When oil is no longer in demand(economist.com)
economist.com
When oil is no longer in demand
http://www.economist.com/news/special-report/21710634-glimpse-post-oil-era-when-oil-no-longer-demand
174 comments
I agree that this is a stupid policy, but there is some attempt at logic behind it.
Oil production has the problem that increasing in oil production requires spending money that will only pay off if the price of oil remains high for several years. Cheap producers like Saudi Arabia know this, and so try to make the price fluctuate with enough lows to wipe out expensive oil producers, and enough highs to get rich themselves. More marginal properties would make money, but it is hard to survive the lows.
Therefore government policy that produces an effective price floor encourages the production of otherwise marginal oil. This is effectively a bet that increased tax revenue from future production is worth the risk of that tax guarantee. And in the short run you get an increase in jobs for no actual outlay of resources. Which is a trick any politician can appreciate.
That said, it remains a bad policy. Once implemented, lobbying efforts are virtually guaranteed to expand government support until the public is guaranteed to lose money. Doubly so because oil producers can now play one government off against another in a race to see who can offer more. (Sports teams have mastered that particular game...)
Oil production has the problem that increasing in oil production requires spending money that will only pay off if the price of oil remains high for several years. Cheap producers like Saudi Arabia know this, and so try to make the price fluctuate with enough lows to wipe out expensive oil producers, and enough highs to get rich themselves. More marginal properties would make money, but it is hard to survive the lows.
Therefore government policy that produces an effective price floor encourages the production of otherwise marginal oil. This is effectively a bet that increased tax revenue from future production is worth the risk of that tax guarantee. And in the short run you get an increase in jobs for no actual outlay of resources. Which is a trick any politician can appreciate.
That said, it remains a bad policy. Once implemented, lobbying efforts are virtually guaranteed to expand government support until the public is guaranteed to lose money. Doubly so because oil producers can now play one government off against another in a race to see who can offer more. (Sports teams have mastered that particular game...)
Or politicians could catch a glimmer of the future & put some tax dollars towards:
* battery factories * electric car incentives * open source car sharing / planning services. (get rid of the 30% uber tax meanwhile steering people towards shared services) * carbon taxes
it's been said a million times, but may as well keep saying it.
it'll fix the problem for good. no more wars. less environmental destruction.
Cars would actually be cheaper this way, if you wanted to bother owning one. way less maintenance. car pretty much lasts forever, just swap out the battery pack now & then.
* battery factories * electric car incentives * open source car sharing / planning services. (get rid of the 30% uber tax meanwhile steering people towards shared services) * carbon taxes
it's been said a million times, but may as well keep saying it.
it'll fix the problem for good. no more wars. less environmental destruction.
Cars would actually be cheaper this way, if you wanted to bother owning one. way less maintenance. car pretty much lasts forever, just swap out the battery pack now & then.
"car pretty much lasts forever, just swap out the battery pack now & then."
Not in Michigan. You will have far more problems from a car than just battery maintenance.
Not in Michigan. You will have far more problems from a car than just battery maintenance.
Electric cars don't have non-zero maintenance aside from the battery, but -- due to the lack of an internal-combustion engine, simplified drive train, and absence of emission-control equipment -- maintenance costs should be considerably lower.
And if they didn't, we might have built a sustainable society faster and invested in sustainable energy sooner. It could have been done in the 80s. I know it's scary to imagine Americans driving on smaller cars and bicycles and public transport like Europeans... but we would survive it :)
Average commute time in the us is lower than almost all of europe (https://goo.gl/r8DJqz) and public transport not only needs billions in investment to be built but there are very few places where it doesn't run on subsidies. So yeah you're asking americans to a) take longer to get to work b) constantly subsidise a system that will keep on losing money. Based on the political makeup of the country i'd say you can keep on dreamin' :)
Commute times can be misleading. It takes me about an hour to get from my house in downtown Shanghai to my office on the other side of the city. However, this is about 15 minutes of walking and 45 five minutes on the metro. Even though its longer than the US average of 25 minutes, I much prefer this option.
Commuting by car is dead time. When I'm on the subway, I can read, send emails, catch up on work. Its also much better for the environment and costs a grand total of $200/year.
Commuting by car is dead time. When I'm on the subway, I can read, send emails, catch up on work. Its also much better for the environment and costs a grand total of $200/year.
> b) constantly subsidise a system that will keep on losing money
If you take into account the total cost of car ownership you will see that also is heavily subsidized. From car production to roads, parking spaces, oil production... if the accounting is done properly it is obvious that when you make 100 people travel all together in the same vehicle it is a lot cheaper that using 100 different machines to move that same 100 people. Cost wise it is a no-brainier.
I agree with you that lack of political will, and also suburban landscape, are going to make it very difficult for it to happen in the USA.
If you take into account the total cost of car ownership you will see that also is heavily subsidized. From car production to roads, parking spaces, oil production... if the accounting is done properly it is obvious that when you make 100 people travel all together in the same vehicle it is a lot cheaper that using 100 different machines to move that same 100 people. Cost wise it is a no-brainier.
I agree with you that lack of political will, and also suburban landscape, are going to make it very difficult for it to happen in the USA.
I live in NYC where it is reality :-P
Isn't that what oil futures are designed to hedge against?
That still isn't risk free, a producer could sell some futures contracts and not be able to produce on delivery; then they either have to sell the future on at a below market price (it will be closer to the spot) or purchase oil to make delivery. It only has less risk on the buy side.
Yes, this basically socializes the cost of figuring out how to hedge (assuming the state actually hedges, which it probably doesn't), since the intersection of oil producers and prudent users of derivatives is probably rather small...
Yes.
But the government has more economic incentives to extend those futures than other participants because they stand to earn money from taxes.
But the government has more economic incentives to extend those futures than other participants because they stand to earn money from taxes.
Pennsylvania has tax free fracking because it provides high paying jobs. We are the only state that provides tax free fracking and it blows my mind. Texas and other strong Republican states take taxes from oil production but in PA nothing.
The "Pro-Fracking" groups says that PA had 250,000 jobs but it ended up including This number captured everyone in those industries including every road construction worker, trucker, engineer, and steel worker in Pennsylvania.
The number is actually around 20,000 and the state makes no tax money from the production and only from income tax.
The "Pro-Fracking" groups says that PA had 250,000 jobs but it ended up including This number captured everyone in those industries including every road construction worker, trucker, engineer, and steel worker in Pennsylvania.
The number is actually around 20,000 and the state makes no tax money from the production and only from income tax.
'Tax breaks' are offered to all sorts of industries.
Almost all entertainment in Canada for example, is done nearly tax free. Pharma, energy, small business etc. etc..
Almost all entertainment in Canada for example, is done nearly tax free. Pharma, energy, small business etc. etc..
It's particularly perverse, however, to give tax breaks for an industry that has immense negative externalities.
At the expense of cleaner, safer ones no less.
Oil companies don't emit a whole lot of CO2.
You emit the CO2 when you use your car (almost 50% of CO2 emissions are from autos).
And a bunch of other industries are responsible for most of the rest of CO2 emissions.
You emit the CO2 when you use your car (almost 50% of CO2 emissions are from autos).
And a bunch of other industries are responsible for most of the rest of CO2 emissions.
I think you're missing the negative externalities inherent in oil extraction, like groundwater pollution, earthquakes, above ground pipelines, etc.
Not to mention it's a little like saying Pablo Escobar doesn't OD on drugs or steal your TV very often, it's the crackheads that do that...
Not to mention it's a little like saying Pablo Escobar doesn't OD on drugs or steal your TV very often, it's the crackheads that do that...
>>I think you're missing the negative externalities inherent in oil extraction
The same can be said for the production of lithium-ion batteries. The mining and production of these batteries is just as bad for the environment. This is mainly due to the high concentration of Copper and Aluminum needed to make them work properly - which both need to be mined.
Fuel cells are a much better alternative to both combustion engines or lithium-ion electric vehicles:
https://www.bloomberg.com/news/articles/2016-02-08/phones-wi...
The same can be said for the production of lithium-ion batteries. The mining and production of these batteries is just as bad for the environment. This is mainly due to the high concentration of Copper and Aluminum needed to make them work properly - which both need to be mined.
Fuel cells are a much better alternative to both combustion engines or lithium-ion electric vehicles:
https://www.bloomberg.com/news/articles/2016-02-08/phones-wi...
" like groundwater pollution, earthquakes, above ground pipelines, etc"
Groundwater pollution and earthquakes are rare, and the latter are minor and have negligible impact. It's no more problematic than most other extraction industries.
'Above ground pipelines' are completely benign entities with almost zero environmental impact. Leaks are rare enough, and most of them are very minor and easy to clean up. Oil is an organic product, found commonly in nature, and small amounts of Oil spilled have no real impact. Unlike the big tanker spills, which can be devastating.
