Oil Price Could Fall To $30 If Global Deal Not Extended

[AcK + 50]

1 hour ago, BenFranklin'sSpectacles said:

Short term clout, maybe.  The problem is that any rise in prices will reduce their long-term market share.  If we define "clout" to mean "ability to increase the sum total of future profits", then no, I don't think they have clout. 

We can lump Russia in with Saudi Arabia, but are we convinced that relationship will last?  How much tolerance will Russia have for lost market share? 

Admittedly, I don't know how traders operate.  My naive guess is that massive price spikes occurred because people believed there was no replacement for Middle Eastern oil.  There's some psychological inertia in that human beings will expect supply restrictions to have the same effect in the future as they did in the past.  However, traders should slowly realize that the Middle East is replaceable.  This will become blatantly obvious in the next 5 years.  Once that happens, there will be no reason to fear OPEC restrictions.  It will become routine for OPEC to attempt price manipulation, and the market to quickly replace that production.  At that point, how high could oil possibly spike?

Lets talk about Russia in some time.

On your other point - replaced by what exactly. Two answers I get most routinely - (a) within the ambit of trad energy, Shale, and (b) outside the ambit, EVs. On first, already old Shale (Eagle Ford) is already starting to feel the heat of Exhaustion - Bakken will follow soon enough - Permian is both big and will grow for longer, but not perpetuity. So US production will peak out in 5-7 years. On second, EVs are more long term threat to the industry no doubt. But they are woefully short of scale right now. The movement will grow, but make no mistake the next big growth for autos/demand will come from SE Asia, South Asia and Africa next (US/EU are done - China will be more modest growth once the current cycle reverses). And here is where (IMHO) people miss the point about EVs - even when the TCO (total cost of ownership) of EVs comes in-line with ICEs, the Capex (upfront cost) will be more and they will win on Opex (running cost - look ma, no gas!). But emerging market consumers will yet go for the model that is low Capex, since there ability to bear high upfront costs is limited.

ICEs and crude oil demand can sustain (if not grow) for another 10-15 years. And US shale will be a shadow of itself by then.

The problem with Middle East and Russia is there federal budgets are all f***ed up. In terms of economics they can deliver cash profits even at US$20-30 oil. While Shale needs US$40-50 oil to deliver the same. Hence, cant write off OPEC+ so easily.

[Gabriel Bergeron 0]

No deal.  35$.

Edited June 14, 2019 by Gabriel Bergeron

[AcK + 50]

13 hours ago, BenFranklin'sSpectacles said:

Short term clout, maybe.  The problem is that any rise in prices will reduce their long-term market share.  If we define "clout" to mean "ability to increase the sum total of future profits", then no, I don't think they have clout. 

We can lump Russia in with Saudi Arabia, but are we convinced that relationship will last?  How much tolerance will Russia have for lost market share? 

Admittedly, I don't know how traders operate.  My naive guess is that massive price spikes occurred because people believed there was no replacement for Middle Eastern oil.  There's some psychological inertia in that human beings will expect supply restrictions to have the same effect in the future as they did in the past.  However, traders should slowly realize that the Middle East is replaceable.  This will become blatantly obvious in the next 5 years.  Once that happens, there will be no reason to fear OPEC restrictions.  It will become routine for OPEC to attempt price manipulation, and the market to quickly replace that production.  At that point, how high could oil possibly spike?

Oh well...

https://finance.yahoo.com/news/putin-40-oil-lie-220000875.html

Russia has as much skin the game as Saudi. Except they are playing poker, not soccer.

[BenFranklin'sSpectacles + 762]

16 hours ago, AcK said:

Lets talk about Russia in some time.

On your other point - replaced by what exactly. Two answers I get most routinely - (a) within the ambit of trad energy, Shale, and (b) outside the ambit, EVs. On first, already old Shale (Eagle Ford) is already starting to feel the heat of Exhaustion - Bakken will follow soon enough - Permian is both big and will grow for longer, but not perpetuity. So US production will peak out in 5-7 years. On second, EVs are more long term threat to the industry no doubt. But they are woefully short of scale right now. The movement will grow, but make no mistake the next big growth for autos/demand will come from SE Asia, South Asia and Africa next (US/EU are done - China will be more modest growth once the current cycle reverses). And here is where (IMHO) people miss the point about EVs - even when the TCO (total cost of ownership) of EVs comes in-line with ICEs, the Capex (upfront cost) will be more and they will win on Opex (running cost - look ma, no gas!). But emerging market consumers will yet go for the model that is low Capex, since there ability to bear high upfront costs is limited.

