Jv

Could oil demand collapse rapidly? Yup, sure could.

Recommended Posts

18 hours ago, DanilKa said:

Switzerland will get bombed by the Big Oil... :) 

US introduced legislation to make cars more fuel-efficient. Result? Bigger cars and Ford closing sedans production. Last thing I would worry is about government doing something right.

You touch on some interesting topics in your comment (maybe not the bombing part, but I love sarcasm!).  I remember with great teenage pride how I tuned my 1970 six cylinder Chevy Camaro to achieve 35-ish mpg way back in 1980.  I was enrolled in vocational school automotive mechanics, worked in gas stations (later car dealerships) and on farms and agricultural suppliers (yes, the good old chemical sprayers with HUGE trucks and equipment!).  It was EASY to get better fuel consumption out of almost any engine, and I thought I could change the world if I just took my knowledge to Detroit, or to John Deere, etc.  Fact is, then and apparently now, whether is was big oil, Presidents related to big oil, automotive labor groups or whatever, nobody was really interested in fuel efficiency.  There was a lot of lip service indicating that everyone was interested, especially after Carter's phenomenal presidency (sarcasm) and lines at the gas pumps, but what did we get?  Another 5 mpg improvement, with really crap cars from Detroit at the same time.  It was like "we can bring you fuel efficiency, but you have to live with crap cars to get it".  Doomed from there on.  

I look under the hood of a car in the U.S. today and cannot believe, repeat, cannot believe all the crap under there that is supposed to produce fuel efficiency, but does nothing of the sort.  What it did do was put a massive shade tree mechanic industry out of business and ensure the work is done by the main auto industry, and put a lot of lipstick on a big pig that is the fuel efficiency effort in the U.S.  Is it possible that everything is not as it seems.........?

  • Like 1
  • Upvote 2

Share this post


Link to post
Share on other sites

(edited)

On 6/20/2018 at 10:02 PM, Dan Warnick said:

What it did do was put a massive shade tree mechanic industry out of business and ensure the work is done by the main auto industry, and put a lot of lipstick on a big pig that is the fuel efficiency effort in the U.S.  Is it possible that everything is not as it seems.........?

Head on over to your friendly Mercedes dealership and take a good look under the hood.  All those bolts in there now require a special socket to work on, the days of the cap screw and the six-point bolt head vanished.  And guess what: Mercedes will not sell you the socket kit so you can go mess with your own engine under that shade tree.  You want your neat new Mercedes worked on?  Bring it in to the Dealer and pay $130/hr.  Have a nice day, Americans.

Edited by Jan van Eck
spelling error
  • Like 1
  • Upvote 1

Share this post


Link to post
Share on other sites

On 6/19/2018 at 11:16 PM, HermitMunster said:

We tried building a bullet train. It failed. Our infrastructure is a joke.

 

Just compare...

 

High-speed rail in the United States

Plan :

California Proposition 1A, passed in November 2008, authorized the state to issue $9.95 billion in bonds to fund the first phase of a planned multi-phase high-speed rail network. Los Angeles to San Francisco, via California's Central Valley, will be the first phase of the network.

In February 2009, as part of the American Recovery and Reinvestment Act (ARRA), Congress allocated $8 billion to be granted to states for intercity rail projects, with "priority to projects that support the development of intercity high speed rail service. In April 2009, as required by ARRA, the FRA released its strategic plan describing the agency's vision for developing high-speed rail in the United States. As potential funding targets, the plan formally identified ten high-speed corridors.

Results :

In 2016 Amtrak awarded Alstom a contract for 28  Avelia Liberty trainsets to enter service 2021.

As of 2017, the California High-Speed Rail Authority is working on the California High-Speed Rail  project, which is planned to link Anaheim, Bakersfield, Fresno, Los Angeles, Sacramento, San Francisco, San Jose. Construction is under way on sections traversing the Central Valley. Phase I will be completed in 2029, and Phase II will likely be completed before 2040.

The Texas Central Railway is a line being built from Houston to Dallas  with speeds up to 205 mph (330 km/h) that initially claimed it would transport passengers by 2021, but as of 2017 says it hopes to become fully operational in 2024. There are also higher-speed rail projects in various parts of the country.