The highway you drive your car on has considerably more environmental footprint than any 'above ground pipeline'.
Groundwater pollution and earthquakes are rare, and the latter are minor and have negligible impact. It's no more problematic than most other extraction industries.
'Above ground pipelines' are completely benign entities with almost zero environmental impact. Leaks are rare enough, and most of them are very minor and easy to clean up. Oil is an organic product, found commonly in nature, and small amounts of Oil spilled have no real impact. Unlike the big tanker spills, which can be devastating.
The highway you drive your car on has considerably more environmental footprint than any 'above ground pipeline'.
I wouldn't want a coffee shop 'in my backyard' and I have nothing against coffee shops.
But if I had to chose between an Oil Pipeline and a 'highway' - I (and I think most people) would chose the Oil Pipeline any day of the week.
You do realize they are quite common? And that natural gas pipelines - which carry the same carbon-based materials run everywhere in urban areas - and that there's a good chance there is a gas pipeline, literally, in your backyard right now?
If you are living in an urban area, my guess is there is an 80% chance there's a carbon-based pipeline within 500m from where you are.
But if I had to chose between an Oil Pipeline and a 'highway' - I (and I think most people) would chose the Oil Pipeline any day of the week.
You do realize they are quite common? And that natural gas pipelines - which carry the same carbon-based materials run everywhere in urban areas - and that there's a good chance there is a gas pipeline, literally, in your backyard right now?
If you are living in an urban area, my guess is there is an 80% chance there's a carbon-based pipeline within 500m from where you are.
The Energy Information Agency has a nice map of them:
http://www.eia.gov/state/maps.cfm
(turn off some layers to make it easier to look at)
I guess that's transportation pipelines and not distribution pipelines though.
http://www.eia.gov/state/maps.cfm
(turn off some layers to make it easier to look at)
I guess that's transportation pipelines and not distribution pipelines though.
That's a cool map. Pipelines are everywhere :). And yes, those don't include distribution which are nearly ubiquitous in many places.
It used to be that earthquakes were rare, but they aren't now, in places with fraking, such as Oklahoma and Dallas (!).
That injections wells ( not fracking - although they are related, hydrocarbon extraction activities ) cause earthquakes is still in the hypothesis phase.
There seems to be correlation. Causation is not yet proven.
In health and sciences that would be enough to prohibit certain activities. But when industry for the benefit of jobs, GDP, etc has its way it means continue as normal regardless of the warnings.
This is why we are nearing a climate crisis. I suppose it is a form of the tragedy of the commons.
In health and sciences that would be enough to prohibit certain activities. But when industry for the benefit of jobs, GDP, etc has its way it means continue as normal regardless of the warnings.
This is why we are nearing a climate crisis. I suppose it is a form of the tragedy of the commons.
The ready availability of hydrocarbons is a pretty significantly public good. Secondarily, the oil industry was one of the first ones regulated ( Sherman Act ) and when an industry is regulated, they get better and better at finding the edges to slip past over time.
"In health and sciences this would be enough to.." is a massive problem, IMO. If the full measure of tobacco law is brought to bear on "energy companies", you could pretty well wreck the US economy without meaning to.
"In health and sciences this would be enough to.." is a massive problem, IMO. If the full measure of tobacco law is brought to bear on "energy companies", you could pretty well wreck the US economy without meaning to.
It appears to be clearly in the middle cigarette processing phase of actively denying any science, passing state laws prohibiting local control (see for example Dallas Texas). I expect it will take a while to get to the levels of the late cigarette industry (recognition that it has impact and controlling it to reduce danger).
The problem is that there's nothing illegal about "actively denying science." Nor should there be. The science of earthquakes is unlikely to ever be capable of even making those sorts of predictions. But who knows?
As socially agreeable as the D.O.J v Phillip Morris decision may be in many circles, it's a terrible precedent. All - all - prohibitions are Bad.
I don't think there will ever be any "control"; if there's regulation of it, the effect will be to send people out of the business. You'll be left with the people who feel up to tangling with the government over it. Guys like Dick Cheney.
As socially agreeable as the D.O.J v Phillip Morris decision may be in many circles, it's a terrible precedent. All - all - prohibitions are Bad.
I don't think there will ever be any "control"; if there's regulation of it, the effect will be to send people out of the business. You'll be left with the people who feel up to tangling with the government over it. Guys like Dick Cheney.
Would you want one in your back yard?
My friend lived in house with an oil well in the back yard. Really wasn't noticeable after you got used to the noise it made. After a week I forgot it was there.
Doesn't it stink?
I remember very clearly the first time I visited western Texas (from Europe) as a child. The smell was sickening.
I remember very clearly the first time I visited western Texas (from Europe) as a child. The smell was sickening.
Generally it is refineries that stink.
Oil companies don't emit a whole lot of CO2.
Not true. Refining crude oil into gasoline or diesel is itself very energy-intensive.
It takes around 4.5kWh to refine each gallon of gasoline from crude. In many cases that energy is supplied by fossil-fuel burning power plants.
Volts for oil: https://m.youtube.com/watch?v=BQpX-9OyEr4
Not true. Refining crude oil into gasoline or diesel is itself very energy-intensive.
It takes around 4.5kWh to refine each gallon of gasoline from crude. In many cases that energy is supplied by fossil-fuel burning power plants.
Volts for oil: https://m.youtube.com/watch?v=BQpX-9OyEr4
You proved my point.
4.5 kWh is not a lot of energy.
It's the amount of energy needed to light a 1K lightbulb for 4 hours.
It's a pittance compared to what you burn in you car.
4.5Kw/h won't get you around the block :)
4.5 kWh is not a lot of energy.
It's the amount of energy needed to light a 1K lightbulb for 4 hours.
It's a pittance compared to what you burn in you car.
4.5Kw/h won't get you around the block :)
I think you may be mistaken about amounts of energy. Typical modern domestic-use light bulb (ccfl) are rated around 20 watts. 100 W was the typical maximum in incandescent light bulbs for domestic use, excluding some very bright halogen bulbs at around 200 W. 1000 W bulbs are mainly used in studio applications (as someone else mentioned) and for stage lighting.
On the subject of getting around the block: A kilogram of gasoline contains some 46 MJ of energy. Gasoline is a bit lighter than water, so one kilo is around 1.3 liters. 46 MJ is equal to, roughly, 13 KWh, so 4.5 KWh are around 300 grams, or around 400 ml. A Manhattan city block is around 80x280 Meters, for a circumference of roughly 720 Meters. An inefficient modern car might use 8 Liters per 100 Kilometers, so 400 ml (or roughly 4.5 KWh) will move an inefficient modern car by around 5 Kilometers.
In other words, it'll get you around the block. Not once, not twice, but slightly less than 7 times.
On the subject of getting around the block: A kilogram of gasoline contains some 46 MJ of energy. Gasoline is a bit lighter than water, so one kilo is around 1.3 liters. 46 MJ is equal to, roughly, 13 KWh, so 4.5 KWh are around 300 grams, or around 400 ml. A Manhattan city block is around 80x280 Meters, for a circumference of roughly 720 Meters. An inefficient modern car might use 8 Liters per 100 Kilometers, so 400 ml (or roughly 4.5 KWh) will move an inefficient modern car by around 5 Kilometers.
In other words, it'll get you around the block. Not once, not twice, but slightly less than 7 times.
4.5Kw/h won't get you around the block :)
4.5 kWh will take you nearly 20 miles in an electric vehicle. Not far short of what 1 gallon of gasoline will get you.
4.5 kWh will take you nearly 20 miles in an electric vehicle. Not far short of what 1 gallon of gasoline will get you.
A 1kW lightbulb is rather bright and not used in homes, more so in studios. A better comparison might be 10 100W bulbs or maybe an average chandelier.
Even 100W bulbs are pretty rare now days (illegal in the EU), replaced with LED versions that consume far less energy.
4.5 kWh is really a tremendous amount of energy just to refine a single gallon of gasoline. And it's energy that's completely lost, just converting hydrocarbons from one form into another.
By putting that energy directly into electric vehicles instead, you'd be able to power around half of all the vehicles on the road!
4.5 kWh is really a tremendous amount of energy just to refine a single gallon of gasoline. And it's energy that's completely lost, just converting hydrocarbons from one form into another.
By putting that energy directly into electric vehicles instead, you'd be able to power around half of all the vehicles on the road!
>> Oil companies don't emit a whole lot of CO2.
The Saudis certainly don't. That oil is easy to tap and, under some circumstances, be used with little refinement (shipping). But Canadian oil, shale oil, requires massive energy to extract.