ICEs and crude oil demand can sustain (if not grow) for another 10-15 years. And US shale will be a shadow of itself by then.

The problem with Middle East and Russia is there federal budgets are all f***ed up. In terms of economics they can deliver cash profits even at US$20-30 oil. While Shale needs US$40-50 oil to deliver the same. Hence, cant write off OPEC+ so easily.

We disagree on a few things:
1)  How long US shale will last
2)  How quickly EVs will destroy oil demand
3)  How much capital costs matter when interest rates are low
4)  The other factors that will reduce oil demand. 

Let's talk about #4:
a)  NG is replacing oil in various applications
b)  Technology exists to reprocess plastics into oil; this technology will be implemented
c)  Technology exists to convert any carbon feedstock into oil; this technology will be implemented
d)  Shale isn't the only source of increased production.  At $50-$70/bbl, there are plenty of sources of oil outside the Middle East
e)  Vehicle efficiency will improve another 20+% without hybridization.  It will improve 40+% on hybrids.  None of this requires the capital costs of EVs. 
f)  Consumer EVs will arrive slowly, but commercial EVs are already being built as quickly as possible.  Their economic case has been made.
g)  States with high fuel prices and oil import dependence will create incentives to purchase EVs.  China and Europe in particular - the two largest importers of oil - are eager to eliminate oil demand. 
h)  Etc.

You get the picture.  Shale oil and EVs are only part of this story.  There are many moving pieces to oil markets, and all of them suggest that Middle Eastern oil is unnecessary. 

Now let's talk about use cases.  EVs make the most sense for vehicles that consume the most fuel.  Consider the following: 
1)  Municipal Bus: 35000 miles/year at 6mpg -> 5800 gallons/year
2)  UPS Truck:  35000 miles/year at 10mpg -> 3500 gallons/year
3)  Line-Haul Truck:  100,000 miles/year at 8mpg -> 12500 gallons/year
4)  Average Commuter:  15000 miles/year at 25mpg -> 600 gallons/year
5)  Me:  5000 miles/year at 30-35 mpg -> 160ish gallons/year

From this, we can see that there's an order of magnitude difference between the best use case and the worst use case.  Will I switch to an EV any time soon?  No.  I don't drive enough.  Will commercial drivers switch as soon as EVs become available?  Absolutely.  Will the average consumer want an EV some time in the next decade?  Most likely. 

That's just use cases.   Consumer behavior is driven by a number of factors, including but not limited to:
1)  What is the consumer's income?  For many people, the cost of an EV is a pittance.
2)  How far does the consumer drive?  There was a mailman in the US who saved money purchasing a Tesla Model S because he drove 100+ miles every day.  There are many US commuters who do the same. 
3)  What government incentives exist?  In China, the government actively discourages ICE purchases, and the population complies.
4)  What does the consumer value?  In the Western world, plenty of people who can't do math want to save the planet.  They'll buy an EV just to virtue signal.
5)  What is the price of fuel?  In America, gasoline is $2-3/gallon.  In Germany, it's $5-6/gallon.  In Hong Kong, it's $8-9/gallon.  Most of the world is $4+/gallon, which is more than enough to justify EVs.
6)  What is the cost of maintenance?  The general population will soon discover how cheap & easy EVs are to maintain.  They'll happily pay more monthly to avoid surprise repairs. 
7)  How is the vehicle being used?  Commercial vehicles that run all day are perfect EV use cases.  With the exception of long-haul trucks, these will electrify as quickly as EVs can be built. 
8 ) What is the interest rate?  The lower the interest rate, the less capital expenses matter.  Interest rates are at historical lows with no sign of increasing. 

Again, you get the picture.  The members of this forum build their oil demand arguments on a Standard EV Consumer, but that consumer doesn't exist.  There is a wide spectrum of consumers, many of whom already benefit from EVs.  As the price of EVs falls, the pool of EV beneficiaries will expand.  My bet is that, within 10 years, the vast majority of customers will benefit from an EV.  That means EV demand will outpace EV battery production for the foreseeable future, which means battery production is the limit on oil demand destruction. 