 

High-speed rail in China

Plan :

The "Mid- to Long-Term Railway Network Plan" ("Railway Network Plan") approved by the State Council in 2004 called for 12,000 km (7,456 mi) of passenger-dedicated HSR lines running train at speeds of at least 200 km/h (124 mph) by 2020.

Results :

In 2017 High-speed rail network extended to 29 of the country's 33 provincial-level divisions and exceeded 25,000 km (16,000 mi) in total length, accounting for about two-thirds of the world's high-speed rail tracks in commercial service. It is the world's longest HSR network and is also the most extensively used, with 1.713 billion trips delivered in 2017 bringing the total cumulative number of trips to 7 billion.

 

Info is from  Wikipedia :

https://en.wikipedia.org/wiki/High-speed_rail_in_the_United_States

https://en.wikipedia.org/wiki/High-speed_rail_in_China

  • Like 1

Share this post


Link to post
Share on other sites

The fact is that a lot of people talk about great ideas and technology that are going to change things, like it is inevitable and unstoppable.  But the fact is, the realities are not usually what they seem to be.  You think just because battery power, charged by good ole Sol, is so advanced now that this must be its time and we're converting whether the government or big business likes it or not?  I would offer that there are factors at work, huge "factors", that are sabotaging those efforts in ways that even Elon hasn't realized yet.  And I would bet a large portion of my limited resources that he is fighting them every single hour of every single day.  I absolutely hope he wins the day.  The stuff he is doing is fantastic, it really is.  I watched his presentation of the new semi trucks and they are incredible.  Unfortunately, his downfall will probably be economics of scale rather than any technical shortcoming (HUGE factors at work).  I mean, really, why wouldn't 8 million truck drivers want self driving battery powered trucks to succeed?.  In fact I am sure that many of those truck drivers talk to their brethren in auto manufacturing about the wonders of having labor-less industries, you know, in a general sense and for the good of the environment!

Having said that, one should be able to bet on the cumulative effect of many factors (Jan's tunnels, hydrogen, battery, solar, etc.) in reducing the consumption of fossil fuels over time.  I would say don't bet that it will happen in an earth shattering all encompassing way at any given time, but little by little, day by day, month by month, year by year.  That is inevitable.  Just my two cent's worth.

  • Like 1
  • Upvote 1

Share this post


Link to post
Share on other sites

(edited)

23 minutes ago, Guillaume Albasini said:

 

Just compare...

 

High-speed rail in the United States

Plan :

California Proposition 1A, passed in November 2008, authorized the state to issue $9.95 billion in bonds to fund the first phase of a planned multi-phase high-speed rail network. Los Angeles to San Francisco, via California's Central Valley, will be the first phase of the network.

In February 2009, as part of the American Recovery and Reinvestment Act (ARRA), Congress allocated $8 billion to be granted to states for intercity rail projects, with "priority to projects that support the development of intercity high speed rail service. In April 2009, as required by ARRA, the FRA released its strategic plan describing the agency's vision for developing high-speed rail in the United States. As potential funding targets, the plan formally identified ten high-speed corridors.

Results :

In 2016 Amtrak awarded Alstom a contract for 28  Avelia Liberty trainsets to enter service 2021.

As of 2017, the California High-Speed Rail Authority is working on the California High-Speed Rail  project, which is planned to link Anaheim, Bakersfield, Fresno, Los Angeles, Sacramento, San Francisco, San Jose. Construction is under way on sections traversing the Central Valley. Phase I will be completed in 2029, and Phase II will likely be completed before 2040.

The Texas Central Railway is a line being built from Houston to Dallas  with speeds up to 205 mph (330 km/h) that initially claimed it would transport passengers by 2021, but as of 2017 says it hopes to become fully operational in 2024. There are also higher-speed rail projects in various parts of the country.

 

High-speed rail in China

Plan :

The "Mid- to Long-Term Railway Network Plan" ("Railway Network Plan") approved by the State Council in 2004 called for 12,000 km (7,456 mi) of passenger-dedicated HSR lines running train at speeds of at least 200 km/h (124 mph) by 2020.

