What Oil Companies Face: The WTF-Collapse of Consumption of Gasoline & Jet Fuel from Long-Term Weakness

Transportation fuel demand rose to where it had been in … 1997.

By Wolf Richter for WOLF STREET.

While the overall S&P 500 Index is down 2.7% in October, about flat for the three-month period, and up 2.8% for the year, the S&P 500 Energy Index is down 4.4% for the month, down 19% for the three-month period, and down 50% year-to-date.

On Friday, Exxon Mobil reported a 29% plunge in revenue in the third quarter, and a loss of $680 million – its third loss in a row, the three of them totaling $2.34 billion. And it warned of possible “significant impairment” charges on “assets with carrying values of approximately $25 billion to $30 billion,” mostly related to its North American shale gas operations. The day before, it had announced job cuts of 14,000 employees and contractors globally, including about 1,900 folks at its Houston headquarters.

Chevron [CVX], which completed the acquisition of Noble Energy in early October, announced this week that it would lay off about one quarter of Noble’s employees. Those layoffs are in addition to the cuts of 10%-15% it’s planning for its own workforce. The cuts at Noble amount to nearly 600 people, and the cuts at Chevron amount to 4,500 to 6,750 folks.

Exxon shares [XOM] have plunged 53% year-to-date to $32.62 on Friday, and thereby edged closer to their March 23 decade-low of $31.45. In July 2014, at the cusp of the Oil Bust, XOM reached a high of $135, having since then plunged by 75%.  Exxon’s dividend yield is now over 10%, but everyone knows that, like other oil companies, Exxon could reduce or eliminate its dividend if push comes to shove.

Bankruptcies by US shale oil and gas companies with less heft and diversification than Exxon and Chevron have turned into a flood. The debts listed in the bankruptcy filings over the first nine months of 2020 reached $89 billion and surpassed year-total filings in the prior peak oil-bust year 2016.

What these companies are facing, in addition to the horrible economics of fracking and the collapsed price of oil, which makes the horrible economics of fracking even more horrible, is the collapse in demand for oil as transportation fuel during the Pandemic, which came on top of the long-term structural demand issues in the US and other developed economies.

Eight months into the Pandemic – with infections rates now resurging – where is US consumption of gasoline, jet fuel, and distillate (such as diesel)?

Gasoline.

In mid-March, demand in the US for gasoline had collapsed in a never-before seen manner, under an avalanche of job losses and the switch to work-from-home. In the week ended April 3, gasoline consumption plunged 48% year-over-year, to 6.7 million barrels per day (mb/d), the lowest in the EIA’s weekly data going back to 1991. The four-week moving average plunged by 44%.

The EIA tracks consumption in terms of product supplied by refineries, blenders, etc., and not by retail sales at gas stations.

As of this week, gasoline consumption, at 8.58 mb/d (four-week moving average), was still down 10% from the same period a year ago and has been essentially flat since mid-July. Gasoline consumption had first reached this level in July 1997, pointing at the long-term structural issues in demand. Over the past 12 years, including a big dip and a recovery, demand has essentially gone nowhere:

Jet fuel.

If gasoline was the good-news story – crummy as it was – jet fuel is the bad-news story. The four-week moving average of kerosene-type jet fuel consumption in the week through October 23, at 1.017 mb/d, was still down 44.3% year-over-year and remains way below anywhere in the data going back to 1991, except for the Pandemic.

Beyond the current collapse in demand – TSA checkpoint screenings of the number of passengers entering airport security zones are still down 62% year-over-year – the chart also shows the long-term demand challenges: It took 17 years for jet fuel demand to return to the 2000/2001 peak. While passenger volume recovered from 9/11 after about three years, greater fuel efficiencies of new planes that replaced the older planes kept putting downward pressure on demand.

The same thing is happening now. Airlines are massively retiring their oldest planes. And when demand picks up, they’re using their newest planes – including those they’d ordered years ago and that they will be taking delivery of. It’s all about cutting costs. It will be very tough for jet fuel demand to return to the old highs.

Distillate.

Distillate includes diesel for trucks, railroad engines, ag equipment, oil-and-gas drilling equipment, construction equipment, generators, etc. plus fuel oils, such as for space heating and utility-scale power generation. The four-week moving average of consumption was down 5.2% from a year ago to 3.97 mb/d – but it too shows the long-term demand declines, with the peaks having been well over a decade ago:

Gasoline, jet fuel, and distillate combined.