How quickly can we expand battery production?  With low interest rates and supportive governments, very quickly.  Maintaining a 50% annual increase is feasible, which means most vehicles sold could be EVs within the next decade.  The only way to stop that is for ICE fuel economy to dramatically improve.  Either way, oil demand begins an inexorable decline. 

[BenFranklin'sSpectacles + 762]

6 hours ago, AcK said:

Oh well...

https://finance.yahoo.com/news/putin-40-oil-lie-220000875.html

Russia has as much skin the game as Saudi. Except they are playing poker, not soccer. 

Russia has skin in the game, but they would benefit from a destabilized Middle East with declining oil production. 

There's too much oil in the world.  My bet is that the powerful, developed oil producers will collaborate to remove competitors.  That means the US and Russia have a common interest against OPEC. 

[AcK + 50]

5 hours ago, BenFranklin'sSpectacles said:

We disagree on a few things:
1)  How long US shale will last
2)  How quickly EVs will destroy oil demand
3)  How much capital costs matter when interest rates are low
4)  The other factors that will reduce oil demand. 

Let's talk about #4:
a)  NG is replacing oil in various applications
b)  Technology exists to reprocess plastics into oil; this technology will be implemented
c)  Technology exists to convert any carbon feedstock into oil; this technology will be implemented
d)  Shale isn't the only source of increased production.  At $50-$70/bbl, there are plenty of sources of oil outside the Middle East
e)  Vehicle efficiency will improve another 20+% without hybridization.  It will improve 40+% on hybrids.  None of this requires the capital costs of EVs. 
f)  Consumer EVs will arrive slowly, but commercial EVs are already being built as quickly as possible.  Their economic case has been made.
g)  States with high fuel prices and oil import dependence will create incentives to purchase EVs.  China and Europe in particular - the two largest importers of oil - are eager to eliminate oil demand. 
h)  Etc.

You get the picture.  Shale oil and EVs are only part of this story.  There are many moving pieces to oil markets, and all of them suggest that Middle Eastern oil is unnecessary. 

Now let's talk about use cases.  EVs make the most sense for vehicles that consume the most fuel.  Consider the following: 
1)  Municipal Bus: 35000 miles/year at 6mpg -> 5800 gallons/year
2)  UPS Truck:  35000 miles/year at 10mpg -> 3500 gallons/year
3)  Line-Haul Truck:  100,000 miles/year at 8mpg -> 12500 gallons/year
4)  Average Commuter:  15000 miles/year at 25mpg -> 600 gallons/year
5)  Me:  5000 miles/year at 30-35 mpg -> 160ish gallons/year

From this, we can see that there's an order of magnitude difference between the best use case and the worst use case.  Will I switch to an EV any time soon?  No.  I don't drive enough.  Will commercial drivers switch as soon as EVs become available?  Absolutely.  Will the average consumer want an EV some time in the next decade?  Most likely. 

That's just use cases.   Consumer behavior is driven by a number of factors, including but not limited to:
1)  What is the consumer's income?  For many people, the cost of an EV is a pittance.
2)  How far does the consumer drive?  There was a mailman in the US who saved money purchasing a Tesla Model S because he drove 100+ miles every day.  There are many US commuters who do the same. 
3)  What government incentives exist?  In China, the government actively discourages ICE purchases, and the population complies.
4)  What does the consumer value?  In the Western world, plenty of people who can't do math want to save the planet.  They'll buy an EV just to virtue signal.
5)  What is the price of fuel?  In America, gasoline is $2-3/gallon.  In Germany, it's $5-6/gallon.  In Hong Kong, it's $8-9/gallon.  Most of the world is $4+/gallon, which is more than enough to justify EVs.
6)  What is the cost of maintenance?  The general population will soon discover how cheap & easy EVs are to maintain.  They'll happily pay more monthly to avoid surprise repairs. 
7)  How is the vehicle being used?  Commercial vehicles that run all day are perfect EV use cases.  With the exception of long-haul trucks, these will electrify as quickly as EVs can be built. 
8 ) What is the interest rate?  The lower the interest rate, the less capital expenses matter.  Interest rates are at historical lows with no sign of increasing. 