The Saudis certainly don't. That oil is easy to tap and, under some circumstances, be used with little refinement (shipping). But Canadian oil, shale oil, requires massive energy to extract.
Not to mention flaring of natural gas in the Bakken fields. It's a significant percentage of the US's total greenhouse emissions.
When you subsidise extraction the price goes down and other industries burn more of it.
Even if they don't use much, they tend to spill a lot which is worse than burning it.
"they tend to spill a lot which is worse than burning it."
Both parts are not correct.
First, they spill very little in the grand scheme of things.
Second, an 'oil spill' unless it's quite large, is not a hugely damaging thing for the environment. Oil is a plentiful, organic material, found everywhere in nature. It's just not concentrated enough in most places to be extracted.
The soil in northern Alberta (an area the size of Florida) is literally oozing with hydrocarbons - same for Venezuela and many other places. Nobody considers those parts of the world 'toxic' - they are otherwise normal places.
Both parts are not correct.
First, they spill very little in the grand scheme of things.
Second, an 'oil spill' unless it's quite large, is not a hugely damaging thing for the environment. Oil is a plentiful, organic material, found everywhere in nature. It's just not concentrated enough in most places to be extracted.
The soil in northern Alberta (an area the size of Florida) is literally oozing with hydrocarbons - same for Venezuela and many other places. Nobody considers those parts of the world 'toxic' - they are otherwise normal places.
I guess it's arguable whether it's worse or not, but CO2 doesn't typically kill any wildlife whereas oil spills do.
There is a certain percentage that is leaked from every pipeline in addition to the large leaks that occur during tanker and drilling accidents. Even a small percentage of the large volume they extract is a large volume to pour on the ground.
I'm not sure why you think the concentrations of oil in the soil occurring naturally approach even the smallest pipeline leak; would love to see some sources though if you have them.
There is a certain percentage that is leaked from every pipeline in addition to the large leaks that occur during tanker and drilling accidents. Even a small percentage of the large volume they extract is a large volume to pour on the ground.
I'm not sure why you think the concentrations of oil in the soil occurring naturally approach even the smallest pipeline leak; would love to see some sources though if you have them.
[deleted]
What sort of technologist thinks like you?
Are you sys admin?
Are you sys admin?
Crudely (haha) crunching some numbers, if we consider the oil spilled in the US in 2011 (incl. Deepwater Horizon) of 4.95e6 bbl compared to the total oil consumption in 2015 of 7.09e9 bbl, the oil spilled is less than 0.07% of the oil consumed. This, mind you, is considering a massive outlier year for spilled oil. In a more typical year it's an order of magnitude less.
Not to minimize the damage from spilled oil or suggest that it's no problem, but let's keep "spill a lot" in perspective.
Not to minimize the damage from spilled oil or suggest that it's no problem, but let's keep "spill a lot" in perspective.
4.95e6 bbl ( 41 L/bbl) = 203 million liters. Your only reference for scale can't be just net product, absolute numbers seem to more accurately approximate the scale of damage.
Do your numbers include pipeline and other small but continuous sources of loss?
Do your numbers include pipeline and other small but continuous sources of loss?
As I said, crude, so I just grabbed some numbers I found quickly to illustrate "a lot."
Here's where the 2010 (I notice a typo now in my original post, it's not 2011) comes from:
http://ops.fhwa.dot.gov/Freight/freight_analysis/nat_freight...
That includes spills from vessels, facilities, pipelines, and other unknown sources. Regardless, the spill due to Deepwater Horizon was so massive compared to more typical years.
Also, it's 786,987,110 liters (there are ~159 liters in an oil barrel).
Here's where the 2010 (I notice a typo now in my original post, it's not 2011) comes from:
http://ops.fhwa.dot.gov/Freight/freight_analysis/nat_freight...
That includes spills from vessels, facilities, pipelines, and other unknown sources. Regardless, the spill due to Deepwater Horizon was so massive compared to more typical years.
Also, it's 786,987,110 liters (there are ~159 liters in an oil barrel).
Fracking requires an immense amount of water.
It requires "barrels-per-minute for hours" amounts of water. 100 BPM is unusually high for fracking. One acre-foot is about 7753 barrels.
The problem is that water is increasingly scarce in many parts where fracking is done for reasons outlined in the book "Cadillac Desert".
The problem is that water is increasingly scarce in many parts where fracking is done for reasons outlined in the book "Cadillac Desert".
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And many of those are bad. Ask people in the visual effects industry how they feel about Canada's tax breaks for film production.
These tax breaks incentivize wasting money on travel and uprooting families to trot around the globe chasing favorable tax laws.
It's one thing to set a low tax rate, it's another thing to create the tax equivalent of a "loss leader" as marketing for a broader economy. I'm not saying it's immoral, but it causes chaos in the pricing signals and should be done carefully.
These tax breaks incentivize wasting money on travel and uprooting families to trot around the globe chasing favorable tax laws.
It's one thing to set a low tax rate, it's another thing to create the tax equivalent of a "loss leader" as marketing for a broader economy. I'm not saying it's immoral, but it causes chaos in the pricing signals and should be done carefully.
The entertainment industry in Canada receives tax incentives to encourage sustaining and sharing Canadian heritage & values, which would otherwise be lost due to the media juggernaut to the south. It is not always successful, but that is the intent.
What is the motivation to give a highly profitable industry tax incentives?
What is the motivation to give a highly profitable industry tax incentives?
> Almost all entertainment in Canada for example, is done nearly tax free.
Categorically untrue.
Categorically untrue.
Carrier is the latest recipient of a tax break.
http://www.zerohedge.com/news/2016-11-30/carrier-issues-stat...
http://www.zerohedge.com/news/2016-11-30/carrier-issues-stat...
That only goes so far.
If people literally don't want the oil, at some point those tax breaks are going to look vulnerable.
If people literally don't want the oil, at some point those tax breaks are going to look vulnerable.
Solar tax credits are also corporate welfare.
No, it's a reflection of the lower externalities inflicted by solar.
Total World Consumption (2017 projection) : 96.92 million barrels per day (up from 92.58 million barrels in 2014)
EIA outlook: http://www.eia.gov/outlooks/ieo/world.cfm
Oil will be in demand for a long time. The demand might peak but headlines like this seem to indicate oil isn't needed anymore.
Most people do not realize that 6-7 million barrels of oil per day must be found year over year to replenish the depletion of old oil wells. This requirement will drive exploration and investment.
EIA outlook: http://www.eia.gov/outlooks/ieo/world.cfm
Oil will be in demand for a long time. The demand might peak but headlines like this seem to indicate oil isn't needed anymore.
Most people do not realize that 6-7 million barrels of oil per day must be found year over year to replenish the depletion of old oil wells. This requirement will drive exploration and investment.
For a major shift we don't need to see 0 consumption. If consumption for electricity production and transportation is lowered significantly, this would lower demand enough to allow production on low-cost, traditional wells. We could have oil at <$30 and still get at least half the output we get today. This would mean that at least half the countries that are currently producing would be out of business. That includes all production in North America (with some low volume exceptions) and Europe, many African countries and South American countries like Venezuela.
A shift in production like this would have major effects. For the order in many emerging countries and the state of the economy and labour markets in developed markets. That the EIA doesn't include a potential collapse of a big US industry sector in their forecast is somehow clear, still doesn't mean that it won't happen.
I don't think that they forecasted the decline of coal as drastically as it happened. Oil could be similar, just much bigger.
A shift in production like this would have major effects. For the order in many emerging countries and the state of the economy and labour markets in developed markets. That the EIA doesn't include a potential collapse of a big US industry sector in their forecast is somehow clear, still doesn't mean that it won't happen.
I don't think that they forecasted the decline of coal as drastically as it happened. Oil could be similar, just much bigger.
What I'm seeing all over this thread is comments being made that don't comport with my knowledge of the energy industry.
>I don't think that they forecasted the decline of coal as drastically as it happened
Coal is starting to come back in the US right now because natural gas prices are starting to rise. For the first time, as of this month, the US is a net exporter of natural gas. Natural gas production increased 70% '05-'14, which caused it to become cheaper than coal. As the US increases exports, the price will make coal more competitive. US power generation facilities often have both NG and coal based turbines allowing them to switch between the two depending on cost. Be careful forecasting the future of energy from short periods of data; the entire energy industry is cyclical going back to when my grandfather was drilling for oil in the 1920s (he went broke).
>I don't think that they forecasted the decline of coal as drastically as it happened
Coal is starting to come back in the US right now because natural gas prices are starting to rise. For the first time, as of this month, the US is a net exporter of natural gas. Natural gas production increased 70% '05-'14, which caused it to become cheaper than coal. As the US increases exports, the price will make coal more competitive. US power generation facilities often have both NG and coal based turbines allowing them to switch between the two depending on cost. Be careful forecasting the future of energy from short periods of data; the entire energy industry is cyclical going back to when my grandfather was drilling for oil in the 1920s (he went broke).