All combined and eight months into the Pandemic, consumption of gasoline, jet fuel, and distillate, at 13.56 mb/d was still down 12.8% from a year ago, and was back where it had first been in 1997, which makes the long-term structural issues glaringly obvious:

This is what oil companies face on the demand side in the US, in terms of transportation fuel. Petroleum is also used in the petrochemical industry, and there are hopes that demand won’t decline long-term in a similar manner. The demand situation in the US is not unique to the US. Over the past many years, Europe, Japan, and other developed economies have seen similar weakness in demand for transportation fuel. And the Pandemic has put additional and immense pressure on the US oil industry.

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.




  208 comments for “What Oil Companies Face: The WTF-Collapse of Consumption of Gasoline & Jet Fuel from Long-Term Weakness

  1. Senecas’s Cliff says:

    It is one thing to see surplus oil feeding low fuel prices during a time of rising demand like the 90’s. That generally works out well for almost everyone. But supply falling at the same time as prices are falling in the face of declining demand will lead to unexpected outcomes that are hard to predict. The petroleum. Production and delivery system depends on volume. At some point the system begins to triage the weakest parts. The way things are going ,I could see a point where it is no longer viable to provide petroleum products to a place like Hawaii. The people will want it but there will no longer be enough economic resources available to make it cost effective and it will grind to a halt.

    • Joan of Arc says:

      WTF is the only way to describe it.

      • GaryGary says:

        Here in SW FL as of October31 the price at the pump hasn’t gone down even as crude prices crater with more to come. So I ask, is this evidence of price fixing or collusion ? Or perhaps profiteering ?

        • Greg says:

          Same elsewhere too and I’ve noticed the lack of price drop. A lot of it is OPEC cutting back production to maintain prices and I think the rest is the actual cost to refine, move, sell, and tax gasoline. So even if the cost per barrel was $0, it’d still cost say $1.25 at the pump. But gas stations are surely also maintaining bigger relative margins – if their sales are down 10%, they need to markup say 11c/gallon on $2 gas vs 10c/gallon on $3 gas.

        • VintageVNvet says:

          Paid $1.78 at Sam’s last Tuesday in Saint Pete gg, and heard it went down another nickel since then. 4th fill up this year, total approximately 44 gal for the year!!! No wonder oil is hurting.
          Many other places way higher that same day, some at 2.09, etc.
          It’s my understanding that FL retail gas stations are not ”required” to lower prices, but are required/limited to raise prices only when the truck comes and fills up their tanks.
          Been seeing lots of chicanery in retail gasoline since for eva around SW FL, and also seen the state guv mint sue/fine retailers in recent years for raising prices/gouging whenever a big storm comes…
          Several ”apps” out there these days that folks report local gas prices on frequently, so I check buddys, at least, before I go.

        • polistra says:

          This is normal. The price at the pump rarely tracks the world crude price. Most of what you’re paying at the pump is refining and distribution, not the crude itself.

        • Lee says:

          “Most of what you’re paying at the pump is refining and distribution, not the crude itself.”

          In reality in many countries in the world what you are paying for is TAX.

          TAX makes up the largest price component of gasoline in many if not most countries in the world.

          It is fixed so that even if the price of crude falls you won’t see a large fall in the price of gasoline.

          A hugely regressive tax on low income people that need to buy gasoline for transport in order to go to work

        • Hey You says:

          .

          Here is the gas tax that each state collects. Notice California adds about 61 cents per gallon for its state tax on gas.

          The map in the below website does not include the federal gas tax of about 18 cents per gallon.

          https://taxfoundation.org/state-gas-tax-rates-2020/

          .

        • Lee says:

          Dated, but an example of other countries’ tax on gasoline:

          https://taxfoundation.org/how-high-are-other-nations-gas-taxes

      • Hey You says:

        .

        Work For Home (WFH) means less commuting to and from work.

        Also companies are not funding business travel as much and relying on video conferences (ie., Zoom, Skype, etc.).

        The internet with streaming services and virtual reality gaming with eyewear means people can stay home more and entertain themselves instead of driving to the movie theaters, etc. or even going on road trips, etc. The lockdown has solidified this consumer trend more.

