The Tony Seba report

[BillKidd + 139]

Through this forum, I became aware of the Tony Seba report, Rethinking Transportation 2020-2030. I have a lot of reading to do to, hopefully, determine how likely it is that he is right. Do you have an opinion?

His report is extremely professional and detailed. It matters to me. I recently started a thread here about whether I should sell out of my oil and gas holdings due to the risk of a permanent oil/gas crash. For any number of reasons, not just Tony Seba's stance on autonomous electric vehicles as a service industry.

My initial reason for creating this thread was... why am I just learning of this report? I read constantly, including everything I can get my hands on regarding the future of energy, and I have never seen this report until now. How the heck can that be? It is dated May 2017, over a year ago! Has it been discredited or is it widely accepted as having validity?

https://www.rethinkx.com/transportation/

[Jan van Eck + 7,558]

Bill, don't place too much credence on the Tony Seba's of the world.  Seba (and others) actually think that in ten years over 95% of car owners will have abandoned or scrapped their private autos, never to own one again.  That mindset might work for him; it is emphatically not the mindset of the overwhelming vast majority of Americans.  

Does anyone seriously think that the farmer in Iowa is about to abandon his pick-up?  How about the young women out in Wyoming, the  ones in knee-high boots and Levis and obligatory Stetson rolling up to the dance hall on Friday night complete with that gun rack across the back window?  Tall, lean, lanky, unbelievably fit,  and totally self-assured, intent on picking up men, you think they are going to roll with some "autonomous vehicle"?  No chance. 

Tonhy Seba is what Americans call a "metrosexual,"  someone born male but commanding no male personal presence.  He turns everything into some slave to the electric machine.  The possibility of any of this actually happening is precisely zero.

Edited June 24, 2018 by Jan van Eck

[JunoTen + 118]

Tony Seba's predictions have been on the money up until now. GM and Waymo will be launching first autonomous electric services by the end of this year or in 2019, then scale it up. GM can build hundreds of thousands of Cruise AVS with their factories.

Tony Seba's argument is that using Transportation as A Service will be ten times cheaper than buying a new car. Which means that no one will buy a new car, everybody will use Transportation as A Service.

He also says that by 2030 100% of electricity generation will come renewables, which is consistent with the rate of growth of photovoltaics in the latest decades.

So yeah, I do think Tony is right, and I do think big oil will die in approximately 3 years due to technological advancement.

The important thing to note is that even businesses of autonomous vehicles have clearly stated that their objective is to be competitors to individual ownership of cars. They will make their services cheap enough to divert people from buying cars, and the competition will be fierce because there are many players.

Edited June 24, 2018 by JunoTen

[BillKidd + 139]

This is the second time this has happened lately... this forum software has obliterated a lengthy post of mine when I hit the Submit button. Aaargh!

I don't have the patience to rethink and retype the entire post but here are a couple of things.

I said that at about the 50:00 minute mark in the video below he says that in 2030, 40% of all vehicles will still be owned by individuals. if so, that accounts for your cowgirl in Wyoming, Jan. But, the 40% of all vehicles will only drive 10k miles/year (each). The remaining 60% will be autonomous, on-demand electric fleet vehicles, and they will drive 95% of all miles driven!

He says (at about 54:00) that the tipping point will be 2021. Because he thinks autonomous vehicles will be 'approved' about that time. And that this will cause oil to crash to $25 or lower. Causing anything unprofitable at that to become stranded assets.

Regardless who says what, if this happens, however it happens, can you imagine! Holy cow. Seems there will be wars, due to chaos of the collapse of oil. And car manufacturers and such.

But if we survive, each American would have an extra six grand/year in his pocket, so, the economy should rock. Developing countries should fare better, as well.

I've been watching this game-changer develop for years now, have tried to read all I can, but his take on it is convincing. Hmmm...

His video:

https://www.youtube.com/watch?v=ox5LtxqQNHw

Edited June 24, 2018 by BillKidd

[Jan van Eck + 7,558]

Bill, your man Tony Seba dramatically underestimates the draw of the private automobile.  It is not just that each buyer/consumer/driver likes his own appointments to his own taste.  It is also that lots of other people are slobs.  Who wants to go sit in some "Uber"-style rent-a-car where somebody else has barfed?  Which has cigarette stink?  Which somebody urinated in? 