Again, you get the picture.  The members of this forum build their oil demand arguments on a Standard EV Consumer, but that consumer doesn't exist.  There is a wide spectrum of consumers, many of whom already benefit from EVs.  As the price of EVs falls, the pool of EV beneficiaries will expand.  My bet is that, within 10 years, the vast majority of customers will benefit from an EV.  That means EV demand will outpace EV battery production for the foreseeable future, which means battery production is the limit on oil demand destruction. 

How quickly can we expand battery production?  With low interest rates and supportive governments, very quickly.  Maintaining a 50% annual increase is feasible, which means most vehicles sold could be EVs within the next decade.  The only way to stop that is for ICE fuel economy to dramatically improve.  Either way, oil demand begins an inexorable decline. 

Agree case for commercial EVs is stronger than consumer EVs. But I would yet say commercial EVs within the PV (passenger vehicle) category - i.e. Uber, Lyft, Ola, Didi et al.

But there is lot to disagree on as well. China EV share is yet sub-5% of market despite all the incentives. Of course China has not given up so it will improve. Yet not clear on the peak EV/trough ICE scenario.

Care to elaborate on...

>> 1)  Municipal Bus: 35000 miles/year at 6mpg -> 5800 gallons/year /3)  Line-Haul Truck:  100,000 miles/year at 8mpg

Are these EV alternates in the market (or at least in 2020/21 pipeline).

>> a)  NG is replacing oil in various applications

What applications?

[Jan van Eck + 7,558]

23 minutes ago, AcK said:

>> a)  NG is replacing oil in various applications

What applications?

Coastal ferry boats.

City transit bus fleets.

Repair trucks of nat-gas municipal suppliers (of course!).

Large electrical generating plants (in the USA, at least).  For example, a new and massive new electrical generating plant was just built in Yonkers, New York, a suburb of New York City, as the NY Edison power company was shutting down the Storm King Mountain power plant, and the new cables set to come down from Hydro-Quebec are being held up by the permitting process in the intervening States.  Gas is cheap, gas turbine generators are very cheap  (there is huge competition between those built by GE Power Systems, a GE Division that lost $800 million building machines last year and is desperate for more orders) and Siemens, the German giant that even built machines for the Crimea although Crimea is under exporter sanctions.  They did that anyway.  When you have cheap gas and cheap machinery you have an irresistible combination, and that causes shift from oil. 

[Jan van Eck + 7,558]

6 hours ago, BenFranklin'sSpectacles said:

4)  The other factors that will reduce oil demand. 

The single biggest factor that is reducing oil demand in the future will be urbanization.  At least, in the West.  Lots of people in the City do not even have a car.  And if they do, it is kept in a garage out in the Outer Rim, which makes it difficult to get to.  Those cars are typically used for weekend "get-away" type holidays, might be driven for 300 miles, then that car goes back into suburban garage storage. 

Right on its heels, and the biggest beneficiary will be trucking, is the construction of tunnels.  Digging tunnels through the two main rock folds in the US surface, the Appalachian Mountains in the East and the Rockies-Sierra Mountains in the West, would reduce oil consumption of the truck fleets crossing those barriers by about 40%.  And that is a lot of oil. 

[Jan van Eck + 7,558]

6 hours ago, BenFranklin'sSpectacles said:

1)  Municipal Bus: 35000 miles/year at 6mpg -> 5800 gallons/year

That must be for a small bus.  A full-size city transit bus, one that is 40 feet long, running in typical city traffic yields about 1.8 to 2.0 miles per gallon (US) of diesel fuel.  They are, what you would say in Russian, Kerosinovvy svini -  kerosine pigs.  (Actually, that term was developed in aviation for a model of Yakolev aircraft, the YAK-42, but hey, if the shoe fits...). 

[Ward Smith + 6,615]

On 6/12/2019 at 5:00 PM, Meredith Poor said:

32000	1 gallon gasoline in terms of watt-hours
96000	watt-hours needed to make gallon of gasoline from CO2 and water
19200	watts needed * 5 hours per day
3840	dollars needed at 20 cents per watt
1.501906718	dollars per gallon (3840 / 2556 days)
63.08008214	dollars per barrel (1.5 x 42 gallons per barrel)

In short, the gasoline price per barrel where solar becomes the cheaper alternative is $63, not accounting for various capital costs.

This ceiling is slipping lower by the day.