        It is not only commercial real estate, hotels/resorts, airlines, movie theaters, etc that are impacted. Energy (i.e., oil) has taken a big hit with less cars and jet liners burning fuel.

        .

    • Shiloh1 says:

      What were the PEs of the majors like Exxon, Chevron, Phillips, Mobil, etc around 1986? I’d go all-in at that ratio, however I also understand that interest rates on Treasuries etc at that time weren’t manipulated like the present.

    • Cas127 says:

      “not serve Hawaii…”

      Well, Hawaii got oil in the late 90’s, when the price was $15 to $20 per barrel.

      Transport prices have gone up…but not that much…especially because oil makes up a huge part of transport costs…

      And, in any event, local premia are put in place to assure delivery.

      In many ways, it is *soaring* prices that screw up transport economics (because some/many consumers get priced out).

  2. Yort says:

    Just like Wolf went on record shorting the market, I’ll go on record of purchasing both XOM ($32 avg so far) and CVX ($67) this week and will cost average on the way down, perhaps as far as another 50% down or worse. Hold timeline 10 year minumum, as I think the EV and green revolution will take at least one decade to break 50% acceptance as my bet is humans are too stubborn to dump oil in a few short years. Sure it is somewhat easy to gain the first 10%-20%, not so much the last 50-70% as we are generally a stuck in the past, change avoiding, future ignoring species.

    Also I have faith in “The Saviors” fooling the population another 5-10 years and in the process and keeping big oil in biz a while longer via the printer go Brrrrr.
    The Fed game is perception over reality—> “The Hero”, “The Winner”, and “The 16 Trillion Dollar Woman” have fooled, and will continue to fool, the majority of humans on Earth for a very, very long time due to the MSM ensuring they look like genius saviors, only existing to save the human race. View the past three Fed leader magazine cover images below. Note all three US Central Bank Leaders are holding back a rather smug smile as they might just be in laughable disbelief that they are “perceived: as world “Saviors”, when deep down they most likely have the intellect to understand they are inevitably destroying “free capitalism” in the process…

    https://pbs.twimg.com/media/ElsBlO5XIAIqmzP?format=jpg&name=medium

    • Wolf Richter says:

      Yort,

      In general, I agree that there will be opportunities someday in this field.

      I just want to add that QE and interest rate repression triggered a majestic no-holds-barred investment boom in US shale oil and gas, starting in 2009, with investors chasing yield everywhere, and falling for anything and everything, and these hundreds of billions of dollars that they plowed into US oil and gas drilling caused production to skyrocket, which caused the price to collapse, which then caused hundreds of oil and gas drillers to file for bankruptcy and wipe out their shareholders.

      These saviors — the Fed heads you refer to — are responsible for the collapse of the price of oil. So be leery of them and their free-money strategies when it comes to prices of commodities such as oil that are subject to overproduction and subsequent price collapse.

      • Gerry says:

        Bad as the situation in the Oil Patch is, in the New York City area matters are far worse for mass transit. The “rush hour” for passenger cars on the Grand Central Parkway in Queens, for commuters to Nassau and Suffolk, now starts earlier, at 2:00PM some days, thanks to the fewer Manhattan employees avoiding the subways, buses and Long Island Rail Road, using their personal, CV-19 free cars.
        For an example of how everything seems to be in freefall as talking heads, Bolshevik governors like Andy Cuomo and the like, promise “vaporware” solutions, the New York Daily News shut down its physical newsroom at 4 New York Plaza permanently Friday, October 30. That was the last day that the few remaining News reporters had to pick up their personal effects there, left there in March when employees were told to work from home.

      • VintageVNvet says:

        Good clarification Wolf, thank you once again.
        As i have posted previously on your wonderful site, looking here to learn with your clear ‘analytics’ as well as your great commentariat, (with your great moderating as far as I know,{ (AFAIK), so far,} to find out if feasible from more than one point of view (POV) for us to invest in these new fangled financial products such as ”futures,” etc., etc., how ever ya spell them,) or any of the others now apparently, like amoeba, sending spores in all directions.
        So far, for this old guy who was OUT of the stock market (SM) in the 1980 era in spite of make some serious money from 50s-then, none of these new products have any allure at all for a retail investor.
        Still pretty much inspired by the likely huge sell off and subsequent bargains to be had in the next 5 years or so in the RE mkt…

    • Anthony says:

      Yort… At the moment no one has worked out where to get all those batteries for all those cars we are going to replace. If they do that then green cars may come in large numbers but at the moment they are not even close to enough battery production…

      • Wolf Richter says:

        Anthony,

        Batteries are being manufactured on order. Battery manufactures make only as many batteries as are ordered by automakers. These are decisions made well in advance. Tesla controls part of its battery-making process (not the battery cells). But not all automakers do. When there is more demand for batteries, there will be more supply. Until then, they won’t be more supply — or there would be a devastating “glut.”