Yeah, it's crazy that people think oil is going away. We're 7 billion people on our way to 9 billion, with another billion in the next 15 years. That fossil free future that we dream about isn't getting any closer. Those big solar plants, etc that we read about are a rounding error.
Added population will be mostly in poor areas where power consumption is very low. Energy demand will likely be driven by US, China and India in the next decade(s), the process there is important and very positive.
Have a look at Gansu Wind Farm in China. [1] They build so many wind turbines there that they had to restrict production until they've finished the corresponding amount of high-voltage cables connecting it to major cities on the coast . Many of these connections have a higher capacity than any other existing in Europe/America. [2]
The potential for wind farms in this regions are huge. It's basically a large, windy desert. With enough cables, you can easily power major cities with it. You can even use it for baseload by combining them with batteries or pump storage.
The reason that China still adds coal is largely one of politics, similar to Trump's promises in the US. Coal adds jobs close to the cities. They've already built too many plants for demand, many will probably only run for a few years (hard to find sources on that, there are no numbers so everyone is just speculating how many there are).
But there are enough resources and potential to power the world's largest energy consumer mostly by renewables. And the picture is not that different for the US, where wind power in some regions is competitive without subsidies.
[1] https://en.wikipedia.org/wiki/Gansu_Wind_Farm
[2] https://en.wikipedia.org/wiki/List_of_HVDC_projects#Asia
Have a look at Gansu Wind Farm in China. [1] They build so many wind turbines there that they had to restrict production until they've finished the corresponding amount of high-voltage cables connecting it to major cities on the coast . Many of these connections have a higher capacity than any other existing in Europe/America. [2]
The potential for wind farms in this regions are huge. It's basically a large, windy desert. With enough cables, you can easily power major cities with it. You can even use it for baseload by combining them with batteries or pump storage.
The reason that China still adds coal is largely one of politics, similar to Trump's promises in the US. Coal adds jobs close to the cities. They've already built too many plants for demand, many will probably only run for a few years (hard to find sources on that, there are no numbers so everyone is just speculating how many there are).
But there are enough resources and potential to power the world's largest energy consumer mostly by renewables. And the picture is not that different for the US, where wind power in some regions is competitive without subsidies.
[1] https://en.wikipedia.org/wiki/Gansu_Wind_Farm
[2] https://en.wikipedia.org/wiki/List_of_HVDC_projects#Asia
India and China have 1/3 of the world population. The US is less than 5% so it doesn't matter, except we use 20% of the oil. China is already the largest car market and India is rising. China gets over 70% of its electricity from coal.
That's great that China is developing solar and wind. Hopefully, it breaks into the double digits in 10 years. We have a long way to go, and we're on a clock.
That's great that China is developing solar and wind. Hopefully, it breaks into the double digits in 10 years. We have a long way to go, and we're on a clock.
>The US is less than 5% so it doesn't matter
The US is the 2nd largest Greenhouse gas emitter on the planet. It matters.
https://en.wikipedia.org/wiki/List_of_countries_by_carbon_di...
The US is the 2nd largest Greenhouse gas emitter on the planet. It matters.
https://en.wikipedia.org/wiki/List_of_countries_by_carbon_di...
This could change faster than you think, I wouldn't be surprised if there was a lot more solar in 50 years. Solar is now getting to the point it can compete w/ fossil fuels on price, w/o subsidies.
12-16 years till solar is the dominant form of power generation at its current growth rate.
https://en.wikipedia.org/wiki/Growth_of_photovoltaics
There isn't anything to indicate that growth curve will slow; the manufacturing capacity is already in place, and more continues to be added. There are power purchase agreements at 2 cents/kWh, and I would not be surprised if you see prices below 1 cent/kwh in the next five years.
http://www.pv-tech.org/news/43695
https://www.bloomberg.com/news/articles/2016-05-03/solar-dev...
https://en.wikipedia.org/wiki/Growth_of_photovoltaics
There isn't anything to indicate that growth curve will slow; the manufacturing capacity is already in place, and more continues to be added. There are power purchase agreements at 2 cents/kWh, and I would not be surprised if you see prices below 1 cent/kwh in the next five years.
http://www.pv-tech.org/news/43695
https://www.bloomberg.com/news/articles/2016-05-03/solar-dev...
Can't make fertilizer or plastic out of solar energy.
See http://www.eia.gov/energyexplained/index.cfm?page=oil_use
If the oil industry existed solely for non-fuel uses, it would be extremely tiny, and probably entirely domestic. It would not be large enough to fund any new deep or complex drilling, and nor would it be large enough to fund even the fixed costs of existing wells.
Total petroleum products: 19.531 (million barrels/day)
Asphalt and road oil 0.343
Petrochemical feedstocks 0.331
Lubricant 0.138
Miscellaneous products and others 0.089
Waxes 0.006
If the oil industry existed solely for non-fuel uses, it would be extremely tiny, and probably entirely domestic. It would not be large enough to fund any new deep or complex drilling, and nor would it be large enough to fund even the fixed costs of existing wells.
"Petrochemical feedstocks" means plastic and Haber process nitrogenous fertilizers. Lubricants is probably substantially motor oils, but even Teslas have gearboxes and sealed parts (stearing, suspension, etc) that require lubricant. Same for general industry (regardless of input energy source).
You deleted far more than just fuels. "Hydrocarbon gas liquids", "Still gas", "Special napthas", and "Kerosene" include significant non-fuel uses. Those bring the total as high as 3.390, though it is impossible to determine from that chart how much is fuel use.
Also, keep in mind that some fuel uses, such as welding/soldering gasses, don't have an effective replacement at this time. Cutting fuel use to 0 at this juncture is effectively impossible.
Also, keep in mind that some fuel uses, such as welding/soldering gasses, don't have an effective replacement at this time. Cutting fuel use to 0 at this juncture is effectively impossible.
One way or the other the conclusion is the same, though. The oil industry would have to radically shrink, even if it would probably not go away.
[deleted]
That chart seems odd. From what I'm aware of, not all parts of "oil" are used for the same thing. E.g. before the internal combustion engine, gasoline was an unwanted byproduct of creating kerosene, and was usually dumped into the environment by refiners.
Modern refineries work a lot harder to shift their output towards the most valuable markets.
Look at all the steps with some output to gasoline on the right:
https://en.wikipedia.org/wiki/Oil_refinery#Flow_diagram_of_t...
Look at all the steps with some output to gasoline on the right:
https://en.wikipedia.org/wiki/Oil_refinery#Flow_diagram_of_t...
> Can't make fertilizer or plastic out of solar energy.
No, but if you're willing to spend a lot of energy you can pull CO2 out of the air and use it as a feedstock to make various fuels or plastics. Right now I think you'd have to burn 10 gallons of oil to make a single gallon so that's not efficient at all.
But if you literally had more solar than you knew what to do with (like Germany does on occasion) you could use that energy to make liquid fuels or plastics.
It's at least a decade and probably several decades off. But this is an economic problem, not a technical one.
No, but if you're willing to spend a lot of energy you can pull CO2 out of the air and use it as a feedstock to make various fuels or plastics. Right now I think you'd have to burn 10 gallons of oil to make a single gallon so that's not efficient at all.
But if you literally had more solar than you knew what to do with (like Germany does on occasion) you could use that energy to make liquid fuels or plastics.
It's at least a decade and probably several decades off. But this is an economic problem, not a technical one.
In California and other deserts, excess solar can be directed to desalination plants. Our water and energy shortages are essentially the same issue; solving one goes a long way to solving the other.
All resource problems are energy problems. With enough clean energy, you can make fuel, water, fertilizer, anything.
We're going to need a lot of surplus energy to sequester all of the CO2 we've pumped into the atmosphere over the last 100+ years.
We're going to need a lot of surplus energy to sequester all of the CO2 we've pumped into the atmosphere over the last 100+ years.
> We're going to need a lot of surplus energy to sequester all of the CO2 we've pumped into the atmosphere over the last 100+ years.
There is no point at which sequestering CO2 by use of electricity is going to make sense. Until the day that we burn zero CO2 whatsoever, you're better off using the electricity as electricity and thereby burning less carbon than burning it and then trying to get it back.
And even at that point, we already have a thing that converts sunlight and CO2 into solid form. Plants.
In theory what you could probably do is cultivate algae in the ocean and then scoop it up in a net, bury it in the ground and repeat. But the scale needed to make a dent is harrowing.
There is no point at which sequestering CO2 by use of electricity is going to make sense. Until the day that we burn zero CO2 whatsoever, you're better off using the electricity as electricity and thereby burning less carbon than burning it and then trying to get it back.