Citation needed

[Ward Smith + 6,615]

7 hours ago, Jan van Eck said:

Digging tunnels through the two main rock folds in the US surface, the Appalachian Mountains in the East and the Rockies-Sierra Mountains in the West, would reduce oil consumption of the truck fleets crossing those barriers by about 40%.  And that is a lot of oil. 

Loved this. My dad used to tell me they should do this back in the 60's. 

Now given what a fustercluck the Big Dig in Boston turned out to be, and the SNAFU in Seattle, my gut feeling tells me it would come in over budget and WAY over time. But that's assuming the usual idiots run the project. 

Personally I'd let The Taiwanese do it.  I've ridden that tunnel and it's predecessor route.  No comparison. 

Edited June 15, 2019 by Ward Smith
Something went wrong with link

[BenFranklin'sSpectacles + 762]

On 6/14/2019 at 1:35 PM, AcK said:

 

Edited June 16, 2019 by BenFranklin'sSpectacles
I was being far too flippant the first time, so I'm deleting this and trying again below.

[BenFranklin'sSpectacles + 762]

7 hours ago, Jan van Eck said:

That must be for a small bus.  A full-size city transit bus, one that is 40 feet long, running in typical city traffic yields about 1.8 to 2.0 miles per gallon (US) of diesel fuel.  They are, what you would say in Russian, Kerosinovvy svini -  kerosine pigs.  (Actually, that term was developed in aviation for a model of Yakolev aircraft, the YAK-42, but hey, if the shoe fits...). 

You may be right.  My point was that commercial vehicles are a much better use case than consumer light-duty vehicles, and that point can be made with a back-of-envelope calculation. 

[Jan van Eck + 7,558]

2 hours ago, Ward Smith said:

Loved this. My dad used to tell me they should do this back in the 60's. 

Now given what a fustercluck the Big Dig in Boston turned out to be, and the SNAFU in Seattle, my gut feeling tells me it would come in over budget and WAY over time. But that's assuming the usual idiots run the project. 

Personally I'd let The Taiwanese do it.  I've ridden that tunnel and it's predecessor route.  No comparison. 

Here's the thing: NONE of the problems experienced in those urban settings will be found out in the open countryside.  What drove those projects way up in cost was that they were attempting to build a tunnel through old landfill, kept running into stuff like dumped wood poles, misc. boulders, old pieces of metal scrap, sunken boat or two, that kind of junk.  When boring through the mountains, all you get is plain old ordinary rock.

So  you set up a tunnel-boring machine and have at it.  Let the machine punch its way through and put in those shield panels at the same time. When the machine comes out the other end you have a perfectly lined tunnel and a lot of gravel.  You use the gravel to either build the access ramps or for ballast stone if the tunnel is for a railroad.  If you do it carefully, that tunnel can accommodate both a railway and a truckway  (you let the train go in first, then as soon as the last car clears you hit the green light for the waiting trucks to go follow along).  

These boring machines are mature technology, and you would be surprised how many are available in the used market. Get a dozen of them and get started!   Added bonus:  lots of savings in the snow areas, no road salt costs, tow truck hauls of spun-out rigs,  less damage to busted up trucks. And if you put in that rail track strictly as a bypass, then if the main line gets washed out, your bypass is already there, that freight just keeps on moving!

Edited June 15, 2019 by Jan van Eck

[ronwagn + 6,290]

On 6/13/2019 at 6:56 AM, AcK said:

Keeping thinking that for a few more months and you will be surprised. Just like the traders you mention.

To think Saudi+Russia with 20%+ share of oil market do not have clout is a mistake, IMHO.

Except that they are both in dire straights and cannot afford to lose market share.

[AcK + 50]

12 hours ago, Jan van Eck said:

Coastal ferry boats.

City transit bus fleets.

Repair trucks of nat-gas municipal suppliers (of course!).

Large electrical generating plants (in the USA, at least).  For example, a new and massive new electrical generating plant was just built in Yonkers, New York, a suburb of New York City, as the NY Edison power company was shutting down the Storm King Mountain power plant, and the new cables set to come down from Hydro-Quebec are being held up by the permitting process in the intervening States.  Gas is cheap, gas turbine generators are very cheap  (there is huge competition between those built by GE Power Systems, a GE Division that lost $800 million building machines last year and is desperate for more orders) and Siemens, the German giant that even built machines for the Crimea although Crimea is under exporter sanctions.  They did that anyway.  When you have cheap gas and cheap machinery you have an irresistible combination, and that causes shift from oil. 