See, that is where Mr. Seba's ideas fall apart.  People like to have control over their environment.  Even the city dweller, who pays more for his parking space than I do for my mortgage in the country, is still going to want his own personal  BMW or Escalade or Mercedes Coupe, and he will pay for it.  That ten thousand bucks is not going to derail him.  And for the poor boy, hey he will drive something older - even a lot older.  There are plenty of cars and pick-ups on the road that were built in the 1990's. Seba thinks the world runs on some accountant's calculator.  It doesn't.  The world runs on individuals, and their preferences, and the overwhelming preference is for private ownership.  And that is not going away any time soon. Cost money?  So does your cable TV subscription. 

PS if your posts are evaporating, write them in Word and save them to a folder, then do a copy and paste into the Reply Box.  If it blows up, you can do a repeat copy and paste.  Cheers.

[DanilKa + 443]

I wouldn't rush to sell oil stocks for fear of demand decline caused by increase adaption of EVs. If you look at scale, it won't happen anytime soon - for logistical constrains. Good discussion on it here: http://euanmearns.com/how-much-more-electricity-do-we-need-to-go-to-100-electric-vehicles/

In my view, people will wake up to the fact that statements about EVs being greener are false (it eats into appeal when people looking at you with pity for not able to think critically and blindly follow the lemmings). But bigger issue is incentive structure - at higher degree of penetration there will be no subsidies or other perks such as driving in bus lane etc especially considering state of most governments level of debt. This make playing field more level. Sharing things require high level of culture and care and I don't think human nature will change that soon.

I work in oilfield but this won't cloud my judgment about buying EV or ICE car - economic considerations and ease of use do.

Biggest threat to oil price comes from greater financial crisis and monetary reset but when and if its over - oil will remain a largest commodity.

[ronwagn + 6,290]

Largest sources of energy worldwide with graph https://en.wikipedia.org/wiki/World_energy_consumption

Edited June 25, 2018 by ronwagn
reference

[JunoTen + 118]

9 minutes ago, ronwagn said:

Largest sources of energy worldwide with graph https://en.wikipedia.org/wiki/World_energy_consumption

We can see on this chart that renewables are growing rapidly, and that coal and nuclear are declining. Actually the growth of photovoltaics has been exponential in the last decades https://en.wikipedia.org/wiki/Growth_of_photovoltaics

[Ian Austin + 131]

36 minutes ago, JunoTen said:

We can see on this chart that renewables are growing rapidly, and that coal and nuclear are declining. Actually the growth of photovoltaics has been exponential in the last decades https://en.wikipedia.org/wiki/Growth_of_photovoltaics

That is corrrect. However, when have we ever seen any exponential curve continue, ad infinitum, in the real world. 

Something such as material access and the associated costs, realization of capacity factor and the lack of a great storage plan, or something unforeseen, will adjust the curve. 

Remeber, Mr. Seba is an Economist, which means he has only a superficial understanding of what he writes about. His entire professions sub .100 career batting average corroborates this...

[JunoTen + 118]

2 minutes ago, Ian Austin said:

That is corrrect. However, when have we ever seen any exponential curve continue, ad infinitum, in the real world. 

Something such as material access and the associated costs, realization of capacity factor and the lack of a great storage plan, or something unforeseen, will adjust the curve. 

Remeber, Mr. Seba is an Economist, which means he has only a superficial understanding of what he writes about. His entire professions sub .100 career batting average corroborates this...

It won't continue forever, it just has to go to 100%. By 2020 wind and solar will be cheaper than fossil fuels all around the world, so it's just a matter of when all the rest is replaced, not if.

As Seba explains, technology adoptions follow S curves (slow growth, exponential, then slow growth). This is what happened with mobile phones, then smartphones, TV, color TV, digital camera...

[DanilKa + 443]

12 minutes ago, JunoTen said:

It won't continue forever, it just has to go to 100%. By 2020 wind and solar will be cheaper than fossil fuels all around the world, so it's just a matter of when all the rest is replaced, not if.

