought that was an important part of what they do?

Nup. Anyone can do that. Here in Australia, the two largest grocery chains own half the petrol stations.

[Dan Warnick + 6,100]

10 hours ago, Ward Smith said:

I'd rather buy the good stuff than take a chance at removing the poison. It's pretty much all glommed together once they add the ethyl acetate or wood alcohol. Even moonshiners know to throw out the first quart or so from the still, that sht will make you blind and sick. Once it's mixed in the hooch, you can't get it back out. Or so I'm told by amateur moonshiners.  😎

Edited October 6, 2020 by Dan Warnick
Silly sarcastic comment. Deleted and left a Happy Face instead.

[KeyboardWarrior + 527]

On 10/5/2020 at 1:20 AM, 0R0 said:

No, their efficiency is advancing with the rest of solar panel tech. The materials need to be very specific to obtain the right conditions for the reactions, so they may lag in efficiency gains. It is a synthetic photosynthesis. So the economics are different. The main point is that the US does not need to drop any of its NG and oil consuming plant in order to go renewable. Which is why the "stranded asset" argument makes no sense to me. It also caps how high NG and oil prices can go over a prolonged period.

The technology is not getting as much attention as photovoltaic because of the drop in battery costs made Teslas & c.o more affordable and range is improving. And small  EV maintenance is cheaper till the battery goes. .

Doesn't look very attractive to me. Not yet at least. Making specialized sensitive panels for fuel production doesn't seem optimal, unless of course they can make it work brilliantly. 

Breaking even at $3.00 gasoline still means that selling power is a much more profitable option (opportunity cost ALWAYS needs to be recognized). If these units cost as much as current panels do, they'll need heavy subsidies to break even. 

Edited October 7, 2020 by KeyboardWarrior

[Rob Kramer + 696]

On 10/5/2020 at 9:09 PM, Dan Warnick said:

I assume it's good whiskey during the good times; cheap whiskey during the bad?  They must be drinking rot-gut right now!

That's oil investing! The majors collect the big bucks till they read the famous chapter 11 book of restarts lol

[ronwagn + 6,290]

On 10/4/2020 at 7:14 PM, Gerry Maddoux said:

I'm not pushing Total, understand, but you might want to check them out. Here are some facts:

1) They began making the shift to renewables in 2013. 2) They purchased Saft, a massive battery company with 105,000 employees and a market cap of 210B, and a hundred-year history of making fine batteries for the world. 3) Their dividend is now up to 9%, what with the slide down to $33 and change. They say it is safe. 4) Total also purchased a stake in Ionic Materials, said to be a leader in achieving a solid-state battery. 5) PSA + Total have formed a JV to build two gigafactories.

I'm not exactly sure why the renewables crowd hasn't picked up on the fact that this is a Big Oil with intentions to move into renewables in a very large way. They very much wish to be the lithium ion battery ESS builder and maintainer for the European Union, and it sure looks like they're headed that way. I had to look up a couple of things to respond to you and based on that I'm buying more in the a.m. It makes little sense to me that people are going hog-wild over a company that nobody has ever heard of and builds very little, while this giant oil company, which btw is also a huge LNG provider, just went out and spent and bought some of the great battery companies.

I agree with your overall premise: renewables and Big Oil don't go together. I could be very wrong but I think Total may be different and in a class all its own. While I couldn't recall the name at first, I remember looking into Saft pretty extensively. They're the real deal. 

 

If you are selling energy you should see your company as an energy company. Just be prepared to shift back and forth to the best horse to ride. 

[ronwagn + 6,290]

On 10/6/2020 at 12:23 AM, Wombat said:

Nup. Anyone can do that. Here in Australia, the two largest grocery chains own half the petrol stations.

We get most of our gasoline at Kroger which offers up to a dollar off per gallon at the end of the month. 

[Gerry Maddoux + 3,627]

Well, I hate to say this, but the best horse to ride seems to be a car company that is actually a "Big Energy" company. I have been slow to the renewables revolution but it has become abundantly clear to me that the growth in energy is currently in electricity. In the past that was provided by coal-fired utility plants. Currently, most electricity is being provided by natural gas-fired plants, but more and more is being harvested from wind and solar, then "stored" in massive lithium-ion battery arrays built by Tesla. 