        • TinyTim says:

          Walmart is currently having trouble with battery supplies. They purchase most of their batteries made by Johnson Controls.

        • Wolf Richter says:

          Batteries for what? Consumer batteries that consumers panic-buy at the spur of the moment, like toilet paper? That’s a completely different animal than batteries that go into EVs and are part of supply-chain planning for complex manufacturing plants.

    • makruger says:

      Environmental concerns aside, all this oil sloshing around looks to have at least provided some semblance of energy independence for the US. However, due to American rugged individualism, and the lack of any kind of cohesive production strategy (much like the way the COVID-19 response was handled) the market was flooded to their own detriment.

      While EV and green energy stocks are all going parabolic, this may be mostly hype since getting to even 50% is likely to leave the US dependent once again heavily dependent on foreign commodities.

      As for finding the market bottom, much like the cannabis market, it may be a lot lower than people realize.

      • VintageVNvet says:

        With you on most of your post mkr, but not on the concept that there is any real kind of even a suggestion of any coherence in any kind of guv mint response now, or mostly eva!!
        (Maybe exception when kings, etc., were coherent in their self aggrandizement, but not likely since.)
        While a lot of folks want not only to consider, but, unfortunately, conclude that everything or at least most things guv mint does has some coherent and intelligent policy and practices supporting those actions ( of the guv mint ) in fact, there is nothing there resembling any such thing, and that is exactly why those overpaid predators of the political persuasion persist.
        IMO, the only way to get rid of those predators and reach a really and true democracy is to insist at every possible moment on complete transparency of all communications, complete and unedited and uncensored, etc., etc., with which rise of www, is completely possible.
        again, this is just my thoughts, but other than a completely free and open system of all information, anything else will not produce the complete democracy needed for our species to advance to where and when we need to bee to be able to continue our species.
        Anything less than full and open communication system will make us just another failed species/society, as should be obvious has happened already many times on this planet.

      • Thomas Roberts says:

        makruger,

        The drop in prices/demand should kill off fracking alot faster. So both production and demand will fall. Fracking wells production, I always hear, drops off considerably after 2 years.

        For electricity, I expect a switch back to coal for time being as natural gas production falls. Demand should have permanently dropped for electricity, unless, manufacturing comes back to US. In the long term renewables should take over, hopefully.

        For gasoline, demand will probably recover somewhat from here, but, production will fall alot in the coming years. Fracked oil is nearly half of us oil production.

        Powering electric cars by coal is cleaner than gasoline, despite any BS report GM has published. It’s also possible to make coal plants cleaner. There is plenty of coal in America, to last until, renewables or fusion can take over.

    • Lee says:

      Yort,

      My first stockbroker – who passed away a long time ago – always told me to load the boat if and when Exxon ever trades at a yield of 10%………………

    • Hey You says:

      .

      Vanguard Energy fund is at the same level it was in late 2003.

      For it to drop another 50%, then it would be at the same level it was around 1992. I’m not sure if it will get to that point, but you could write covered calls if you own an energy etf like Vanguard’s Energy ETF (symbol VDE).

      .

  3. GotCollateral says:

    Good coverage of the long term outlook.

    I’m seeing starting to see a bifurcation in O&G paper again between HY and IG even though ~80% of the sites in the US are unprofitable under $36, ~90% under $30.

    Obvs that resolved to the downside in march… I expect to see it again when the BBB O&G paper (nearly all unsecured) trading way above par now gets smacked. 5% off IG collateral valuations at least not considering knock on effects in adjacent industries…

  4. Adi says:

    They deserve to be bankrupt. Exxon paid tens of millions of greenbucks to “scientists” to publish garbage research to persuade the public that burning fossil fuels does not create climate change. They will disappear is 5 years no one will use plastic or combustion engines

    • KGC says:

      Just what do you expect will take the place of plastics? Wood/cellulose? That will create climate change, and require the use of combustion engines to harvest.