Results :

In 2017 High-speed rail network extended to 29 of the country's 33 provincial-level divisions and exceeded 25,000 km (16,000 mi) in total length, accounting for about two-thirds of the world's high-speed rail tracks in commercial service. It is the world's longest HSR network and is also the most extensively used, with 1.713 billion trips delivered in 2017 bringing the total cumulative number of trips to 7 billion.

 

Info is from  Wikipedia :

https://en.wikipedia.org/wiki/High-speed_rail_in_the_United_States

https://en.wikipedia.org/wiki/High-speed_rail_in_China

I'm sorry, but this is apples and oranges.  You simply cannot compare forced labor under "socialism with Chinese characteristics" with a free society and a government...er...like ours.  The under the radar factors in the inability to execute in California, Texas and many other places are simply, I don't know, how do you quantify or even identify them?  Great headlines though!

I wanted to add that by "forced labor" I mean a workforce that has no education and no other skill set, and therefore must take the manual labor jobs the government puts forth.  We're talking 10's of millions of people who make wages in the form of food and little else, monthly stipends of no more than $100, etc.  I did not mean to imply that China forces the people to work under threat of punishment or anything like that.

Edited by Dan Warnick

Share this post


Link to post
Share on other sites

1 hour ago, Dan Warnick said:

Is it possible that everything is not as it seems.........?

" never suspect malice where things may be adequately explained by stupidity"...

I'm pretty sure we are getting more hhp/gal from modern engines and things could be fairly easily improved. Hybrid cars are low hanging fruit - my Camry gives ~40mpg (btw, your tuning of Camaro is nothing short of remarkable!) and I'm not limited to 300-400km range of an electric car. "Regenerative braking" of hybrids making heat-dissipating breaks "degenerative":)   

I'm a strong believer in incentives and price-discovery mechanism as a most efficient way to drive it. Best cure of high oil price is high oil price but same is true for the cheap crude.

  • Like 2

Share this post


Link to post
Share on other sites

4 minutes ago, DanilKa said:

" never suspect malice where things may be adequately explained by stupidity"...

I'm pretty sure we are getting more hhp/gal from modern engines and things could be fairly easily improved. Hybrid cars are low hanging fruit - my Camry gives ~40mpg (btw, your tuning of Camaro is nothing short of remarkable!) and I'm not limited to 300-400km range of an electric car. "Regenerative braking" of hybrids making heat-dissipating breaks "degenerative":)   

I'm a strong believer in incentives and price-discovery mechanism as a most efficient way to drive it. Best cure of high oil price is high oil price but same is true for the cheap crude.

Now that is a wonderful quote!  Love it!

Share this post


Link to post
Share on other sites

4 hours ago, Dan Warnick said:

I'm sorry, but this is apples and oranges.  You simply cannot compare forced labor under "socialism with Chinese characteristics" with a free society and a government...er...like ours.  The under the radar factors in the inability to execute in California, Texas and many other places are simply, I don't know, how do you quantify or even identify them?  Great headlines though!

I wanted to add that by "forced labor" I mean a workforce that has no education and no other skill set, and therefore must take the manual labor jobs the government puts forth.  We're talking 10's of millions of people who make wages in the form of food and little else, monthly stipends of no more than $100, etc.  I did not mean to imply that China forces the people to work under threat of punishment or anything like that.

 

China : a workforce that has no education and no other skill set, and therefore must take the manual labor jobs the government puts forth

US : a workforce that has no education and no other skill set, and therefore must take the manual labor jobs the private firms puts forth

The only difference is that in China they end up building railways and in the US they end up serving dinners in fast foods.

 

More than a question of workforce available it's more a question of political will and public spending priorities. The US budget priority is on military spending rather than an building infrastructure.

So Americans are way more efficient in how to destroy infrastructures with bombs, missiles and other high tech weapons than on how to build infrastructures. It's a choice but not the best one in my own opinion.