And even at that point, we already have a thing that converts sunlight and CO2 into solid form. Plants.
In theory what you could probably do is cultivate algae in the ocean and then scoop it up in a net, bury it in the ground and repeat. But the scale needed to make a dent is harrowing.
> There is no point at which sequestering CO2 by use of electricity is going to make sense.
Of course there will be. Even burning a small fraction of the Thorium lying in spill heaps today will achieve that. In February 2019, when Tsinghua Uni demos the worlds first commercially viable fusion reactor, everything will change.
We will:
Of course there will be. Even burning a small fraction of the Thorium lying in spill heaps today will achieve that. In February 2019, when Tsinghua Uni demos the worlds first commercially viable fusion reactor, everything will change.
We will:
- convert cubic kilometres of seawater into potable water per day and irrigate the Sahara and the Outback.
- convert atmospheric C02 to carbohydrate fuels (while there are still need for them)
- extract cubic killometers of C out of the atmosphere and oceans for construction material.
- Drop the excess blocks of diamond into the mariana trench, those that we don't use for road base.
- etc
> ...In February 2019, when Tsinghua Uni demos the worlds first commercially viable fusion reactor...
Is this your own prediction, or something that the university has announced publicly? I haven't heard anything about it.
Is this your own prediction, or something that the university has announced publicly? I haven't heard anything about it.
> There is no point at which sequestering CO2 by use of electricity is going to make sense.
> Until the day that we burn zero CO2 whatsoever
That day will come. And we'll then be at the point where its time to use cheap renewables to pull CO2 back out of the air and store it in a stable state where it can't be burned again.
> Until the day that we burn zero CO2 whatsoever
That day will come. And we'll then be at the point where its time to use cheap renewables to pull CO2 back out of the air and store it in a stable state where it can't be burned again.
My bet is some sort of synthetic bio-augmented photosynthesis process (if you think about it - that's exactly what plants do - sequester carbon dioxide in carbohydrates). If we are super lucky that process will also generate edible byproducts.
oh yeah. probably.... not
problem with computer types is we think that high tech will rule and fix all. and that mind boggling high tech is around the corner always.
Then we are surprised when a Neanderthal wins the Presidency who says he WILL burn more coal. doesn't even matter if it's not economic.
Maybe instead we should become more aggressive. Turn off Trump's twitter. Turn off gmail & facebook in red states.
problem with computer types is we think that high tech will rule and fix all. and that mind boggling high tech is around the corner always.
Then we are surprised when a Neanderthal wins the Presidency who says he WILL burn more coal. doesn't even matter if it's not economic.
Maybe instead we should become more aggressive. Turn off Trump's twitter. Turn off gmail & facebook in red states.
The weird part about sequestering is that if it's really going to work, people will need incentive to simply put all that energy in to the ground with no immediate benefit for them. You either need heavy government regulation or for everyone involved to be thinking about the larger picture.
I wonder if anti aging technology would push people to start seeing climate problems in its larger context.
I wonder if anti aging technology would push people to start seeing climate problems in its larger context.
Carbon sequestration doesn't necessarily mean driving combustion in reverse to get oxygen and hydrocarbons again. Accelerated silicate weathering could remove a lot more atmospheric CO2 per unit of energy invested and it generates carbonate minerals rather than fuel that people would be tempted to burn again. Like this, "Enhanced weathering strategies for stabilizing climate and averting ocean acidification": http://www.southampton.ac.uk/assets/imported/transforms/cont...
That's pretty cool! Non fuel forms of sequestered carbon hadn't occurred to me, though you would still need to fund the process. Using a carbon tax to fund it as a government function seem likes the obvious solution if it were to be implemented at scale.
Carbon tax funds sequestering operations.
Something like this: https://www.terrapass.com/climate-change/carbon-offsets-expl...
Something like this: https://www.terrapass.com/climate-change/carbon-offsets-expl...
https://www.newlight.com/company claims to produce plastic from CO2 for less cost than from oil https://youtu.be/GlPyDLGKYSQ?t=1m15s
"After 10 years of research and development, Newlight has commercialized a carbon capture technology that combines air with methane-based greenhouse gas emissions to produce a plastic material"
Rather than using natural gas as a plastics feedstock, they are using methane from organic sources (livestock bioproducts, landfills, other agricultural waste). They are using "greenhouse gases" but not CO2.
Rather than using natural gas as a plastics feedstock, they are using methane from organic sources (livestock bioproducts, landfills, other agricultural waste). They are using "greenhouse gases" but not CO2.
There's a process for fixing nitrogen using electricity as the primary input:
https://en.wikipedia.org/wiki/Birkeland%E2%80%93Eyde_process
You can also plant nitrogen fixing plants and till them into the soil at the end of the season.
https://en.wikipedia.org/wiki/Birkeland%E2%80%93Eyde_process
You can also plant nitrogen fixing plants and till them into the soil at the end of the season.
Even better, electrolyze water and run the hydrogen through a standard Haber-Bosch ammonia plant. It's a little more complicated but much more energy efficient. It's been done on an industrial scale in the past with electricity from hydropower.
Yeah that's the thing, hydrogen is the key feed-stock for the Haber-Bosch process. I think currently it's mostly made from natural gas. Though earlier it was made by reacting H2O with coke (coal).
Makes me think about the flurry of ill directed excitement about a catalyst that with energy supplied electricity could convert water and CO2 to alcohol. One wonders if it wouldn't be possible use a similar catalyst to convert nitrogen and water to nitrate/ammonia.
Makes me think about the flurry of ill directed excitement about a catalyst that with energy supplied electricity could convert water and CO2 to alcohol. One wonders if it wouldn't be possible use a similar catalyst to convert nitrogen and water to nitrate/ammonia.
[deleted]
You're right. The price going down has, I think, more to do with the effect of fracking in the US. It's getting to the point that the US could be an exporter if it changed its laws.
The effect of petro-states will be much the same, though.
The effect of petro-states will be much the same, though.
We are an oil exporter. We did change the laws.
http://money.cnn.com/2016/06/06/investing/us-oil-exports-inc...
I missed that. Thanks for the correction.
[deleted]
The US, like everyone else in the world, will always be an oil exporter and an oil importer. The grades of oil differ throughout the world, and are used in different industries.
More to do with the Saudis pumping more.
It lacks 2015 and 2016, but the huge ramp up in US production (which fracking has contributed to) has clearly been a big factor:
http://www.eia.gov/beta/international/index.cfm?view=product...
http://www.eia.gov/beta/international/index.cfm?view=product...
China installed 20GW of solar in the first half of 2016. They are moving fast.
What does 20GW means? If they install 40GW for the next 10 years, is that enough? That's about 1 nuclear power plant:
https://www.eia.gov/tools/faqs/faq.cfm?id=104&t=3
https://www.eia.gov/tools/faqs/faq.cfm?id=104&t=3
[deleted]
And plastics.
Notice how food storage boxes changed considerably in the last few years? It's because they're derived from shale byproducts that are essentially free, if not cost-negative.
There's an irony in that we have an overabundance of natural gas due to shale, but oil itself is becoming far less important to the plastics industry than ever before.
Related viewing: https://www.youtube.com/watch?v=pyfVTBI4dgA
There's an irony in that we have an overabundance of natural gas due to shale, but oil itself is becoming far less important to the plastics industry than ever before.
Related viewing: https://www.youtube.com/watch?v=pyfVTBI4dgA
I think plastics have been produced mostly from natural gas rather than oil for many years. Ethane & methane are an easier starting point for making polyethylene et al than the varied hydrocarbons in oil.
A web developer from Aberdeen here.
The transition from wealthy to poor in Aberdeen has been instantaneous. Everyone I know in the city has been affected—my fiancee was made redundant, my Dad (after 25 years at BP) and my best mate’s dad (after 25 years at Shell) too.
I studied CS at Robert Gordon University, which is cutting academic staff. I also worked at a design and dev shop, but that went bust in December last year.
It’s actually a really bleak time, but this outcome was avoidable.
Although my friends and family all live in Aberdeen, I feel like I can’t sustain myself there. I currently live in Wellington, NZ, which is beautiful, vibrant and diverse.
The transition from wealthy to poor in Aberdeen has been instantaneous. Everyone I know in the city has been affected—my fiancee was made redundant, my Dad (after 25 years at BP) and my best mate’s dad (after 25 years at Shell) too.
I studied CS at Robert Gordon University, which is cutting academic staff. I also worked at a design and dev shop, but that went bust in December last year.
It’s actually a really bleak time, but this outcome was avoidable.
Although my friends and family all live in Aberdeen, I feel like I can’t sustain myself there. I currently live in Wellington, NZ, which is beautiful, vibrant and diverse.