      As it stands today human civilization cannot exist at the current standard of living without plastics. And the combustion engine will be around for decades, if only in lessor developed countries, because they can’t afford to go without them.

      Tesla made a major change in the acceptance of electric powered transportation. It took 18 years (and counting). You expect the world will give up petroleum based products in 5 years? Just how naïve are you?

      • Fat Chewer. says:

        You’re not much of a chemist are you? Plastic can be made a variety of ways. Getting the carbon from oil was merely the LAZIEST way of producing plastics. They are also far less biodegradable, if at all. You need to understand that oil WILL be gone one day. We need to begin adapting now. There’s money in it too, so no shortage of businesses wanting some of it. That’s your cherished creative destruction in a free market at work.

        • ted says:

          Get back to us all when SpaceX launches its first battery powered rocket, OK?

        • Happy1 says:

          People were saying we would run out of oil by 2020 just 10 years ago. This will not happen in your lifetime.

        • Gandalf says:

          Fat Chewer.

          LAZIEST is the wrong word. CHEAPEST would be a much better word.

          It’s all about the money, and the cost.

          In the mid 2000’s, as China’s industrial growth and thirst for oil caused world oil prices to soar to over $60 and then to well over $100 per barrel, numerous alternative schemes were advanced to deal with the surging prices and perceived shortage of oil.

          The Defense Dept. funded programs to develop bio-diesel to ensure a stable national supply of oil for its non-nuclear fleet of ships and planes.

          One privately funded project plant was built to produce biodiesel from turkey guts from a nearby turkey plant, using Thermal Depolymerization technology.

          But, in the end, all of these projects got aced by the fracking boom, which attracted an endless stream of investment money. The technology had been there for a while already, it just needed a motivator to ecplode in growth.

          The problem with all these schemes to produce oil other than from sucking it out of the ground is that they all need huge amounts of heat and pressure to turn carbon containing compounds into oil, something that the Earth had done for free already in the underground deposits of oil.

          These projects were all essentially variations of the WWII era German synthetic fuel plants where coal (which Germany had plenty of) and water were heated under high pressure to produce fuel for Germany’s war machines. Nobody ever tried to replicate exactly what was done in WWII Germany because this was known to be very energy intensive and expensive.

          BTW, natural gas remains by far the dominant and cheapest method for production of nitrogen fertilizer thru the Haber-Bosch process, with ammonia produced from natural gas and water heated under high pressure over a catalytic bed the first step.

          This was a milestone in the history of human agriculture that unlocked massively increased food production world wide, as previously, nitrate mines (largely formed from enormous deposits of bird and bat guano) were the only sources for nitrogen fertilizer which was very expensive as a result.

          So, natural gas is key for for world food production.

          The history of Fritz Haber, who developed that process, is notable and tragic, and worth a read on wikipedia. A loyal and patriotic German, he would lead Germany’s military poison gas program in WWI, win the Nobel Prize in 1918 for his ammonia process, and then suffer through persecution in the postwar years, both for his role in Germany’s poison gas programs and for his Jewish heritage. The institue that he headed would develop Zyklon A , a predecessor compound to Zyklon B, which was used the German death camps in WWII

        • char says:

          NH4 is made from N2 out of the air and H2. The H2 is normally made with natural gas(CH4) but could also be made with electrolysing water

    • Anthony A. says:

      “……no one will use plastic……” Really? Try living without it.

    • Javert Chip says:

      Adi

      Your virtue signal:

      ‘…They will disappear is 5 years no one will use plastic or combustion engines…’

      My response:

      Wanna bet?

    • max says:

      “burning fossil fuels does not create climate change.”

      “They will disappear is 5 years no one will use plastic or combustion engines”

      Vaclav Smil:
the pace of decarbonization
      History of energy transitions

      In 1800 traditional biomass fuels (wood, charcoal, crop residues, dung) supplied all but a tiny share of the world’s primary energy, a century later their share was about 50%, and at the beginning of the 21st century they still accounted for nearly 10%. This means that even after more than two centuries the world has not completed the shift from traditional biofuels to modern sources of primary energy.