Share this post


Link to post
Share on other sites

On 6/20/2018 at 9:20 PM, Dan Warnick said:

With respect, I don't think anyone expects Americans to park our cars and get on the train, hence just one of the reasons high speed bullet trains fail to materialize in the U.S.  Lots of people who think we should build them for the environment, blah, blah, blah, apparently live in a dream world.  Yes, the environmental benefits are there and provable, but Americans by and large can't be bothered with them.  Amtrak is not a failure just because it's not efficient.

In any case, Jan's scenario is about business/cargo transport more than anything.  That is a sector that lobbies the government and keeps the pressure on.  Automobile savings are just an added benefit in his scenario, not the driver.  AND, he repeats over and over that it will take the will of powerful people in Washington to get off the ground.  The Donald has proven, and continues to prove, that he is rather unpredictable about what he will put his weight behind and push through.  Might not happen, but to Jan's point, it could.  In fact, take Jan's scenario and implement just 25% of it over the next 10 years and let the dominoes fall as they may.

It is too late for us to park our cars and get on a train. The train has passed.

And of course there's this:

5914bdeef1722b1f008b459c-750-563.png

  • Like 1

Share this post


Link to post
Share on other sites

On 6/20/2018 at 10:49 PM, Guillaume Albasini said:

 

In 2017 High-speed rail network extended to 29 of the country's 33 provincial-level divisions and exceeded 25,000 km (16,000 mi) in total length, accounting for about two-thirds of the world's high-speed rail tracks in commercial service. It is the world's longest HSR network and is also the most extensively used, with 1.713 billion trips delivered in 2017 bringing the total cumulative number of trips to 7 billion.

 

 

The bolded part is just crazy to think about but it is amazing for their infrastructure. 

Share this post


Link to post
Share on other sites

On 6/20/2018 at 8:47 AM, DanilKa said:

Switzerland will get bombed by the Big Oil... :) 

US introduced legislation to make cars more fuel-efficient. Result? Bigger cars and Ford closing sedans production. Last thing I would worry is about government doing something right.

Wasn't that because SUV's were rated as light trucks rather than private vehicles? 

Share this post


Link to post
Share on other sites

4 hours ago, NickW said:

Wasn't that because SUV's were rated as light trucks rather than private vehicles? 

Yes.  Anything below 10,000 lbs is classified as a "light truck" and at one time got an investment tax credit, so all these housewives in New Jersey went out and bought Chevy Suburbans.  I remember pulling in at one place, some country club, and all the women were showing up driving those Suburbans.  Whatever happened to the BMW? 

But the real kicker in CAFE fuel numbers is the development, and US buyer preference, for the "crossover," that bizarre thing that is part sedan, part SUV, part mini-van.  40% of retail sales today are crossovers.  So the mileage improvements for new autos is mired at around 24.  Welcome to America.

  • Upvote 1

Share this post


Link to post
Share on other sites

Incidentally, the real reason we do not have "high speed rail" is because we have these very large animals out there on the range.  first you have these big cows (and bulls), and then you have moose, and elk, and buffalo, all that big stuff.  You whack one of those and your train is headed off the rails and into oblivion. They don't have those big animals in France so you can go build those TGV trainsets and roar along at 200 mph, hey who cares?   Bring one to America and whack a buffalo and bye-bye.

So what that implies is that you have to build totally animal-proof fences on both sides of your rail track, which will likely triple the cost of the track.  And then you have to install a very fancy monitoring system to catch animals that break in.  And you have to go patrol those fences constantly, including in winter blizzards, to find breaks, and go fix. It gets hideously expensive. 

What you can have is "higher speed rail," which is what America had in the time frame 1933-1951.  To do that safely you build yourself a locomotive that weighs in at 775,000 lbs.  Does that exist?  Sure; take a look at the Union Pacific "Big Boy," a monster with sixteen driving wheels and two sets of steam chambers, set up as an articulated driveset of 4-8-8-4.  Not heavy enough for your taste?  OK, then  roll for a Virginian class, used on the Norfolk & Western or the Baltimore and Ohio, a monster steamer set up as I think a 2-10-10-4, probably over a million pounds, used for hauling coal trains up and over the stiff grades of the Allegheny Mountains. You can get those machines up over 80 mph and you whack a buffalo, it goes flying over into the next county like some billiard ball. So forget those fences.  No worries, mate!