Have you noticed any pick-up from the offshore wind industry? There's certainly some overlap between oil and wind industries, and Scotland is doing quite a lot of offshore wind development nowadays.
Nah, unfortunately not.
Scotland in general is very well placed for renewable energy, with both great geography and skilled labour. I feel like the businesses based in Aberdeen haven’t realised that opportunity though.
The local industry has been a one-trick pony with no ambition to diversify. The end result is what we’re currently seeing.
Scotland in general is very well placed for renewable energy, with both great geography and skilled labour. I feel like the businesses based in Aberdeen haven’t realised that opportunity though.
The local industry has been a one-trick pony with no ambition to diversify. The end result is what we’re currently seeing.
So you basically hate/have never seen the sun?
I was wondering about this lately as I live in Houston in an area greatly dependent upon oil and gas. What happens when so many vehicles are charged by solar panels on rooftops (Tesla Energy)? What about oil and gas? Well, it turns out that tons of things are made from oil and gas and once we stop burning it to make vehicles go down the street, we can start using it for other things.
I'm unable to find the origin of the "burning Picassos for heat" quote, but it is catchy.
"An oil executive once observed that burning oil for energy is like burning Picassos for heat. Oil is extraordinarily valuable as the basis for so many products we use every day that the thought of simply burning it ought to be unthinkable. So versatile are oil molecules that they can be transformed into substances that serve as clothing, medicines, building materials, carpet, skin care products, sporting goods, agricultural chemicals, perfumes, and myriad other products."
http://www.resilience.org/stories/2012-11-04/burning-picasso...
I can foresee things like plastic wood being used to build all sorts of things.
I'm unable to find the origin of the "burning Picassos for heat" quote, but it is catchy.
"An oil executive once observed that burning oil for energy is like burning Picassos for heat. Oil is extraordinarily valuable as the basis for so many products we use every day that the thought of simply burning it ought to be unthinkable. So versatile are oil molecules that they can be transformed into substances that serve as clothing, medicines, building materials, carpet, skin care products, sporting goods, agricultural chemicals, perfumes, and myriad other products."
http://www.resilience.org/stories/2012-11-04/burning-picasso...
I can foresee things like plastic wood being used to build all sorts of things.
As pointed out in another comment, the use of oil for plastics, streets, etc is less than 5% of overall oil consumption in the US. You could get that kind of output with a tiny domestic industry. With modern refineries, you can get a good control over the output mix and only produce what is needed.I think Houston would be hugely affected by a decline in the oil industry. Even if they can create jobs in the production of renewables, the job profile is often different from working at wells and the huge shipping sector would be largely non-existant.
So even if we increase plastic consumption by 2x (don't really see where that should come from), it's still a potential decline in oil consumption of 90%. Enough to basically destroy several industries (refining, drilling, well maintenance, pipelines, shipping).
Another interesting question is regarding gas stations. You'll still need some stations on interstates to re-charge for long distance trips. But you could basically get rid of all of them in cities. They would continue to exist as convenience stores, but probably with half the number of employees. This would be another huge sector that often employess untrained people, many of whom will likely not be qualified enough to work in battery factories.
Link to EIA report: http://www.eia.gov/energyexplained/index.cfm?page=oil_use
So even if we increase plastic consumption by 2x (don't really see where that should come from), it's still a potential decline in oil consumption of 90%. Enough to basically destroy several industries (refining, drilling, well maintenance, pipelines, shipping).
Another interesting question is regarding gas stations. You'll still need some stations on interstates to re-charge for long distance trips. But you could basically get rid of all of them in cities. They would continue to exist as convenience stores, but probably with half the number of employees. This would be another huge sector that often employess untrained people, many of whom will likely not be qualified enough to work in battery factories.
Link to EIA report: http://www.eia.gov/energyexplained/index.cfm?page=oil_use
Fair enough, a "potential decline in oil consumption of 90%". I get that. I accept that. It is a potential though; based upon existing technology. The oil and gas industry will be impacted (perhaps severely), but will it be a 90% impact? I doubt it. Few people have ever been able to predict the future. (Xerox failed, IBM failed, Yahoo failed, etc. - AT&T did a good job with "You Will" - Think it was a research firm that did it for AT&T.) Don't fall into the trap of thinking one knows how it will all play out. Odds are it will not play out like one thinks it will. The same technological advances that are removing industries are creating other industries. I just think the oil can be used for much more interesting things. 3D printing is really in its infancy right now. https://all3dp.com/biggest-3d-printers-world/ Imagine being able to print out whatever you want, including buildings and having them perfect. (not some nailed together wood done in a rush that has tons of joints where problems may arise) Raw material (oil) will be needed to do that. (unless of course there is other material to use, but it will have to be refined and oil & gas companies know all about that)
Now the employment of people is the other thing. Technology should make things cheaper and better. (cheaper either in initial price and/or the cost of maintenance) Fewer people will need to work and/or work fewer hours because things are cheaper and better. There was a time before there were two-income households. We could cut back to that without a huge disruption. An equilibrium will likely develop. If there is no income, there will be no consumers. Basic income may also be needed.
On a more funny note, those convenience stores had better well have some damn good restrooms like they have at Buc-ee's. Otherwise, why stop? The car is doing the driving. You're free to eat whatever you brought or simply sleep through the trip.
Now the employment of people is the other thing. Technology should make things cheaper and better. (cheaper either in initial price and/or the cost of maintenance) Fewer people will need to work and/or work fewer hours because things are cheaper and better. There was a time before there were two-income households. We could cut back to that without a huge disruption. An equilibrium will likely develop. If there is no income, there will be no consumers. Basic income may also be needed.
On a more funny note, those convenience stores had better well have some damn good restrooms like they have at Buc-ee's. Otherwise, why stop? The car is doing the driving. You're free to eat whatever you brought or simply sleep through the trip.
Interesting that the Economist is looking at a future where oil demand is lower, but that realization hasn't hit the public yet, at least not in the US. I have been thinking about the Standing Rock protests in North Dakota, and they are objecting to the environmental risk of pipelines. But in the big picture, oil is getting more expensive to extract, more dangerous to ship, and contributes to global warming then used. Given electric cars, some fueled from solar power, there could really be a time soon in the US when the whole gasoline industry is reduced to almost nothing.
I think the concept is in the back of many poeple's mind, but the status quo is dominant and electric-everything on the road seems futuristic still. But as more and more people try electric cars and install solar panels, more people will see it and accept it as the new normal, and then things could change quickly, within 5 years perhaps.
And yes, this comment is intended to speed up that change.
I think the concept is in the back of many poeple's mind, but the status quo is dominant and electric-everything on the road seems futuristic still. But as more and more people try electric cars and install solar panels, more people will see it and accept it as the new normal, and then things could change quickly, within 5 years perhaps.
And yes, this comment is intended to speed up that change.
> But in the big picture, oil is getting more expensive to extract, more dangerous to ship, and contributes to global warming then used.
These assertions don't match the reality of what's happening.
The cost to extract oil has plummeted, and that's reshaping the world order. It's destroyed Russia's entire financial plan.
In the US it's become far safer to ship. US domestic production has increased to the point of effective independence, and the US no longer depends on the Strait of Hormuz for its energy supply. Oil's vastly easier to move than natural gas. Current natural gas production exists as a byproduct of shale oil production.
It's also becoming far cleaner to extract. The progress shale has made in just a few years is astounding. The extraction methods used today are orders of magnitude cleaner than the ones used just a few years ago.
Known domestic supplies are also increasing exponentially, which means the industry is highly unlikely to be "reduced to almost nothing" any time soon. The cheapest form of energy always wins, and even incentives and penalties can only somewhat mitigate that.
Sure, we'll have self-driving electric cards on the roads soon enough, but most of that energy isn't going to come from nuclear power, solar, or wind sources.
This landscape is changing quickly, and a lot of assumptions people hold–assumptions that are based on many decades of reality–aren't true.
Here's a lecture that's relatively current (though 9 months is nearly stale given how quickly shale tech is progressing), and does a decent job of outlining the situation:
https://www.youtube.com/watch?v=pyfVTBI4dgA
These assertions don't match the reality of what's happening.
The cost to extract oil has plummeted, and that's reshaping the world order. It's destroyed Russia's entire financial plan.
In the US it's become far safer to ship. US domestic production has increased to the point of effective independence, and the US no longer depends on the Strait of Hormuz for its energy supply. Oil's vastly easier to move than natural gas. Current natural gas production exists as a byproduct of shale oil production.
It's also becoming far cleaner to extract. The progress shale has made in just a few years is astounding. The extraction methods used today are orders of magnitude cleaner than the ones used just a few years ago.