  5. Brant Lee says:

    The loss of energy dominance is THE most important factor in the U.S. economy. When the infrastructure goes, it ain’t coming back. Goodbye petro-dollar and free printed money. Goodbye cheap fuel that the country was built on.

    Yet another forgotten factor soon to dawn on the populace. Gasoline is pure magic in a can. Just try for a day living without it. My car does about 30 MPG. Would I rather push the car 30 miles (literally impossible) or pay $2 for gas to drive that distance in comfort?

    • Khowdung Flunghi says:

      “Gasoline is pure magic in a can.”

      I seem to recall reading somewhere that a barrel of oil has the energy equivalent of 4.5 years of human effort…so yeah, magic in a can!

      • andy says:

        Sounds about right. Too many calories in oil. I go thru a quarter barrel of light tasting olive oil in about 12 months. But it’s good for you. McDonalds freedom fries oil is also good, for diesel Suburban driving.

    • andy says:

      I think the last time I bought gasoline was in September 2019. I think it was $4+ for premium.

      • Javert Chip says:

        Andy

        My guess is you’ve switched from gasoline to electricity (made from coal).

        Congratulations, Dude!

        • andy says:

          I walk for now, but good try. Will get 7 series BMW SUV for pennies on the dollar. They just came out.

        • Wolf Richter says:

          Javert Chip,

          Not many — if any — Americans live in a place where 100% of the power is from coal. The US average of coal in the power mix is around 25%, below the share of renewables. In California, the biggest EV market in the US, there are no more coal power plants at all. Texas is by far the largest wind power producer in the nation. So it all depends on where you’re driving your EV.

  6. Andy says:

    US should have invested in and gone to electric cars 50 years ago. – Elon Musk has limited new tech in his batteries and motors.

    But Big Oil and Big Auto, which got rid of US metro rail in the 1950s and 1960s, resisted and prevented it.

    Caused a lot of problems in the Middle East as a result.

    Kinda nice to see GM, Ford and XOM finally get their comeuppance.

    • 2banana says:

      An electric vehicle in the 1970s was a two seater go cart that went 30 miles. There was zero demand for them even with gasoline at historic high prices and hour long waits.

      Just as the railroad replaced canals as the main goods transportation method, the post WWII Eisenhower modern highway system and long haul trucks replaced the railroads.

      No conspiracies needed.

      • Wolf Richter says:

        2banana,

        “… long haul trucks replaced the railroads.”

        Trucks became very potent competitors to railroads. But railroads doing just fine. Trucks are better for some things because they offer more flexibility and convenience, and may be faster. Railroads are FAR superior for other things where trucks cannot even try to compete.

        • Anthony A. says:

          Railroads used in commercial settings are great if you don’t need the goods in a short time.

          I remember ordering copper castings (ingots) for the rolling mill I ran in Detroit. We used to order from Asarco in El Paso, Tx. Delivery was 30 days, which was OK for several hundred thousand pounds of ingots we hot rolled into flat products.

          By truck delivery, our costs were much higher but delivery was 7 days vs. 30.

      • KGC says:

        Railroads are, by far, the easiest transportation to computerize. The only reason that hasn’t happened yet is due to contracts and grants for right of way and employment. As it stands they are becoming less manual labor intensive at a fairly good pace. 30 years ago the requirement was for a caboose. Those are gone, replaced by technology.

        With fixed routes, uniform car lengths and loads, there’s no technologic reason that all the rail movement isn’t automated. Add to that the capability to load and unload by robot (like the Port of Rotterdam which is run by less than a dozen humans) and there’s a good chance you’ll see totally automated rail inside of 40 years.

        Automating the rail would be a major step in reducing long haul trucking. And if/when city planners get wise to the fact that they could eliminate long haul trucking by over 80% (and ease the traffic issue of big trucks on small roads) by increasing the use of rail it will make a real change. Long haul rail for cargo is where the money is, not passengers.

        If I had my way no truck would be allowed on a road where it cannot make the entire turn in it’s own lane. We have the technology to make this happen, but the will to but 6-8 Million people out of work is lacking.

        • roddy6667 says:

          The bumper sticker that reads “everything you have came by truck” is true. You can’t put a railroad siding at every house and apartment. Can you imagine the outcry from the NIMBY’s? With railroads, the last mile or so is the problem.

