A lesson from VW

Herbert Diess Chief Executive of VW "Such an industry can crash faster than many people realize... I see our chances of keeping the lead position at 50:50"

This was in relation to the on coming storm of EV's in the automotive industry and this was Diess trying to paint a rosy picture. The European car manufactures have totally ignored the facts in front of them that EV's are coming of age and have only produced compliance EV's mainly, as has the USA. Now they are being left behind, just look how Tesla's model 3 has hit the market and they can't produce enough cars to cover demand. Now China is coming, it has invested hard in EV technology, manufacturing and governmental pressure. They produce massive amount of batteries and are designing cars bottom up as EV's. Many traditional car manufactures will not be here by the end of next decade, even a minor drop in sales can bring them down as was shown ten years ago.

The same attitude is being shown in the oil world and really the fossil fuel world as a whole. Ignoring whats happening with renewables and how they are beginning to transform the energy world. In many ways like those that run the car manufacturing world the fossil fuel world ignoring these changes makes sense short term, share holders wont be happy if those dividends don't show up every time they expect them. So those running the show with only a few years of work ahead of them are best of carrying on as normal and get those massive bonuses, let the next big cheese take the fall.

It's difficult to see if those in the industry really believe that everything is going to go on as normal or they are just looking after their own self interests and bullshitting their way through to that nice retirement.     

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15 minutes ago, DA? said:

It's difficult to see if those in the industry really believe that everything is going to go on as normal or they are just looking after their own self interests and bullshitting their way through to that nice retirement.     

Try reading this report:

The Future of Oil & Gas in a Lower Carbon World - PEPANZ

Oil and gas are still expected to supply half of the world’s energy needs by 2040 – around the same proportion as now.  This is the finding of the International Energy Agency (IEA) in all three of their projected scenarios.

The global future for oil and gas

Global natural gas usage is expected to grow 45% by 2040, providing a quarter of the world’s energy according to the IEA’s ‘New Policies’ scenario. It will increasingly be used for power generation to displace coal and potentially for shipping, trucks and buses in the form of LNG.

Projections show demand for oil will be slower and potentially even decrease with the rise of electric cars, but it will continue to be the world’s biggest source of energy.

While electric vehicles will become more common for domestic use, other uses of oil (such as petrochemicals, heavy transport, aviation, 3D printing and building materials) will continue to drive demand.

The appeal of natural gas is no surprise. As well as being affordable, accessible and practical, it has less than half the emissions of coal which is still widely used around the world.

However, this doesn’t mean business as usual. Instead, oil and gas will need to be used more efficiently and in different ways.

==============================

Direct download link to the report:

https://www.pepanz.com/dmsdocument/92

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3 minutes ago, Tom Kirkman said:

Try reading this report:

The Future of Oil & Gas in a Lower Carbon World - PEPANZ

Oil and gas are still expected to supply half of the world’s energy needs by 2040 – around the same proportion as now.  This is the finding of the International Energy Agency (IEA) in all three of their projected scenarios.

The global future for oil and gas

Global natural gas usage is expected to grow 45% by 2040, providing a quarter of the world’s energy according to the IEA’s ‘New Policies’ scenario. It will increasingly be used for power generation to displace coal and potentially for shipping, trucks and buses in the form of LNG.

Projections show demand for oil will be slower and potentially even decrease with the rise of electric cars, but it will continue to be the world’s biggest source of energy.

While electric vehicles will become more common for domestic use, other uses of oil (such as petrochemicals, heavy transport, aviation, 3D printing and building materials) will continue to drive demand.

The appeal of natural gas is no surprise. As well as being affordable, accessible and practical, it has less than half the emissions of coal which is still widely used around the world.

However, this doesn’t mean business as usual. Instead, oil and gas will need to be used more efficiently and in different ways.

==============================

Direct download link to the report:

https://www.pepanz.com/dmsdocument/92

The IEA "forecasts" are a joke. Look what they have said repeatedly about solar for example, wrong every year and still getting it so wrong and not by a bit but completely out of the ball park. This is what I'm talking about, ignoring whats happening.

The chemical feed stock is going to be the knight riding into to save fossil fuels this is just more of the same blinkered thinking. Totally ignoring the other means that are being developed to get these carbon and hydrogen and sticking them together.

LNG for buses, trucks and so on, have you seen whats going on with EV's, LNG is so yesterday.

Also if those barrels of dinosaur juice don't use up all those different chemicals what happens to the rest, it's a waste product that needs disposing off, even less profits.