BP, Total, Royal Dutch Shell all see this and are moving as rapidly as they can toward renewables, using LNG as a transition energy source. Soon, I have no doubt, we can add hydrogen to this list, and then nuclear. In short, as I tried to show on this thread the other day, Big Oil has to somehow figure out how to become Big Energy or get used to these sorts of figures. These people can still afford to drink the good whiskey but it's soon going to taste bad. Here are the numbers: 

Company          CEO          2019 Compensation          Share Price January 1, 2019          Share Price Today         

Tesla              Elon Musk               $559,266,000                         $61                                   $2,550 (6:1 split)                                                 

Exxon            Darron Woods         $23,500,000                           $73                                   $34                                                                       

Chevron        Michael Wirth           $19,687,000                           $114                                 $73                                                                             

Occidental    Vicki Hollub              $15,990,000                           $67                                   $10                                                                             

BP                 Bob Dudley             $14,666,000                            $41                                   $17

Edited October 7, 2020 by Gerry Maddoux
to make it presentable

[BLA + 1,666]

On 10/7/2020 at 7:34 PM, Gerry Maddoux said:

Well, I hate to say this, but the best horse to ride seems to be a car company that is actually a "Big Energy" company. I have been slow to the renewables revolution but it has become abundantly clear to me that the growth in energy is currently in electricity. In the past that was provided by coal-fired utility plants. Currently, most electricity is being provided by natural gas-fired plants, but more and more is being harvested from wind and solar, then "stored" in massive lithium-ion battery arrays built by Tesla. 

BP, Total, Royal Dutch Shell all see this and are moving as rapidly as they can toward renewables, using LNG as a transition energy source. Soon, I have no doubt, we can add hydrogen to this list, and then nuclear. In short, as I tried to show on this thread the other day, 

Musk is the only operation that can now provide Utility scale storage.  He has a couple of projects in the works.  He openly admit these are not profitable.

Note Musk never ran an oil company. He is s technologist. An expert in renewable energy, EVs , and battery technology.  Big oil is kidding the elves if they think they can compete.

Profits will come to storage.

Solar and wind will grow but not to the extent some believe.

Musk's Tesla has entered the solar industry. Tesla solar business has been declining , not increasing.  They are not making any money.  Several Tesla shareholders even filed a lawsuit over the solar investment.

As one analyst said , "I’d take all Elon claims with a grain, or metric ton, of salt,” said Morningstar equity analyst David Whiston. “Energy probably stays a small piece of Tesla for a long time .   .   .   .   "

I agree natural gas is the transition energy .  There is abundant natural gas available the world over.    I think  the natural gas will be the transition fuel until nuclear fusion. Whether that transition to Fusion takes 15 years or 30 years.  

I don't know enough about hydrogen to be able to speak to it.  I know the Fuel Cell stocks have gone up as a result of the interest in hydrogen.  

Again , renewables are coming . Just understand they are not going to take over the world.  

I don't see Big Oil becoming Big Renewable Energy.  Solar companies still depend on subsidies and massive tax breaks.  European Big Oil are tight with European Governments and will likely continue to be subsidized when it comes to green initiatives. The French government put sizeable money into the Total + PSA joint venture. 

Electric vehicles will result in meaningfully decline in oil demand. This decline will have an affect on price.  The corresponding increasing demand for electricity will be met by natural gas fuel power plants.  

European Big Oil companies such as Shell will give renewables some mention but natural gas will be their bread and butter for a long time.  

Sad to say but the only thing I see that will  save the oil companies for a bit would be conflict , war or chaos on the Mideast region. Even that won't last forever. 

Edited October 9, 2020 by BLA

[Dan Clemmensen + 1,011]

15 hours ago, Gerry Maddoux said:

Well, I hate to say this, but the best horse to ride seems to be a car company that is actually a "Big Energy" company. I have been slow to the renewables revolution but it has become abundantly clear to me that the growth in energy is currently in electricity. In the past that was provided by coal-fired utility plants. Currently, most electricity is being provided by natural gas-fired plants, but more and more is being harvested from wind and solar, then "stored" in massive lithium-ion battery arrays built by Tesla. 