Known domestic supplies are also increasing exponentially, which means the industry is highly unlikely to be "reduced to almost nothing" any time soon. The cheapest form of energy always wins, and even incentives and penalties can only somewhat mitigate that.
Sure, we'll have self-driving electric cards on the roads soon enough, but most of that energy isn't going to come from nuclear power, solar, or wind sources.
This landscape is changing quickly, and a lot of assumptions people hold–assumptions that are based on many decades of reality–aren't true.
Here's a lecture that's relatively current (though 9 months is nearly stale given how quickly shale tech is progressing), and does a decent job of outlining the situation:
https://www.youtube.com/watch?v=pyfVTBI4dgA
I just finished a (realtime systems programming) job at an oil services company. I wouldn't expect a lot of progress in shale tech, especially at present natural gas and oil prices.
The oil industry in general has a very skewed vision of what "technology" means. It tends to mean PLC programming, and PLCs are a really weird, small market. It tends to mean systems integration of a rather crude order.
The oil industry in general has a very skewed vision of what "technology" means. It tends to mean PLC programming, and PLCs are a really weird, small market. It tends to mean systems integration of a rather crude order.
So? It's still an environmental risk to their community at the present time. Oil's days being numbered must be cold comfort to them.
"Cold comfort" indeed in a North Dakota blizzard. But I'm in no way criticizing the standing rock protests, what I'm saying is that it's representative of things to come. When more people realize we can live exactly the same without gasoline pollution in all its forms (fracking water injection, leaking pipelines, leaking tanks at gas stations, air pollution and greenhouse gasses), it will seem like a no brainer.
The recent market conditions are more a consequence of changes in supply than in demand.
I heard someone refer to something called the "Economist effect", where an article in the Economist about a particular trend signals its end.
Sure enough: https://www.bloomberg.com/news/articles/2016-11-30/opec-said...
e: word order
I heard someone refer to something called the "Economist effect", where an article in the Economist about a particular trend signals its end.
Sure enough: https://www.bloomberg.com/news/articles/2016-11-30/opec-said...
e: word order
the "Economist effect"
It's real. Someone on HN mentioned them as a contra-indicator during a previous discussion. https://news.ycombinator.com/item?id=12516078
My supporting argument to him was that The Economist argued in 1999 that $10 oil was too expensive and that it could be headed to $5. So of course oil rose to $140 over the next decade! https://news.ycombinator.com/item?id=12517258
It's real. Someone on HN mentioned them as a contra-indicator during a previous discussion. https://news.ycombinator.com/item?id=12516078
My supporting argument to him was that The Economist argued in 1999 that $10 oil was too expensive and that it could be headed to $5. So of course oil rose to $140 over the next decade! https://news.ycombinator.com/item?id=12517258
You can replace that with any newspaper reports. The oil price follows in part a pork cycle, so a period of falling prices will likely lead to a sharp reverse at some point (and vice versa). Once you have enough data supporting the lower price regime, oil will likely spike again.
The interesting question is if it's gonna be different this time. Many argue that with shale production supply will be much more elastic, but it could also just be a false lead.
Pork cycle: https://en.wikipedia.org/wiki/Pork_cycle
The interesting question is if it's gonna be different this time. Many argue that with shale production supply will be much more elastic, but it could also just be a false lead.
Pork cycle: https://en.wikipedia.org/wiki/Pork_cycle
Resource extraction companies (oil, mining, etc..) usually are required to post security for reclamation. However, large companies are permitted to not post cash or bond, but on their word (credit). Which works while commodity prices are high. But when prices crash, so do the companies and society (the tax payer) is left holding the bag for cleanup.
The title exaggerates. Charts elsewhere in the same report project demand going from the current ~4.2bn tonnes to anywhere between 3.2 to 4.7bn by 2040, meaning demand may actually increase over the next 25 years.
http://www.economist.com/news/special-report/21710628-worlds...
http://www.economist.com/news/special-report/21710628-worlds...
A few counterpoints:
* In the market oil is a very popular short. So much so that despite Iran coming back onstream, oil has since risen 20 points.
* Aramco's IPO will force it to open kimono on its reserves. Is there a negative surprise waiting there?
* Nobody is going to put electric cars into the southern hemisphere anytime soon, because the distances are too long and infrastructure too sparse. As Africa develops, oil demand there will increase, especially with increasing chinese involvement. Ditto Latam. Ditto central Asia, Middle east.
* We are seeing inflation picking up around the world, and oil is the classic inflation trade.
Finally, anecdotally, the economist has a long history of being a counter-indicator due to its susceptibility to consensus thinking.
* In the market oil is a very popular short. So much so that despite Iran coming back onstream, oil has since risen 20 points.
* Aramco's IPO will force it to open kimono on its reserves. Is there a negative surprise waiting there?
* Nobody is going to put electric cars into the southern hemisphere anytime soon, because the distances are too long and infrastructure too sparse. As Africa develops, oil demand there will increase, especially with increasing chinese involvement. Ditto Latam. Ditto central Asia, Middle east.
* We are seeing inflation picking up around the world, and oil is the classic inflation trade.
Finally, anecdotally, the economist has a long history of being a counter-indicator due to its susceptibility to consensus thinking.
I wonder what will happen to the price of jet fuel once electric cars are wide spread. Petroleum production will go down as demand for gasoline will go down while jet fuel demand will probably remain similar. So will that lead to a rise in jet fuel price?
> Of the 7.13 billion barrels of total U.S. petroleum product consumption in 2015, 47% was motor gasoline (includes ethanol), 20% was distillate fuel (heating oil and diesel fuel), and 8% was jet fuel, 4% plastics.[1]
Jet fuel is only 8% so if there is less auto usage, probably cheaper initially until supply is constrained due to lower demand. Then, other methods will start to get cheaper like wood to fuel[2].
But overall fuel and heating oil are about 70-80% of all oil use, we still use it for plastics which will be hard to get rid of which are 4% of usage. My guess is initially both jet fuel and plastic production prices will go down when autos are electric, at least initially.
[1] https://www.eia.gov/tools/faqs/faq.cfm?id=41&t=6
[2] http://www.denverpost.com/2016/11/14/first-commercial-flight...
Jet fuel is only 8% so if there is less auto usage, probably cheaper initially until supply is constrained due to lower demand. Then, other methods will start to get cheaper like wood to fuel[2].
But overall fuel and heating oil are about 70-80% of all oil use, we still use it for plastics which will be hard to get rid of which are 4% of usage. My guess is initially both jet fuel and plastic production prices will go down when autos are electric, at least initially.
[1] https://www.eia.gov/tools/faqs/faq.cfm?id=41&t=6
[2] http://www.denverpost.com/2016/11/14/first-commercial-flight...
Probably temporarily. It'll likely cross a point where more synthetic production methods reach economic viability.
The field requires such a great energy density that I suspect only a remarkable breakthrough in energy density for weight would allow a fully electric solution. Hydrogen is also likely out as the storage cells would be under unimaginable stresses.
In the long term it might actually incentivize the creation of moderate/high speed rail lines in the US.
The field requires such a great energy density that I suspect only a remarkable breakthrough in energy density for weight would allow a fully electric solution. Hydrogen is also likely out as the storage cells would be under unimaginable stresses.
In the long term it might actually incentivize the creation of moderate/high speed rail lines in the US.
Unless someone figures out how to bulldoze the Rocky mountain range, high speed rail as a replacement for coast to coast air travel is a non starter.
Actually, it's when someone can figure out how to make meal service on trains profitable. Most Amtrak routes without meal service makes operating profits, and only one or two routes with meal service might make an operating profit.
Given current train speeds, that comes out to around 500-700 miles being the upper limit of viable HSR. This is roughly the distance between Chicago and DC and also roughly the distance of the largest axis of most European countries.
Given current train speeds, that comes out to around 500-700 miles being the upper limit of viable HSR. This is roughly the distance between Chicago and DC and also roughly the distance of the largest axis of most European countries.
The real transit corridors are Boston-Atlanta and New York-Chicago, as well as Seattle-San Diego on the west coast. Coast to coast would be nice but even just those would be an enormous boost to our transport infrastructure and potentially a huge emissions cut (depending on where the power comes from).
The high speed part of the California high speed rail is mostly to relieve congestion at the coastal airports. Idea being that passengers flying between the Bay Area and LA/San Diego will instead take the train. Hardest part of that is it'll require a number of tunnels, one 14 miles long, through the mountains into the LA Basin.
I'm curious about why you think the Rocky Mountains would preclude this (as opposed to the distance, where ~ 500 mph via air vs. ~250 mph by train seems like a larger obstacle). Tunnels, and picking a relatively flat route seems to alleviate any concerns about the Rockies.