Excuse my ignorance but how is this replacing oil. Isnt this replacing coal? Solar/wind and other renewables are anyway taking care of that.

Take your first three points...

[J.mo + 165]

On 6/13/2019 at 6:54 AM, AcK said:

The build after build is in the US - since weekly data is published. OECD EU/APac data is also published on monthly basis by IEA (although undergoes substantial revisions before stabilizing). The problem is OECD consumption is more or less flat (well 0.2-0.3% growth). What you need is inventory data for China/India/now SouthEast Asia (since Trump started his trade wars) - that is not available.

And this creates a lot of problems. See below - nobody had any idea for how long China has been preping for the trade war. They are sitting on 25-50% (various sources) more inventory than normal and refuse to buy US crude till Trump continues with his tirade.

https://orbitalinsight.com/crude-markets-remain-adequately-supplied/

What do you mean nobody had any idea China had a surplus? I even knew China had a surplus. Anyone who reads the slightest news about oil knew china had a surplus. it's been posted frequently the level of their elevated imports and elevated inventories. anyone who does not know simply turned a blind eye or wanted to forget about it  

[AcK + 50]

>> 2)  How quickly EVs will destroy oil demand

Interesting on current state of EVs - we are also watching very keenly...

https://www.forbes.com/sites/jimcollins/2019/06/14/chinas-electric-car-boom-is-already-running-out-of-gas/#39bccb72dcb5

Listen I am not saying whether EVs can be the gamechanger or not - just that evidence of it actually happening is quite thin right now. I would reckon more than China, EU will be the one to watch. China the government wants it but not so sure about the consumer. EU the consumer is very environment conscious with the ability to pay for EV upfront costs - and democratic governments willing to create infra.

[AcK + 50]

2 hours ago, J.mo said:

What do you mean nobody had any idea China had a surplus? I even knew China had a surplus. Anyone who reads the slightest news about oil knew china had a surplus. it's been posted frequently the level of their elevated imports and elevated inventories. anyone who does not know simply turned a blind eye or wanted to forget about it  

Well the hedgies who pushed WTI net speculative positions to 5.5X long didnt know (for the second time within a year) - to be so adventurous as to take leveraged positions on crude oil price going beyond US$65.

https://www.investing.com/economic-calendar/cftc-crude-oil-speculative-positions-1653

Then again - maybe you were on the other side of the trade - my congratulation 😉

[Jan van Eck + 7,558]

3 hours ago, AcK said:

Excuse my ignorance but how is this replacing oil. Isnt this replacing coal? Solar/wind and other renewables are anyway taking care of that.

Take your first three points...

I deduce from your phrasing of your question that you are inquiring as to how nat-gas replaces oil in NY electrical generating.  Inside the City, the power is from Consolidated Edison plants, although the ownership of the power plants themselves is changed on paper to some other supplier consequent to de-regulation and the severing of ownership of power plants from the distributor of electricity.  All those plants inside NYC are or were burning oil, they went off coal a long time ago.  As new or replacement power is required it is coming from nat-gas. At least, that is my understanding; I have never been inside one of those generator facilities. I was invited to assist in the construction of that Yonkers nat-gas generator, but that was on a different level.  Yonkers is a gas-fired plant, neither oil nor coal were considered.  It is my understanding that oil, which is heavy oil, and coal, are not considered due to the issue of causing and aggravating asthma.  Air quality is a very big problem in US cities, especially for children living near bus depots and repair garages.  In NYC, the vast fleets of diesel buses are a serious problem, yet another reason for those machines to go to compressed gas or to electric. 

I speculate that NYC will at some point simply ban any non-electric or non-natural-gas vehicle, and do so "legally" based on air quality. I think the City has the legal authority to do that and survive any Court challenge.  If so, that would remove a huge number of autos from ICE and the owners would logically go buy Tesla Model 3, the domestic electric builder.  That big taxi fleet is headed for a very rapid change-over to electric, once somebody offers a fast change-out of the battery pack.  (I thought Tesla Model S had that capability??). These cities are going to say, "Hey, you can be  in the taxi business, but you cannot inflict harms onto the residents with your exhaust, so either you go electric or you go the Asian pedal-cab or some Rickshaw and pull the passengers around town yourself. You take your choice."  I am betting that the typical New York cabbie is going to go electric.  I don't see them importing some rickshaw machine, those guys are too lazy for that!