Share this post


Link to post
Share on other sites

1 hour ago, Jan van Eck said:

You can get those machines up over 80 mph and you whack a buffalo, it goes flying over into the next county like some billiard ball.

Yep, just Google image search for cow catcher railroad. 

  • Like 1

Share this post


Link to post
Share on other sites

On 6/22/2018 at 9:28 PM, Jan van Eck said:

Yes.  Anything below 10,000 lbs is classified as a "light truck" and at one time got an investment tax credit, so all these housewives in New Jersey went out and bought Chevy Suburbans.  I remember pulling in at one place, some country club, and all the women were showing up driving those Suburbans.  Whatever happened to the BMW? 

But the real kicker in CAFE fuel numbers is the development, and US buyer preference, for the "crossover," that bizarre thing that is part sedan, part SUV, part mini-van.  40% of retail sales today are crossovers.  So the mileage improvements for new autos is mired at around 24.  Welcome to America.

We have seen similar trends in the UK. 

Its not uncommon to see a Hair dresser driving a Range Rover Evoque - courtesy of Personal Contract Purchase (ie rent a car). 

 

Share this post


Link to post
Share on other sites

1 minute ago, NickW said:

Its not uncommon to see a Hair dresser driving a Range Rover Evoque - courtesy of Personal Contract Purchase (ie rent a car). 

Everybody in America does that, except for the 1%.  We live in a sea of debt.  I don't do that, I pay cash only, but hey, that's just me. 

Now, on to a serious note:  what folks do not seem to recognize is that the real reason GM went bankrupt and the shareholders were wiped out had little to do with the design or building of their autos.  GM recognized early on that its customers, who were the "mass-market" buyers  (not the guys buying the Austin Martin DB-11's)  would need a source of ready credit in order to buy the increasingly more expensive autos and pick-ups they were building.  So GM set up "General Motors Acceptance Corporation," or GMAC for short.  And what GMAC did was flog out the paper for the retail buyers.  You showed up at the dealership, filled out the credit app, it was sent (originally by phone and fax machine, later by internet) to the GMAC underwriters, and the customer was approved (except for total deadbeats), and he could drive out the door from the showroom with his new wheels. As long as you were warm and breathing and not in jail and had a job, you got financed. Without GMAC, GM itself had nothing. It was able to operate only because the customers could get financed. GMAC  (and their rivals, Ford Credit) would even finance the sales tax, so you could drive out "no money down," and interesting American invention called "sign and drive."

OK, so then some "bright"  [really, seriously dumb managers]  wrote up Proposals to GM Division managers indicating that they could profit handsomely from the river of cash coming in from those car payment streams by getting into the financing of home mortgage loans.  And that worked great, until the Housing Crash and the paper crash for securitized mortgages, and nothing could get unloaded onto Wall Street buyers, and GMAC ended up both in the Red and without the liquidity to finance the car customers. And worse, the credit rating of GMAC hit the toilet and they could not even borrow the money from wholesale lenders to go finance the retail car customers.  Well, guess what, if the cars cannot be financed they don't get sold to the hoi-polloi, the average guy who buys Chevrolet. So then GM itself collapsed, as they could build cars, but would have to park them in the cornfields because nobody had any cash - or credit - to buy them. 

And that, folks, is how some 23-year-old with his fancy MBA from Wharton School can end up busting your 130-billion-dollar corporation, leaving it in the ashcan.  It sent GM shares from $65 to 18 cents. Just lovely. 

  • Like 1
  • Upvote 1

Share this post


Link to post
Share on other sites

I pay cash too. When I buy a car its normally a couple of days before Xmas when the show rooms are dead. 

I got 20% off the asking on our nearly new Auris Hybrid. 

Share this post


Link to post
Share on other sites

Based on reports, world global oil consumption is rising by an approximate rate of 1.5 million bpd each year, worldwide oil demand is believed to increase by 12  million bpd and 20 million bpd by the year 2026 and 2031 , respectively. 