BP, Total, Royal Dutch Shell all see this and are moving as rapidly as they can toward renewables, using LNG as a transition energy source. Soon, I have no doubt, we can add hydrogen to this list, and then nuclear. In short, as I tried to show on this thread the other day, Big Oil has to somehow figure out how to become Big Energy or get used to these sorts of figures. These people can still afford to drink the good whiskey but it's soon going to taste bad. Here are the numbers: 

Company          CEO          2019 Compensation          Share Price January 1, 2019          Share Price Today         

Tesla              Elon Musk               $559,266,000                         $61                                   $2,550 (6:1 split)                                                 

Exxon            Darron Woods         $23,500,000                           $73                                   $34                                                                       

Chevron        Michael Wirth           $19,687,000                           $114                                 $73                                                                             

Occidental    Vicki Hollub              $15,990,000                           $67                                   $10                                                                             

BP                 Bob Dudley             $14,666,000                            $41                                   $17

I have never understood the insane stock prices of new-model companies ("unicorns" like Facebook, Amazon, Netflix, Google, Paypall), but Elon sure does, and Tesla is squarely in this category. For a traditional company, market cap is (sort of) based on assets, track record,  and reasonably straightforward financial projections. These new companies are valued based on vision, dreams, and the charisma of the founders. Each of them identifies a new niche, pours in billions of dollars, and develops a completely new disruptive business model. The value is apparently based on having a new business model that takes some time to replicate, so the company becomes dominant before the competition can catch up. Traditional companies simply cannot pivot to the new model quickly enough to make a difference. By the time the new company is profitable and the old companies quit scoffing and start competing, it's too late.

For big oil, this is compounded by the loss of value of their assets, mostly their proven reserves but also their refineries. Market cap simply reflects this loss. Shareholders are buying a share of these assets. For Tesla, shareholders are buying a share of the vision.

[specinho + 467]

On 10/6/2020 at 9:09 AM, Dan Warnick said:

I assume it's good whiskey during the good times; cheap whiskey during the bad?  They must be drinking rot-gut right now!

not at all.... during bad times, most would drink home made whisky..... original, tasty, good quality, and cheap........ Good times, most would buy. Why bother to make, right? Massive factory production of ................. some types........... Now....... shops not opened, excessive food not available, money might not be enough etc etc... might be just tap water with mild natural solvent of carbon dioxide.......... (ultra light soda)

2 hours ago, Dan Clemmensen said:

Traditional companies simply cannot pivot to the new model quickly enough to make a difference. By the time the new company is profitable and the old companies quit scoffing and start competing, it's too late.

For big oil, this is compounded by the loss of value of their assets, mostly their proven reserves but also their refineries. Market cap simply reflects this loss. Shareholders are buying a share of these assets. For Tesla, shareholders are buying a share of the vision.

Traditional companies have been built slowly but steadily. They, generally, can withstand the test of time with no rush to chase over the wind in the hands of the old and wise.

Well said.......very smart strategy on the other hands on personal gains.............

 

Edited October 8, 2020 by specinho

[Rob Kramer + 696]

16 hours ago, BLA said:

Electric vehicles will result in meaningfully decline in oil demand. This decline will have an affect on price.  The corresponding increasing demand for electricity will be met by natural gas fuel power plants.  

At 6L/Day average consumption per personal vehicle . Tesla at 400k cars a year . 2.4million liters/ day yoy decline.  Divided by 260L/barrel is 9,230 barrels a day..... is gonna take some time.

Edit google says fleet average is 24.6 mpg and 13,500mi per year

Edited October 8, 2020 by Rob Kramer

[Dan Clemmensen + 1,011]

8 hours ago, Rob Kramer said:

At 6L/Day average consumption per personal vehicle . Tesla at 400k cars a year . 2.4million liters/ day yoy decline.  Divided by 260L/barrel is 9,230 barrels a day..... is gonna take some time.

Edit google says fleet average is 24.6 mpg and 13,500mi per year

Tesla's expertise is not building cars, but building factories that build cars. I don't know what their doubling rate is, but it's high, and other manufacturers will either react or die, so your 400k number needs some adjustment. I think your analytical approach is good, though: it's basically an estimate of the rate at which ICE vehicles with be replaced by EVs, converted into BOE/day.