This is the lesson that needs to be learnt for the car market, ignoring the reality of whats happening will lead to companies folding. As coal showed when that demand peaks the industry faces a whole world of pain.

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Well DA, clearly we disagree on the entire topic of the oil & gas industry.

Good luck with the EV / renewables revolution.  With Elon Musk and Al Gore as the Fearless Leaders, this should be an entertaining carnival of hype.

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34 minutes ago, DA? said:

Herbert Diess Chief Executive of VW "Such an industry can crash faster than many people realize... I see our chances of keeping the lead position at 50:50"

This was in relation to the on coming storm of EV's in the automotive industry and this was Diess trying to paint a rosy picture. The European car manufactures have totally ignored the facts in front of them that EV's are coming of age and have only produced compliance EV's mainly, as has the USA. Now they are being left behind, just look how Tesla's model 3 has hit the market and they can't produce enough cars to cover demand. Now China is coming, it has invested hard in EV technology, manufacturing and governmental pressure. They produce massive amount of batteries and are designing cars bottom up as EV's. Many traditional car manufactures will not be here by the end of next decade, even a minor drop in sales can bring them down as was shown ten years ago.

The same attitude is being shown in the oil world and really the fossil fuel world as a whole. Ignoring whats happening with renewables and how they are beginning to transform the energy world. In many ways like those that run the car manufacturing world the fossil fuel world ignoring these changes makes sense short term, share holders wont be happy if those dividends don't show up every time they expect them. So those running the show with only a few years of work ahead of them are best of carrying on as normal and get those massive bonuses, let the next big cheese take the fall.

It's difficult to see if those in the industry really believe that everything is going to go on as normal or they are just looking after their own self interests and bullshitting their way through to that nice retirement.     

You have some good points. 

However, as someone involved in both renewables and O & G I can tell you that it takes the capital strength and organisational skill of E&P companies or states to really roll out the renewables revolution. And even then it takes time to gather momentum. Best I can judge is that it will be a very slow transition... please note though that is not the same as saying that the alternative energy will not boast impressive growth. It will, but I think that we will need fossil fuels in the energy mix for a very long time. 

 

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36 minutes ago, Rasmus Jorgensen said:

You have some good points. 

However, as someone involved in both renewables and O & G I can tell you that it takes the capital strength and organisational skill of E&P companies or states to really roll out the renewables revolution. And even then it takes time to gather momentum. Best I can judge is that it will be a very slow transition... please note though that is not the same as saying that the alternative energy will not boast impressive growth. It will, but I think that we will need fossil fuels in the energy mix for a very long time. 

 

I agree it will take time, the entrenched side has a massive advantage. Every market has a different tipping point and it's by far not just down to price and at the moment and if present day change over rates held it'd take generations to become a sustainable society. But I expect and the trends show a point sometime in the next decade when renewables become cheaper than just the fuel for the generators (different markets different times) they become more expensive than installing new renewables, then those fossil fuel plants become so much scrap. Ignoring any black swans or even the grey ones I expect the renewable (and other) technologies to become so dam obviously the only choice that it can't be ignore by all but the blinded at around 2025.

I also think share holders should keep in mind what happened to the share prices of coal a number of years a go when coal peaked and share price dropped like a stone, what are they now 25% of the value they were? Even a peak demand on the near horizon will crash the value of these companies and that horizon gets rapidly nearer. The price of fossil fuels will crash as peak demand happens, only those that can produce for a very low price can continue and this actually will help keep fossil fuels going for longer but at a rapidly reducing rate.

It's true even though smart phones quickly took the market from the old dumb mobiles there are still people with a dumb phone (my wife for one) but what happened to Nokia and those others that didn't react quicker enough? There are a few companies making these $10 phones but not many and not making many rich. The fossil fuel world seems to think it's special in some way that insulates it from change, just like the massive car manufactures thought.  

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That would be the same Diess who said VW can come up with a Tesla Model 3-equivalent performance car at half the price, right? I wouldn't believe a word this guy says.

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1 hour ago, DA? said:

I agree it will take time, the entrenched side has a massive advantage. Every market has a different tipping point and it's by far not just down to price and at the moment and if present day change over rates held it'd take generations to become a sustainable society. But I expect and the trends show a point sometime in the next decade when renewables become cheaper than just the fuel for the generators (different markets different times) they become more expensive than installing new renewables, then those fossil fuel plants become so much scrap. Ignoring any black swans or even the grey ones I expect the renewable (and other) technologies to become so dam obviously the only choice that it can't be ignore by all but the blinded at around 2025.