As Seba explains, technology adoptions follow S curves (slow growth, exponential, then slow growth). This is what happened with mobile phones, then smartphones, TV, color TV, digital camera...

Renewables are indeed growing fast (17% in 2017) and already at 8% of electricity production (source - BP).

For growth to continue, there should be drivers. Currently there are two factors pushing renewables: 1) de-carbonization and 2) cost of new installed capacity. Later is largely driven by imposed carbon taxes, subsidies for renewables and perceived risk of further sanctions on fossil fuel. If for a sake of mental exercise you'll assume that anthropogenic climate change idea is a hoax, 97% science consensus is a myth and CO2 is actually beneficial for plants, it won't be hard to imagine that governments faced with growing opposition (especially if temperature continues to drop as proponents of solar activity hypothesis telling us) will change their stance on #2. Without support, renewable project will be developing much slower as ERoEI is marginal at best. Another slowing factor would be need to address intermittency with higher degree of penetration. It is not priced at present but if you have ~half of your energy riding on wind and solar - you'll need to build backup capacity for it (diesel generators in South Australia; but mostly relying on grid from other states with coal, hydro & gas).

Having said that, fossil fuels are finite resource and drive to replace it will continue. When we'll find a way to pack enough energy into light enough battery, it cost less than ICE and made out of available materials - we may see decline in crude consumption. But my bet - we'll see peak production before we see peak demand.  

So I agree with you in principal on direction, just a different time scale.

[JunoTen + 118]

38 minutes ago, DanilKa said:

Renewables are indeed growing fast (17% in 2017) and already at 8% of electricity production (source - BP).

For growth to continue, there should be drivers. Currently there are two factors pushing renewables: 1) de-carbonization and 2) cost of new installed capacity. Later is largely driven by imposed carbon taxes, subsidies for renewables and perceived risk of further sanctions on fossil fuel. If for a sake of mental exercise you'll assume that anthropogenic climate change idea is a hoax, 97% science consensus is a myth and CO2 is actually beneficial for plants, it won't be hard to imagine that governments faced with growing opposition (especially if temperature continues to drop as proponents of solar activity hypothesis telling us) will change their stance on #2. Without support, renewable project will be developing much slower as ERoEI is marginal at best. Another slowing factor would be need to address intermittency with higher degree of penetration. It is not priced at present but if you have ~half of your energy riding on wind and solar - you'll need to build backup capacity for it (diesel generators in South Australia; but mostly relying on grid from other states with coal, hydro & gas).

Having said that, fossil fuels are finite resource and drive to replace it will continue. When we'll find a way to pack enough energy into light enough battery, it cost less than ICE and made out of available materials - we may see decline in crude consumption. But my bet - we'll see peak production before we see peak demand.  

So I agree with you in principal on direction, just a different time scale.

I don't agree with subsidies being important. When I said that by 2020 renewables would be cheaper than fossil fuels, I was talking about renewables unsubsidized. Building a new solar plant is already cheaper than running an existing coal one, unsubsidized.

So it doesn't matter what people think about global warming or not, because their first interest will always be their purse. And because renewables are getting cheaper by the day, renewables will dominate, regardless of climate change talks.

What would you choose between the cheapest form of energy generation, that doesn't require to import a commodity from some God forsaken area of the world,  and that said commodity ? It's a no brainer in my opinion.

The same logic will apply to electric vehicles, first because they are cheaper to run and maintain and soon will be cheaper to buy, and second because they will lower the reliance on oil and allow many countries to just stop worrying about what's happening in the Middle East.

[DanilKa + 443]

5 minutes ago, JunoTen said:

Building a new solar plant is already cheaper than running an existing coal one, unsubsidized.

You’ll been to build ~3-4x generation capacity for every MW of solar because there is no viable storage option and perhaps to no surprise, folks tend to use lights when it dark. In some places it gets dark the whole bloody winter (trust me on this). Wind is much better in this regard but less reliable. So even in absence of direct subsidies or carbon tax renewables are subsidied - cost of backup generation is not passed to it. 