However, due to declining production in some non-OPEC countries, growing world demand in the future will have to be met by OPEC members, particularly the four major producing countries of Saudi Arabia, Iran, Kuwait and Iraq.

So , these countries have already called upon international oil companies to help provide the necessary investment for an expansion of production capacity. Without a doubt, the price of oil and political stability in the Persian Gulf region are important factors to be considered by foreign investors. 

Under the current circumstances, what OPEC needs to do is to present the oil buyers with a feeling of unity in the organization. This means OPEC members , especially the main producers in the Persian Gulf region, must set aside baseless claims against each other and try to cooperate for the benefit of all producers.

  • Like 1
  • Upvote 1

Share this post


Link to post
Share on other sites

Consumption will continue to rise.

No. 2 Economy China will develop its own resources.

Rising demand in the emerging economies of Malaysia and Indonesia will put pressure on production.

Global Oil, will redirect its efforts, for better process, cheaper recovery and less expensive equipment.

Cheap labor in production/refining as well as E&P will continue.

Indian and Paki grad engineers will work for less than someone with a PE degree from an American university.

And so it goes.

Meanwhile, BUBBA after third shift, climbs in his pickup, which knows its way to the nearest watering hole, and proceeds to down a case and a half of BUD, then heads for breakfast before going home to get a little rest.

Tomorrow it starts all over again.

  • Like 1

Share this post


Link to post
Share on other sites

8 hours ago, Mahyar said:

Based on reports, world global oil consumption is rising by an approximate rate of 1.5 million bpd each year, worldwide oil demand is believed to increase by 12  million bpd and 20 million bpd by the year 2026 and 2031 , respectively. 

However, due to declining production in some non-OPEC countries, growing world demand in the future will have to be met by OPEC members, particularly the four major producing countries of Saudi Arabia, Iran, Kuwait and Iraq.

So , these countries have already called upon international oil companies to help provide the necessary investment for an expansion of production capacity. Without a doubt, the price of oil and political stability in the Persian Gulf region are important factors to be considered by foreign investors. 

Under the current circumstances, what OPEC needs to do is to present the oil buyers with a feeling of unity in the organization. This means OPEC members , especially the main producers in the Persian Gulf region, must set aside baseless claims against each other and try to cooperate for the benefit of all producers.

Interesting viewpoint, Mahyar.

Since I know who you are and your background from LinkedIn, but others here don't, perhaps you would like to introduce youself a bit.  If you feel comfortable doing so.

Share this post


Link to post
Share on other sites

Yes, I believe it will collapse but not as fast as what we call "rapidly". Why?.  For example. I've heard  decades ago that KSA's reserve is depleting fast and may not last for the next few decades. Look what now, their output capacity has doubled and the previous report of depletion has vanished. Why?.. perhaps during that time, exploration technology not yet sophisticated like what we are having now. And note also the drilling technology has evolved into what they  haven't seen during that period. And here we come again, said in different, terminology "collapse rapidly". Alternative or renewable source of energy remained costly compared to fossil fuel, except for nuclear. Nuclear, still faces a strong resistance perhaps due to politics, ignorance or lobbies. So, fossil fuel demand may collapse but not in the foreseebale future..

  • Like 1

Share this post


Link to post
Share on other sites

 

Yes there are many innovations that can help to make land based transportation more efficient. In this regard I think that the Chinese projects for high-speed rail to Europe are probably way more significant in terms of potential fuel savings. EV’s will also help substantially a decade from now.

However IMHO, annual global oil demand will continue to grow at one to two million barrels per day in the foreseeable future unless there is a major global economic contraction. Most of this demand will come from Asia and the developing economies. I think that at this time only materially higher prices are capable to create substantial oil demand destruction.

  • Upvote 1

Share this post


Link to post
Share on other sites

During a presentation on oil demand at the recent Intertanko conference gathering independent tanker owners in Rome, delegates were asked when they thought peak oil demand would occur, 2035 or 2050?

71% voted for 2035

 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.