I also think share holders should keep in mind what happened to the share prices of coal a number of years a go when coal peaked and share price dropped like a stone, what are they now 25% of the value they were? Even a peak demand on the near horizon will crash the value of these companies and that horizon gets rapidly nearer. The price of fossil fuels will crash as peak demand happens, only those that can produce for a very low price can continue and this actually will help keep fossil fuels going for longer but at a rapidly reducing rate.

It's true even though smart phones quickly took the market from the old dumb mobiles there are still people with a dumb phone (my wife for one) but what happened to Nokia and those others that didn't react quicker enough? There are a few companies making these $10 phones but not many and not making many rich. The fossil fuel world seems to think it's special in some way that insulates it from change, just like the massive car manufactures thought.  

I think you are getting to equilibrium with your thoughts, at least as they relate to an OilPrice.com website.  By that I mean I have never seen anyone on here say that the market won't win out.  Everyone supports that.  Yes, everyone.

The resistance and skepticism only comes from people making projections that, at least in the reader's opinion, seem outlandish or being more of the same old, same old.  The more I learn the more I tend to agree that we are on the cusp of some game changing breakthroughs, and you are right, the market will embrace that and the people will make their choices with their wallets.  Popcorn anyone?

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1 hour ago, Marina Schwarz said:

That would be the same Diess who said VW can come up with a Tesla Model 3-equivalent performance car at half the price, right? I wouldn't believe a word this guy says.

Do you remember your reaction when you first read that German car manufacturers were lying about emissions?  I couldn't believe it.  And then they had the nerve to play on that sentiment and try to blame it on a something like 9 engineers!  Please.....   Hell, the engineers in Germany are the ones with the integrity, to their core.  It's management trying to squeeze out those profits that got them in trouble.  Now nobody will listen to them and it will take a lot of years for them to recover, and it will take solid products for them to get there.  Unfortunately, their lies got them into seriously deep investment capital draining trouble and it is going to take help from Angela, er, the government to bail them out.

Just my opinion.

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42 minutes ago, Dan Warnick said:

Do you remember your reaction when you first read that German car manufacturers were lying about emissions?  I couldn't believe it.  And then they had the nerve to play on that sentiment and try to blame it on a something like 9 engineers!  Please.....   Hell, the engineers in Germany are the ones with the integrity, to their core.  It's management trying to squeeze out those profits that got them in trouble.  Now nobody will listen to them and it will take a lot of years for them to recover, and it will take solid products for them to get there.  Unfortunately, their lies got them into seriously deep investment capital draining trouble and it is going to take help from Angela, er, the government to bail them out.

Just my opinion.

Not to mention the cost's to the share holders for their lies, what's that $28 billion and rising. Unfortunately most of the upper management will probably get away with it or maybe have a slap on the wrist (well maybe not all as the exbig cheese of Audi sits in jail) it's the actual workers in the German automotive industry that will pay the price, oh and the share holders.

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2 hours ago, Dan Warnick said:

Do you remember your reaction when you first read that German car manufacturers were lying about emissions?  I couldn't believe it.  And then they had the nerve to play on that sentiment and try to blame it on a something like 9 engineers!  Please.....   Hell, the engineers in Germany are the ones with the integrity, to their core.  It's management trying to squeeze out those profits that got them in trouble.  Now nobody will listen to them and it will take a lot of years for them to recover, and it will take solid products for them to get there.  Unfortunately, their lies got them into seriously deep investment capital draining trouble and it is going to take help from Angela, er, the government to bail them out.

Just my opinion.

Yes. Integrity is, alas, now just a nine-letter word. Pity.

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1 hour ago, DA? said:

Not to mention the cost's to the share holders for their lies, what's that $28 billion and rising. Unfortunately most of the upper management will probably get away with it or maybe have a slap on the wrist (well maybe not all as the exbig cheese of Audi sits in jail) it's the actual workers in the German automotive industry that will pay the price, oh and the share holders.

They can't fire everybody at once; that would be admitting guilt and that would cost the shareholders even more.  I think they have done their internal investigations and know exactly who is to blame.  Unfortunately, in order to keep the ruse going, those (very high level) managers will be phased out so as their departures will look "normal".  The slap will be inconsequential indeed: probably just the industry insider knowledge of who was involved, so a bit of a loss of face, but the golden parachutes will deploy just fine.  These guys are by and large on contract and they move around on a merry-go-round of C-suites.  The company loyalty in the face of downright incompetence at times is amazing indeed.  The workers/engineers bear the brunt of embarrassment, but they tow the line.  They and the shareholders will hang on.