[Guillaume Albasini + 851]

1 hour ago, DanilKa said:

You’ll been to build ~3-4x generation capacity for every MW of solar because there is no viable storage option and perhaps to no surprise, folks tend to use lights when it dark. In some places it gets dark the whole bloody winter (trust me on this). Wind is much better in this regard but less reliable. So even in absence of direct subsidies or carbon tax renewables are subsidied - cost of backup generation is not passed to it. 

Energy storage solutions are growing fast and will help to overcome the day/light or summer/winter discrepancies.

Pumped-hydro, batteries or power to gas are some of the energy storage options we can be combine with renewables.

 

From an IRENA report on electricity storage and renewables :

Battery storage in stationary applications looks set to grow from only 2 gigawatts (GW) worldwide in 2017 to around 175 GW, rivalling pumped-hydro storage, projected to reach 235 GW in 2030. In the meantime, lower installed costs, longer lifetimes, increased numbers of cycles and improved performance will further drive down the cost of stored electricity services.     

http://www.irena.org/publications/2017/Oct/Electricity-storage-and-renewables-costs-and-markets

[YOGESH KUMAR GUPTA + 1]

Why crude oil prices have jumped after opec discision of increasing the supply. Waguness is not the sole reason, something is behind the curtain, what that may be ?

[Rodent + 1,424]

4 hours ago, JunoTen said:

So it doesn't matter what people think about global warming or not, because their first interest will always be their purse. 

I'm not sure that's true. It's an important piece, but I suspect not the most important. First level of importance is meeting a need, and EVs and autonomous whatnots cannot meet the needs of everyone, or even most. The claims in the Seba report make some pretty serious assumptions. If those assumptions are wrong, it follows logically that the conclusions will be wrong also. 

Of course, no one can predict the future. If anyone claims they can you can almost certainly bank on the fact they will be wrong. 

@Jan van Eck's points about EVs and Uberish plans should not be dismissed. I won't be trading in my ICE for an EV anytime soon at any price. 

[BillKidd + 139]

7 hours ago, Ian Austin said:

Remeber, Mr. Seba is an Economist, which means he has only a superficial understanding of what he writes about. His entire professions sub .100 career batting average corroborates this...

Ian, what do you mean by the emboldened statement above? You talking about all economists record or Seba's record? And whatever you meant, do you have any supporting link or is that just a general opinion of yours?

Trying to find out more about Seba and his 'worthiness.'

As for predicting the future... yes, impossible... but my own individual dilemma is the huge financial risk of being wrong. My assets are worth x-amount right now. Being wrong (not selling for cash now) could be very costly. I continue to read but the uncertainty of it all is quite concerning. Technology can move SO fast, that is the concern. I mean, it's POSSIBLE that Tony Seba could be dead on. And that it could happen far faster than most people realize.

What are the odds? I don't know, but my perception is that another crash of oil/gas prices seems likelier as time goes on. And, of course, the worst case... it does not recover, it's a permanent price reduction. Or, say, 20-30 years. That length of time is enough to drastically devalue one's assets due to the time value of money principle. A crash with a price recovery decades away doesn't really matter to me. The future of natural gas is more important to me, personally, than oil, as most of my assets are natural gas leases. Nat gas went down to $1.60 just a couple years ago. If that were to happen again and stay there 20 years, I'd be MUCH better off to sell now and take the money and run. The shale gas industry is dicey at $3.00. It's over at $1.60.

All of this is also jaded by my perception that the oil and gas industry lies like Trump. Bogus as hell. They paint a rosy picture for how great everything is but nobody's making money! Again, I can envision the house of cards falling. So, it's more than just Tony Seba's possible scenario.

Thanks for all responses, interesting stuff.

[Jan van Eck + 7,558]

8 minutes ago, BillKidd said:

What are the odds?

I predict that nat gas will be used as a proxy weapon of war.  You have this big supplier, the Russia, and you have these customers who live in dread of Russia, the States adjacent: - Poland, Ukraine, the Baltics.  Those guys do not want to buy from Russia, they want to totally separate themselves from an aggressive, dominant Russia.  So the USA, the old adversary of Russia, goes and makes exports of gas to the border States a matter of policy.  And you see a rush for permits to build liquefaction plants and pipelines to those plants, that sort of thing.  Will US gas undersell Russian gas?  Of course it will.  and even where the Russians drop the price into the cellar in some sort of economic warfare, those border states are still going to buy US gas if it is available.  Don't underestimate the fear of Russia. 