[AcK + 50]

12 minutes ago, Jan van Eck said:

I deduce from your phrasing of your question that you are inquiring as to how nat-gas replaces oil in NY electrical generating.  Inside the City, the power is from Consolidated Edison plants, although the ownership of the power plants themselves is changed on paper to some other supplier consequent to de-regulation and the severing of ownership of power plants from the distributor of electricity.  All those plants inside NYC are or were burning oil, they went off coal a long time ago.  As new or replacement power is required it is coming from nat-gas. At least, that is my understanding; I have never been inside one of those generator facilities. I was invited to assist in the construction of that Yonkers nat-gas generator, but that was on a different level.  Yonkers is a gas-fired plant, neither oil nor coal were considered.  It is my understanding that oil, which is heavy oil, and coal, are not considered due to the issue of causing and aggravating asthma.  Air quality is a very big problem in US cities, especially for children living near bus depots and repair garages.  In NYC, the vast fleets of diesel buses are a serious problem, yet another reason for those machines to go to compressed gas or to electric. 

I speculate that NYC will at some point simply ban any non-electric or non-natural-gas vehicle, and do so "legally" based on air quality. I think the City has the legal authority to do that and survive any Court challenge.  If so, that would remove a huge number of autos from ICE and the owners would logically go buy Tesla Model 3, the domestic electric builder.  That big taxi fleet is headed for a very rapid change-over to electric, once somebody offers a fast change-out of the battery pack.  (I thought Tesla Model S had that capability??). These cities are going to say, "Hey, you can be  in the taxi business, but you cannot inflict harms onto the residents with your exhaust, so either you go electric or you go the Asian pedal-cab or some Rickshaw and pull the passengers around town yourself. You take your choice."  I am betting that the typical New York cabbie is going to go electric.  I don't see them importing some rickshaw machine, those guys are too lazy for that!

Aok chief...

But was searching for some data on the same... aint gonna save you a lot.

https://www.eia.gov/tools/faqs/faq.php?id=427&t=3

 

[Meredith Poor + 897]

10 hours ago, Ward Smith said:

Citation needed

What data source are you looking for? The Kwh equivalent of gasoline is available on a keyword search.

Price trends on RE from the last half of 2018:

https://www.nrel.gov/docs/fy19osti/73234.pdf

Also look up Carbon Engineering website regarding 'Air to Fuels'.

[Jan van Eck + 7,558]

25 minutes ago, AcK said:

Aok chief...

But was searching for some data on the same... aint gonna save you a lot.

https://www.eia.gov/tools/faqs/faq.php?id=427&t=3

 

All true.   Yet I would posit that, at least in New England, that nuclear component of electric power generation will all be replaced by natural gas-fired generators.   It would be nice if some chunk of that would come from surplus HydroQuebec power capability, right now there is some 5,600 MW of built power that is simply being washed over the spillways as there are no customers, and the cables to bring that into the NYC and Boston markets are stalled in "environmental review" Hearings, so you have these nat-gas plants going up.  Yet even that is hampered by the stalling of new gas pipelines, also stuck in interminable delays of review hearings.  Our society is becoming totally jammed up with "reviews" being done by people who have no clear grasp of the technical aspects nor the economic impacts.  You get these people who object to some gas pipeline, even a very small local feeder, on the grounds that "gas" is some massive environmental poison and the planet will collapse.  So instead the customers can burn either oil or wood. And then they object to undersea power cables, although the reasoning seems absent.  Maybe the real reason is they don't like Canadians and Canadian lobster.  The whole thing has become the Twilight Zone of the surreal. 

[Tom Kirkman + 8,860]

On 6/13/2019 at 12:01 PM, J.mo said:

Can someone help me understand something real quick. 

How is the extension of these cuts worth anything more than market buzz? Cuts have been in place since 2016, and have only deepened with Iran and Venezuela. Oil still closed in the 50s today. I'm failing to see at this point the significant impact of any of these cuts. Oil is continuing a downward trajectory with build after build. 