[Jay McKinsey + 1,490]

46 minutes ago, Dan Clemmensen said:

Tesla's expertise is not building cars, but building factories that build cars. I don't know what their doubling rate is, but it's high, and other manufacturers will either react or die, so your 400k number needs some adjustment. I think your analytical approach is good, though: it's basically an estimate of the rate at which ICE vehicles with be replaced by EVs, converted into BOE/day.

Tesla is growing at 40-50% per year. 42% is doubling every two years = Moore's Law

Their stated goal is to produce 20 million vehicles in 2030.

Edited October 9, 2020 by Jay McKinsey

[Dan Clemmensen + 1,011]

1 hour ago, Jay McKinsey said:

Tesla is growing at 40-50% per year. 42% is doubling every two years = Moore's Law

Their stated goal is to produce 20 million vehicles in 2030.

OK, 20 million is a factor of 50, so 9.2 K x 50 = 460 K BOE/day just from Tesla. Assume they have 50% of the market, so a reduction of 920 K BOE/day yoy in 2030. That's still only a reduction of about 1% every year if the doubling quits in 2030. But the EV market grows to totally replace all ICE sales, then the reduction in oil will continue until the last ICE is retired. There are roughly 1.5 billion ICE cars and commercial vehicles in the world (2019, according to google). Say that grows to 2 billion, and say they last an average of 20 years: we must replace about 100 million per year. (This is consistent with the 80 million per year in 2017 reported by google.) So by 2030, Elon is selling 20% of new vehicles and presumably still growing, but probably not at 42%/yr.  This is consistent with the last new production ICE being sold in about 2036 or so, and the last ICE (except for antiques) leaving service in 2056.

[Jay McKinsey + 1,490]

10 minutes ago, Dan Clemmensen said:

OK, 20 million is a factor of 50, so 9.2 K x 50 = 460 K BOE/day just from Tesla. Assume they have 50% of the market, so a reduction of 920 K BOE/day yoy in 2030. That's still only a reduction of about 1% every year if the doubling quits in 2030. But the EV market grows to totally replace all ICE sales, then the reduction in oil will continue until the last ICE is retired. There are roughly 1.5 billion ICE cars and commercial vehicles in the world (2019, according to google). Say that grows to 2 billion, and say they last an average of 20 years: we must replace about 100 million per year. (This is consistent with the 80 million per year in 2017 reported by google.) So by 2030, Elon is selling 20% of new vehicles and presumably still growing, but probably not at 42%/yr.  This is consistent with the last new production ICE being sold in about 2036 or so, and the last ICE (except for antiques) leaving service in 2056.

I think you will find this interesting

https://www.iea.org/reports/global-ev-outlook-2020

[Rob Kramer + 696]

11 hours ago, Dan Clemmensen said:

Tesla's expertise is not building cars, but building factories that build cars. I don't know what their doubling rate is, but it's high, and other manufacturers will either react or die, so your 400k number needs some adjustment. I think your analytical approach is good, though: it's basically an estimate of the rate at which ICE vehicles with be replaced by EVs, converted into BOE/day.

Thanks I like a good analysis of a situation.  I very highly doubt Tesla sells 20M cars in a year ever. Or doubles at 42% every what was it 2 years? With full government incentives and no competition and starting at zero is the low hanging fruit. Mabey 400k-1.6m is the sweet spot . After that will get very very hard. Dont forget a good portion of this will run on NG and help oil companies (a bit) and there competition is land battery so battery will stay in demand especially if there cheaper. Either way we just saw USA poop out 2.6M barrels a day in decline . And my end of year production is 10.2M b/d

[Ward Smith + 6,615]

On 10/8/2020 at 8:35 AM, Dan Clemmensen said:

I have never understood the insane stock prices of new-model companies ("unicorns" like Facebook, Amazon, Netflix, Google, Paypall), but Elon sure does, and Tesla is squarely in this category. For a traditional company, market cap is (sort of) based on assets, track record,  and reasonably straightforward financial projections. These new companies are valued based on vision, dreams, and the charisma of the founders. Each of them identifies a new niche, pours in billions of dollars, and develops a completely new disruptive business model. The value is apparently based on having a new business model that takes some time to replicate, so the company becomes dominant before the competition can catch up. Traditional companies simply cannot pivot to the new model quickly enough to make a difference. By the time the new company is profitable and the old companies quit scoffing and start competing, it's too late.