Now, how to get the gas there?  That solution is being provided by private ship owners who build and lease all manner of ships.  And those guys have ordered up a lot of seriously heavy tonnage, all of which is hitting the water in 2019-2020.  Gas has a market, and a big one, outside the USA market.  Nobody in Ukraine is going to be heating their houses with lithium batteries any time soon. 

[Guillaume Albasini + 851]

Another point that you have to take into consideration is the advent of Power to Gas.

The best way for Europe to reduce it's dependence from russian gas is not switching to a new dependence from US LNG. The best way for Europe is to reduce it's share of gas consumption by increasing renewables or to produce it's own gas and that can be done using power from renewable energy with the gas to power technology.

The electricity produced by solar or wind energy can be used to split water into hydrogen and hydrogen by mean of electrolysis. Then hydrogen can be mixed with CO2 to convert the two gases to methane.

There are several  benefits from this production

1 - to reduce dependence from foreign suppliers (Russia, US, Qatar...)

2 - to produce locally so no need for expensive infrastructures (LNG ships, liquefaction and regasification plants or long pipelines from Siberia)

3 - to offer a way to store huge amounts of energy .(The storage capacity of the German natural gas network is more than 200,000 GWh which is enough for several months of energy requirement. By comparison, the capacity of all German pumped storage power plants amounts to only about 40 GWh).

4 - to transport energy by another mean than the power grid  (The transport of energy through a gas network is done with much less loss (<0.1%) than in a power network (8%) )

5 - to recycle CO2. The CO2 released when you burn this gas is the CO2 you have used to produce the methane. So its CO2 neutral. It's for that that it is also labelled as "green methane".

 

So methane produced from renewable electricity could become a new competitor to natural gas.

 

Read this article :  https://www.carboncommentary.com/blog/2017/3/2/cgb0bbx2uyubc858ubthhxegtd41n0

 

http://europeanpowertogas.com/power-to-gas/

https://en.wikipedia.org/wiki/Power-to-gas

 

 

[Joseph Aaron + 2]

This was a very civilized discussion, unlike what I am used to reading in the WSJ. So I will weigh in.

Seba is right at 40K feet. There is no reason to sell your oil stocks. There is no reason to sell short either.

If oil goes to $25 a barrel EVs will play a role. They don't break down. The cost of the battery is falling 10% a year and batteries make up 40% of the cost of an EV.

Fifty percent of a barrel goes to fuel, half to diesel and jets, the other half to autos. A 25% reduction in demand will drive prices down but that will be offset by the cost to produce a barrel. New technology that is more productive than fracking is a guarantee. 

The top 20% of earners will continue to buy new cars. The problem will be the disappearance of buyers of their used cars. The bottom 50% of the economic ladder will be the user of the AV, not you or me. The poor will no longer have to give up a week's wages to pay for a repair. They do not have to buy insurance. With an AV they no longer buy gas. 

I could go on and on. Seba is right. His timing will not be perfect. 

[Rodent + 1,424]

2 hours ago, BillKidd said:

 

 

Edited June 25, 2018 by Rodent
removed for being a jackhole comment.

[Refman + 207]

Tony Seba is hopelessly optimistic, some might say delusional, on this transportation revolution. As others have pointed out above, the allure of a privately owned automobile is underestimated by Seba. I believe Electric Vehicles will soon be very popular, I even plan to buy one myself, but this whole autonomous driving thing is overblown. First I believe it will take a lot longer to solve fully autonomous driving than the experts believe. Secondly, even if they do solve it relatively soon, I can't imagine people in the suburbs ditching their personal vehicles and having to take a "taxi" to the grocery store, or to take Jimmy to soccer practice.

[Jan van Eck + 7,558]

3 hours ago, Joseph Aaron said:

 

The top 20% of earners will continue to buy new cars. The problem will be the disappearance of buyers of their used cars. The bottom 50% of the economic ladder will be the user of the AV, not you or me. The poor will no longer have to give up a week's wages to pay for a repair. They do not have to buy insurance. With an AV they no longer buy gas. 