Here's part of a comment by @Mike Shellman  in another thread:

Since when has it become the responsibility of the United States of America to provide the rest of the world with cheap, abundant LTO exports...using credit/debt? The IEA talks up American shale oil, naturally, because the entire world is benefiting from it; it could care less about how fast the resource is being depleted in our nation, how woefully unprofitable it is to extract, how much debt there is associated with it, how much gas is getting wasted with it or where the water is going to come from to frac the damn things. OPEC + and Russia, by the way, are loving the whole "revolution" thing; America is growing its production and exports while other world producers are reducing theirs. In 5-6 years other world oil producers who can think past next week will be selling oil back to America for 3 times the cost.   

[BenFranklin'sSpectacles + 762]

1 hour ago, AcK said:

>> 2)  How quickly EVs will destroy oil demand

Interesting on current state of EVs - we are also watching very keenly...

https://www.forbes.com/sites/jimcollins/2019/06/14/chinas-electric-car-boom-is-already-running-out-of-gas/#39bccb72dcb5

Listen I am not saying whether EVs can be the gamechanger or not - just that evidence of it actually happening is quite thin right now. I would reckon more than China, EU will be the one to watch. China the government wants it but not so sure about the consumer. EU the consumer is very environment conscious with the ability to pay for EV upfront costs - and democratic governments willing to create infra. 

I can tell you from the title of that article that the author is incompetent. 

That said, I see your point about trends, but I stand behind my original statement.  Since the reasoning is less obvious, I'll explain in more detail.

You're looking at what's happening today, which is the gold standard for evidence.  I'm looking at what will happen 5-10 years in the future.  To understand why I'm so confident, we need to discuss trend analysis vs system knowledge:
1)  Trend analysis: looking at what happened in the past and extrapolating to the future.  This technique contains effectively zero information on causes, effects, how systems actually work, how people make decisions, etc.  This is an incredibly naive approach.  Sadly, it's all most people are capable of. 
2)  System knowledge:  How do consumers make purchasing decisions?  What drives the economics of different vehicles?  What technologies are coming down the R&D pipeline?  What are businessmen planning to do in the next 5-10 years?  What are governments planning to do in the next 5-10 years?  These are the things that drive EV demand.  If we can understand these things, we need not rely on trend analysis. 

I earned two degrees.  One was pure engineering; the other was engineering techniques applied to business decisions.  Then I worked in industry.  I have system knowledge:
1)  EVs (BEV and PHEV) will win because the TCO will be lower, both in time and money.  Lower fuel prices, lower maintenance costs, fewer breakdowns, less preventative maintenance, easier to drive - they're just a better product. 
2)  Industry knows EVs are the future, which is why vast financial resources are being poured into battery research & supply chains.  We haven't seen the fruits of these investments because sales data is a lagging indicator.  It takes years to develop technologies, design vehicles, survey for natural resources, start mines, construct factories, and finally get product to customers - but all of these things are being done as we speak.
3)  Per an automotive engineer I know, nearly every new vehicle model will have a hybrid or full-electric option by 2022.  The automotive industry knows electrification is the future; they're already designing for it.  Volvo has declared that their current generation of ICEs will be their last.  New ICEs are being designed around hybridization (E.g. Mercedes/Chrysler I4 & I6 engines).  Companies that resisted BEVs (Toyota) have begun to pursue them and are accelerating their electrification schedules.  EV startups are appearing (Tesla, Rivian) - and receiving funding/cooperation from automotive majors (Ford with Rivian).  This is for consumer light-duty vehicles - the worst use case for EVs.  Commercial EVs are happening even faster. 

All of that is being done in the background as quickly as industry can manage it.  When that effort finally appears in sales data, it will look like a tsunami.  The news will report astounding changes in the market, environmentalists will revel in their "victory", and politicians will invent ways to take credit.  Meanwhile, those of us who learned the system will roll our eyes at the inevitability of the outcome. 

As a side note, Elon Musk consistently succeeds at risky business bets because he's fiercely technically competent.  Fierce technical competence allows him to see what's possible instead of mimicking what others are doing.  He's constantly annoyed on earnings calls because the analysts and reporters asking questions are literally incapable of seeing what he sees and doing what he does - even when he directly tells them what he's doing.  He may as well be explaining geopolitics to six year olds.