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(edited)

9 hours ago, DA? said:

I agree it will take time, the entrenched side has a massive advantage. Every market has a different tipping point and it's by far not just down to price and at the moment and if present day change over rates held it'd take generations to become a sustainable society. But I expect and the trends show a point sometime in the next decade when renewables become cheaper than just the fuel for the generators (different markets different times) they become more expensive than installing new renewables, then those fossil fuel plants become so much scrap. Ignoring any black swans or even the grey ones I expect the renewable (and other) technologies to become so dam obviously the only choice that it can't be ignore by all but the blinded at around 2025.

Agree with the overall tendency. However, I doubt it will be that quick. I know it takes a long time to setup manufacturing supply-chain. Add to this the time it takes to get the projects FIDs it takes to get critical mass required to make the manufacturing supplychain viable. Finally, once a traditional power-plant is built that becomes sunk cost that nobody wants or can afford to to write off (think freeport / grasberg / Indonesia)..

 

9 hours ago, DA? said:

also think share holders should keep in mind what happened to the share prices of coal a number of years a go when coal peaked and share price dropped like a stone, what are they now 25% of the value they were? Even a peak demand on the near horizon will crash the value of these companies and that horizon gets rapidly nearer. The price of fossil fuels will crash as peak demand happens, only those that can produce for a very low price can continue and this actually will help keep fossil fuels going for longer but at a rapidly reducing rate.

Most of the large E&Ps are trying to get a greener profile.... it is almost like they are investing just enough to define them as green, waiting on the tipping point... Between them the supermajors could make this happen quickly, if they wanted (I think @Marina Schwarz wrote about this).

My point is that the overall tendency is clear - I seriously doubt the timeline you suggest though. 

Edited by Rasmus Jorgensen

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I am a big fan of popcorn when it is buttered. I will happily watch the competition between natural gas, CNG, and LNG, Coal, diesel, gasoline, electricity, alcohol, methane etc. Competition is the lifeblood of productivity and wealth building. 

There are already far more natural gas vehicles in operation worldwide than electric vehicles. The technology is well tested, proven, safe, and is good for long range vehicles such as buses, trucks, ships, locomotives, even aircraft. Electricity is good for trains, streetcars, and small automobiles and trucks. It has yet to prove itself with large trucks to my knowledge. Natural gas or coal will produce most of the electricity for electric cars in the near future. 

I hope that coal declines in use but only the countries that presently depend on it will decide that. I hope that I do not have to pay taxes to support electric vehicles that I do not want. My standard for electric vehicles will be simple. Are they as economical and useful as the vehicle that I have purchased before? My latest purchase is a three cylinder Mitsubishi Mirage for my 19 year old daughter. It cost $13,400 and gets around 37/43 mpg. The speedometer goes up to 120 MPH but I hope she doesn't go over 70 or so.  Electric car buyers will presently pay over $30,000 and still have to pay for electricity. I hope that Volkswagen can cut that price in half without government subsidies. 

I will be avidly watching and waiting. I am rooting for the best vehicles and fuels to win. 

https://www.mitsubishicars.com/mirage/2018/models

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On 11/5/2018 at 5:39 AM, Tom Kirkman said:

Well DA, clearly we disagree on the entire topic of the oil & gas industry.

Good luck with the EV / renewables revolution.  With Elon Musk and Al Gore as the Fearless Leaders, this should be an entertaining carnival of hype.

I don't have anything nice to say about Al Gore, but I do admire Elon.

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(edited)

26 minutes ago, ronwagn said:

I am a big fan of popcorn when it is buttered. I will happily watch the competition between natural gas, CNG, and LNG, Coal, diesel, gasoline, electricity, alcohol, methane etc. Competition is the lifeblood of productivity and wealth building. 

There are already far more natural gas vehicles in operation worldwide than electric vehicles. The technology is well tested, proven, safe, and is good for long range vehicles such as buses, trucks, ships, locomotives, even aircraft. Electricity is good for trains, streetcars, and small automobiles and trucks. It has yet to prove itself with large trucks to my knowledge. Natural gas or coal will produce most of the electricity for electric cars in the near future. 