A route roughly following the I-80 corridor would top out somewhere below 9000 ft[1]. The California high speed rail is already being designed for what I would guess are similar elevations (and perhaps steeper grades)[2].
You could also route through southern Arizona and New Mexico, completely avoiding significant mountains.
1. https://en.wikipedia.org/wiki/Interstate_80#Wyoming
2. http://articles.latimes.com/2012/nov/12/local/la-me-bullet-m...
A route roughly following the I-80 corridor would top out somewhere below 9000 ft[1]. The California high speed rail is already being designed for what I would guess are similar elevations (and perhaps steeper grades)[2].
You could also route through southern Arizona and New Mexico, completely avoiding significant mountains.
1. https://en.wikipedia.org/wiki/Interstate_80#Wyoming
2. http://articles.latimes.com/2012/nov/12/local/la-me-bullet-m...
Jet fuel is more similar to Diesel than gasoline. Different oil wells produce varying mixtures of fuels; I would expect 'sweet' (gasoline-rich) crude to decrease in price much more than heavier crudes, as the demand for the latter is likely to persist for longer, though we may also see shifts in the types of fuels being used.
Doubtful. Under basic economic theory, as demand goes down, so does price. The petroleum production that shuts down first will tend to be the most expensive production, causing a drop in the average cost, and price (we should see a similar effect in upstream products like crude).
The main way this effect breaks down is if the market shrinks so much that we loose the economy of scale; but it seams unlikely demand will fall far enough for that to occur.
The main way this effect breaks down is if the market shrinks so much that we loose the economy of scale; but it seams unlikely demand will fall far enough for that to occur.
That was not his point. When you extract oil, you don't really get a single product but multiple ones (heavy oils, lubricants, etc.)
Before you might be selling lubricants cheaply, because after refinement you had lots of lubricants as a by-product. If you need less car fuel, this changes the cost equation and lubricants (and other byproducts) might become more expensive even if car fuel becomes cheaper.
Before you might be selling lubricants cheaply, because after refinement you had lots of lubricants as a by-product. If you need less car fuel, this changes the cost equation and lubricants (and other byproducts) might become more expensive even if car fuel becomes cheaper.
You can see this at work already with gasoline for small planes, which commands a huge premium over automotive gasoline now. Around here, the cost is 2x higher or more. The premium used to be smaller, but when gas prices came down from their $4 high, avgas didn't really follow.
87UL and 93UL aren't much more expensive than automotive gas, since it's pretty much the same thing. It's 100+ octane leaded gas that's expensive, and it'll stay that way until general aviation gets out of its carburetor & fixed timing rut and join the modern world of direct fuel injection and FADEC.
Which will not happen quickly because FAA certification makes re-powering small aircraft expensive and strict maintenance requirements keeps half century old planes running
The're working on an unleaded 100 octane avgas: http://www.eaa.org/en/airventure/eaa-airventure-news-and-mul...
> I wonder what will happen to the price of jet fuel once electric cars are wide spread.
Probably the same thing that happened to coal, it just gets used elsewhere.
Historically used for heating, trains and ships
Probably the same thing that happened to coal, it just gets used elsewhere.
Historically used for heating, trains and ships
Or would it potentially increase the supply of Jet A (jet fuel), as less oil needs to be converted to automobile fuel.
Is the refining process flexible enough to do that? I was under the impression that refining is more of a separation process so the amount of each petroleum product you get is already determined by the petroleum you have before you even start the process.
There's all sorts of processes used to convert stuff.
https://en.wikipedia.org/wiki/Cracking_(chemistry)
https://en.wikipedia.org/wiki/Cracking_(chemistry)
You can crack the fuel to go from heavier to lighter grade, and use Fischer-Tropsch process to go the other way.
If the price go down, people will travel more, increasing the demand and the price of oil.
It's self-stabilizing.
It's self-stabilizing.
If oil is no longer in demand it will trigger the biggest mass migration from the middle east to the west the world has ever seen. These countries import 90% of their food, food which they pay for with oil income.
Highly unlikely. Most of the oil revenues and profits end up at wealthy top and a tiny portion would be spent for food imports. If revenues dry up, there will be political revolutions and probably communist style rule.
The West doesn't have to accept them.
Yeah, because we need more "refugees". As if the ones we already got haven't caused enough damage.
Europe will get refugees regardless of its need for them, in the same way that we got climate change without needing it.
What we're debating is not the "if", it's what to do with them. The most endorsed answer thus far seems to be letting them drown in the Mediterranean Sea.
What we're debating is not the "if", it's what to do with them. The most endorsed answer thus far seems to be letting them drown in the Mediterranean Sea.
I think the best thing of oil no longer being in demand is the US and the UK could end their relationships with Saudi Arabia, and hold them accountable for the vile regime they run there.
As long as we have ground wars, we'll have demand for oil (i.e. gasoline). As an energy source, stored gasoline is far more modular and transportable than anything requiring the electric grid. Consequently, it is easier to defend and remains the ideal energy solution for supply lines in battle.
As long as we have air wars, we'll also have demand for oil. The logistics of moving an airforce around the world require floating airfields doubling as standalone fueling stations. How efficient would solar need to be for an aircraft carrier + all of its planes to run on solar?
As long as we have wars fought on the open seas... you get the idea. Oil, as a power source, moves quite easily and this cannot be ignored, strategically.
Militaries and governments know this. As long as we have physical borders that need to be defended, we'll have a demand for oil.
As long as we have air wars, we'll also have demand for oil. The logistics of moving an airforce around the world require floating airfields doubling as standalone fueling stations. How efficient would solar need to be for an aircraft carrier + all of its planes to run on solar?
As long as we have wars fought on the open seas... you get the idea. Oil, as a power source, moves quite easily and this cannot be ignored, strategically.
Militaries and governments know this. As long as we have physical borders that need to be defended, we'll have a demand for oil.
George Friedman describes a ~2030/2040 military that uses batteries in power armor that are recharged by solar power satellites.
Purely military purposes would need relatively low volumes, though. Even just decoupling consumer demand from military demand would dramatically alter the economies of oil production. It might not fix all oil-related wars and restructure all Middle-Eastern alliances, but it would certainly change the landscape.
Hubbert's Peak
"World oil production will start to fall sometime during this decade, never to rise again. In 1956, M. King Hubbert predicted that U.S. oil production would peak in the early 1970's. Although Hubbert was widely criticized by some oil experts and economists, in 1971 Hubbert's prediction came true. The 100 year period when most of the world's oil is being discovered became known as "Hubbert's Peak". The peak stands in contrast to the hundreds of millions of years the oil deposits took to form. Hubbert's methods predict a peak in world oil production less than five years away."
http://www.princeton.edu/hubbert/the-peak.html
"World oil production will start to fall sometime during this decade, never to rise again. In 1956, M. King Hubbert predicted that U.S. oil production would peak in the early 1970's. Although Hubbert was widely criticized by some oil experts and economists, in 1971 Hubbert's prediction came true. The 100 year period when most of the world's oil is being discovered became known as "Hubbert's Peak". The peak stands in contrast to the hundreds of millions of years the oil deposits took to form. Hubbert's methods predict a peak in world oil production less than five years away."
http://www.princeton.edu/hubbert/the-peak.html
> Hubbert's methods predict a peak in world oil production less than five years away.
According to the wayback machine [1], that page was first written in 2001.
[1] https://web.archive.org/web/20011121173642/http://www.prince...
According to the wayback machine [1], that page was first written in 2001.
[1] https://web.archive.org/web/20011121173642/http://www.prince...
This discussion should really come to the forefront of the energy conversation in the US with the Trump presidency. His commitment to ramping up oil production and reversing all of the initiatives to increase investment in alternative, sustainable energy resources will hurt the US' progress towards relying less on fossil fuels which are not sustainable. His motivations are obviously to prioritize the big oil companies making money.
As the developing world develops, demand for petroleum based products (plastics, and even some paper products) will certainly rise, even if power plants and transportation moves away from fossil fuels.
Demand will never go to zero even if our energy needs our met renewably. I wonder what the ratios will be though.
Demand will never go to zero even if our energy needs our met renewably. I wonder what the ratios will be though.
Usage in plastics is a tiny highly substitutable use compared to fuels.
A realignment where it becomes a buyer's market for oil will be a massive change to the status quo.
A realignment where it becomes a buyer's market for oil will be a massive change to the status quo.
Why does pumping CO2 under water not sound as stable as having carbon locked in a petrochemical under the ground?
water
>As the world enters what could be the twilight of the oil age
This is the point when I stopped taking the article seriously.
This is the point when I stopped taking the article seriously.
This is the same government attempting to roll back solar tax credits because they insist that the solar industry needs to stand on it's own 2 feet and compete in the "free" market.