I could go on and on. Seba is right. His timing will not be perfect. 

Well, not quite, Robert.  Here's why:

That top 20% buying new cars and who will predictably continue to buy new cars ,  will likely not hold on to them after 5 years; they tend to get traded.  You indicate that the bottom 80% will be cash-strapped peasants and unable to buy them.  Well, don't expect those used cars to be scrapped.  What is likely to happen is that the price of used cars will continue to deteriorate until the lower price clears the lots of those accumulated used cars  (and in some areas "auto auctions" act as the price-clearing mechanism). 

For example, a new BMW in the 7-series can set you back around $93,000.  Five years later when that auto gets traded it is valued at about $20,000.  It goes through the dealer auction process and surfaces at some used lot, priced at $25,000.  Now the next guy picks it up.  Soon enough it gets down into the single digits and still is a fine, perfectly workable automobile.  But the pricing mechanism, which is ruthless, sorts out where it will trade at. 

It reminds me of the comment from the "new guy on board" to the skipper in the submarine movie, U-571.  He asks: "How far down will it go?"  And the skipper replies: "Oh, she'll go all the way to the bottom unless we  stop her."   Dark humor, perhaps, but true enough.  Ultimately, everything sinks. 

And PS:  the seriously poor boys will purchase bicycles, including variations of electric bicycles and of "cargo bikes," cycles with big cargo areas capable of hauling practically anything.  

(OK, this guy got carried away, but then again, he's Dutch, so you have to make some allowances for insanity.)

Edited June 25, 2018 by Jan van Eck

[Ian Austin + 131]

5 hours ago, BillKidd said:

Ian, what do you mean by the emboldened statement above? You talking about all economists record or Seba's record? And whatever you meant, do you have any supporting link or is that just a general opinion of yours?

Trying to find out more about Seba and his 'worthiness.'

As for predicting the future... yes, impossible... but my own individual dilemma is the huge financial risk of being wrong. My assets are worth x-amount right now. Being wrong (not selling for cash now) could be very costly. I continue to read but the uncertainty of it all is quite concerning. Technology can move SO fast, that is the concern. I mean, it's POSSIBLE that Tony Seba could be dead on. And that it could happen far faster than most people realize.

What are the odds? I don't know, but my perception is that another crash of oil/gas prices seems likelier as time goes on. And, of course, the worst case... it does not recover, it's a permanent price reduction. Or, say, 20-30 years. That length of time is enough to drastically devalue one's assets due to the time value of money principle. A crash with a price recovery decades away doesn't really matter to me. The future of natural gas is more important to me, personally, than oil, as most of my assets are natural gas leases. Nat gas went down to $1.60 just a couple years ago. If that were to happen again and stay there 20 years, I'd be MUCH better off to sell now and take the money and run. The shale gas industry is dicey at $3.00. It's over at $1.60.

All of this is also jaded by my perception that the oil and gas industry lies like Trump. Bogus as hell. They paint a rosy picture for how great everything is but nobody's making money! Again, I can envision the house of cards falling. So, it's more than just Tony Seba's possible scenario.

Thanks for all responses, interesting stuff.

I understand your apprehension, as I have the same thoughts. However, since I’ve yet to come up with a way to make a Solar PV array pay out on my roof in less than 20 years, I’m unsure how Mr. Seba and Co. expect to do it on a utility scale. 

He may be right, may be completely wrong - my guess is, like all of us, he’ll be somewhere in the middle. As for his predictions on transport, I think he’s pushing that though because he knows it is the only EVs will get large scale adoption - too costly otherwise. There’s a lot of hair on his thoughts: what about governments - how do they replace the cash cow that is gasoline taxes? I expect oil to take up a smaller % of new demand growth. However, demand will still grow. 

As for my other comment, simple: we’re bombared by predictions from the “who’s who” of economists on a near daily basis. Show me when one has ever been correct? They’re great with numbers, no doubt, but tend to know nothing about the industries they’re applying said numbers to. Life isn’t a math problem, there are other factors to account for

[Tom Kirkman + 8,860]

5 hours ago, Ian Austin said:

Life isn’t a math problem, there are other factors to account for

^  This.  Very much so, this ^