I hope that coal declines in use but only the countries that presently depend on it will decide that. I hope that I do not have to pay taxes to support electric vehicles that I do not want. My standard for electric vehicles will be simple. Are they as economical and useful as the vehicle that I have purchased before? My latest purchase is a three cylinder Mitsubishi Mirage for my 19 year old daughter. It cost $13,400 and gets around 37/43 mpg. The speedometer goes up to 120 MPH but I hope she doesn't go over 70 or so.  Electric car buyers will presently pay over $30,000 and still have to pay for electricity. I hope that Volkswagen can cut that price in half without government subsidies. 

I will be avidly watching and waiting. I am rooting for the best vehicles and fuels to win. 

https://www.mitsubishicars.com/mirage/2018/models

Ron, better make sure your daughter is careful to put only premium fuel, at least 91 octane, probably better at 93, given that that little engine is set up at 10-1/2 compression ratio.  That is a neat little car, and with that low weight a 3-cyl will still make it sing.   The last 3-cyl I drove was a two-cycle machine built by SAAB, it was 850 cc, the reason being that at 850 and below it was not exposed to various emissions regulations in the USA.  The SAAB weighed in I think at about 2300 lbs which is 300 lbs heavier than your Mitsubishi, and at 850 cc I would guess it had perhaps 50 hp.,a bit shy of the 74 hp that your daughter has under her foot.  Then again, the SAAB was all steel, no plastic as in today'scars.

You really don't need large engines.  Even the big tank I drive with a 4.4 liter V-8  runs just fine hauling 4,400 lbs tare weight, figure 5,000 lbs with the driver, passengers and luggage, still will do 155 all day long.  But you don't really need that,  only legal in Montana!  Cheers.

Edited by Jan van Eck
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(edited)

Thanks for the warning on the octane. We are tempted to get one as a tow vehicle. It performs quite well and I like the continuously variable transmission. I was always intrigued by Sabbs but never drove one. The old ones were two cycle, as I recall. 

I assume you are talking 155 kph not mph. 

Edited by ronwagn
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(edited)

12 minutes ago, ronwagn said:

Thanks for the warning on the octane. We are tempted to get one as a tow vehicle. It performs quite well and I like the continuously variable transmission. I was always intrigued by Sabbs but never drove one. The old ones were two cycle, as I recall. 

I assume you are talking 155 kph not mph. 

Nah.  Runs at 155 Mph.  Kinda fast, I don't attempt it, but I do install tires good to 186 mph, gives me some reserve!  Big monster BMW.  The Germans like the speed,what can I say.  I run 93 octane with 10.5 compression. Keeps it from detonating. 

Basically, once you get over about 8.9/1 compression ratio, you have to go to a better grade of fuel.  Above about maybe 9.6, you want to be using 91 octane.  Above 11.0, go to 93.  And if it is an airplane, go to 100.  

Edited by Jan van Eck
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21 hours ago, Jan van Eck said:

Nah.  Runs at 155 Mph.  Kinda fast, I don't attempt it, but I do install tires good to 186 mph, gives me some reserve!  Big monster BMW.  The Germans like the speed,what can I say.  I run 93 octane with 10.5 compression. Keeps it from detonating. 

Basically, once you get over about 8.9/1 compression ratio, you have to go to a better grade of fuel.  Above about maybe 9.6, you want to be using 91 octane.  Above 11.0, go to 93.  And if it is an airplane, go to 100.  

We got to go to Montana and North Dakota last year on a trip back from California. We have now been to all fifty states. I was really impressed by the beauty of Southern Montana. I always thought it would be boring grassland. It actually reminded me of Alaska. We visited Yellowstone right after some of the roads opened. I had planned to go all the way to Glacier National Park and Banff but found out that all the roads would still be closed. They probably have a road opening schedule under normal conditions. We may be back next July. 

 

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41 minutes ago, ronwagn said:

We got to go to Montana and North Dakota last year on a trip back from California. We have now been to all fifty states.

Great for you : )  I've been to all of the lower 48 states, but not Alaska or Hawaii.  The U.S. is big and diverse.  Travel is good. 

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Now GM are at it, no electric pickup truck (Ute, Backie) for the next twenty years apparently. Or until they are court with their pants down again, then lots of running around like headless chickens. Roll on nuts Lutz for a bit more Tesla's going bankrupt and such.

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On 11/11/2018 at 8:54 PM, Tom Kirkman said:

Great for you : )  I've been to all of the lower 48 states, but not Alaska or Hawaii.  The U.S. is big and diverse.  Travel is good. 

Working on all the provinces of Canada next. God willing we will make it. 

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