For big oil, this is compounded by the loss of value of their assets, mostly their proven reserves but also their refineries. Market cap simply reflects this loss. Shareholders are buying a share of these assets. For Tesla, shareholders are buying a share of the vision.

So long as valuation is based on blue sky, its a crapshoot. Amazon should have gone out of business like all the other dot com companies, but against all laws of physics it levitated while losing billions every year. If Bezos released his taxes, you'd see he doesn't pay any more than Trump, he's got tens of billions in loss carryforward to spend on tax bills. 

The headwinds against oil companies are twofold. Demand destruction plus investment disincentive by the top institutional investors who were their bread and butter for decades. Thanks to activists, they've divested from fossil fuel companies to the tune of trillions. Who is around to take up that kind of slack, considering those institutional investment companies aren't even investing their own money but are holding trillions of other people's money? They're not allowed to invest in oil companies so they have to plow into… Amazon, facebook, Tesla, Apple, Google…

And now you see why "Big Tech" is so keen on keeping the flames fanned on global warming hysteria. It's pouring hundreds of billions into their pockets. 

[Dan Clemmensen + 1,011]

4 hours ago, Rob Kramer said:

Thanks I like a good analysis of a situation.  I very highly doubt Tesla sells 20M cars in a year ever. Or doubles at 42% every what was it 2 years? With full government incentives and no competition and starting at zero is the low hanging fruit. Mabey 400k-1.6m is the sweet spot . After that will get very very hard. Dont forget a good portion of this will run on NG and help oil companies (a bit) and there competition is land battery so battery will stay in demand especially if there cheaper. Either way we just saw USA poop out 2.6M barrels a day in decline . And my end of year production is 10.2M b/d

Possibly, but maybe not. Tesla appears to be supply-limited for the Model 3 and Model Y, so they can keep expanding until they meet the pent-up demand. If they finally saturate that market, they will move down-market and build a "Model 2" or whatever and do it again, using the lessons learned on the existing products. They have done this twice so far (roadster-->S and X, then S and X -->3 and Y). They have demonstrated the ability to very rapidly build factories and ramp up production, so they can increase supply until demand saturates at each price point. They hit their 400,000/yr mostly out of a single factory. They now have two factories up and two under construction, and the factories are getting bigger. That's how the doubling works. By any traditional measure, this is insane. Just like Amazon or Google. I have always been skeptical about Elon's grandiose schemes, and I still am. I have always been wrong. It's a good thing I don't play the market.

Unless competitors get their act together, Tesla will continue to double until it captures the entire vehicle market. The only ICE manufacturer that appears to really understand this is VW, and I think that's because of the basic internal reset following dieselgate. The other big ICE guys are in denial, and look on EVs as a mostly future adjunct to their main ICE business. Since an all-Tesla world is just plain crazy, the competitors will not be the ICE companies, but other mostly Chinese pure EV companies.

[Jay McKinsey + 1,490]

4 hours ago, Rob Kramer said:

Thanks I like a good analysis of a situation.  I very highly doubt Tesla sells 20M cars in a year ever. Or doubles at 42% every what was it 2 years? With full government incentives and no competition and starting at zero is the low hanging fruit. Mabey 400k-1.6m is the sweet spot . After that will get very very hard. Dont forget a good portion of this will run on NG and help oil companies (a bit) and there competition is land battery so battery will stay in demand especially if there cheaper. Either way we just saw USA poop out 2.6M barrels a day in decline . And my end of year production is 10.2M b/d

Have you shorted Tesla?

[Rob Kramer + 696]

1 hour ago, Jay McKinsey said:

Have you shorted Tesla?

I dont short anything.  I'm long only and all fossil fuels.  But I'll spead out to REITs banks gold (if theres cheap small efficient production) and utilities after this cycle in oil and nat gas.  Then sit back and take a more passive role. 

But car companies are a terrible business IMO.