        • Wolf Richter says:

          roddy6667,

          But there is this scenario: The container came off the ship and crossed the country by rail. At the local rail yard, the container was loaded on a truck and was transferred to a fulfillment center where the content was put on shelves. This is part of the “intermodal” system, a huge business for railroads. Your order gets fulfilled, and a guy in a van takes the box to your house.

          Another slice of intermodal for railroads is transporting truck trailers piggyback style. Works great for long distances.

          So yes, “everything came by truck,” even if a ship and railroad car carried it most of the way.

        • roddy6667 says:

          My last ten years working were for a large retailer in their supply chain. This is exactly how it is. Most of the merchandise comes from Long Beach, CA to West Springfield, MA by train. The trailers are hauled to a cross-dock distribution facility and then to the stores. I was just objecting to those who want to block the roads to truck traffic. They are clueless to the process.

        • nick kelly says:

          All you have to do is to figure out a way for the train to go where the tracks don’t. If you order by rail you arrange for delivery (by truck) to where you want yr stuff. If you order by truck it comes to yr loading dock.

          The predominance of trucking over rail (ex, commodities, coal, wheat etc.,) is the result of natural selection, not a conspiracy against rail.

        • Fat Chewer. says:

          Australian mines already have automated railways. Using trains over 1km long. The future will not wait for slow coaches.

        • Dan Romig says:

          Adding to nick kelley’s comment:

          If you look at where the grain elevators are in the upper mid-west farm country, you see them by rail lines. When Friederichs Seed is selling non-GMO soy to buyers in Taiwan, it is loaded onto train in western Minnesota and taken to Tacoma to be put on a cargo ship.

          As far as gasoline goes; damn it, I just want some 93 octane non-oxygenated (no ethanol mixed in) fuel please! In the Twin Cities this doesn’t exist. Hell, I’ll pay more, but I want the good stuff for my motorbike & car.

          Also, not all gasoline is the same. In the Twin Cities, two of the main retailers, who I shall not name, have small amounts of ash in their gas. This leaves a tell-tale signature of carbon build up on the spark plugs. I believe this is from the contracts they have with their supplier, Pine Bend Refinery. Other retailers with the same refinery source have different formulas, and this can be seen on the plug tips.

    • Petunia says:

      I hear the Brightline, a new commuter rail service in south FL, is not running because of covid. No point in having more public transit if you can’t/won’t use it.

      • Khowdung Flunghi says:

        I can hardly wait for the new Brightline bullet train connecting Los Angeles to Las Vegas!

        “Las Vegas / Southern California Expansion
        Brightline is headed to the West coast. The first phase of our Las Vegas to Southern California
        route will be built on the XpressWest right-of-way, connecting the 170 miles between
        Las Vegas, NV to Victor Valley, CA with expansion to Los Angeles following after.

        We plan to break ground in CA and NV the second half of 2020. For more about this project,
        including economic and environmental impact and bond activity, please see our fact sheet.”

      • RightNYer says:

        The problem with Brightline is that it’s WAY too expensive unless you buy a monthly pass. It’s one of those things where individual rides cost 3-4 times the per ride cost of a monthly.

        In any case, I won’t take Brightline because they make all passengers go through metal detectors.

        • Lee says:

          “In any case, I won’t take Brightline because they make all passengers go through metal detectors.”

          Another stupid ass requirement of living in the USA.

          Geez, I’d like to see that happen in Japan…………………….

        • RightNYer says:

          FWIW, It’s the only train in the U.S. I’ve ever seen that does that.

      • Denise says:

        They are using this time to fast track construction of their second track, bridge and street crossing upgrades as well as positive train control. They are using low interest rates and covid stay at home eules well. None stop work where I live on Florida treasure coast.

    • Old School says:

      Stockman has a saying that the solution to high oil prices is high oil prices. You could just replace the word high with low.

      As far as going to electric 50 years ago people haven’t valued that enough to do it. In economics, nothing happens in a vacuum. Choosing to do something that is more expensive or has a poorer return on investment has consequences and it eventually gets to people having to make tough choices between, food, shelter, electricity, insurance, transportation. That’s when what people really value is found out. Yes now if you are upper middle class you can live your values in a Tesla, but a lot of people choose to drive less expensive vehicles because it would not even be a financial choice for them to be an early adopter of electric vehicles. If electric vehicles are the best form of transportation our grandkids will probably be only driving them.

      • Implicit says:

        LOL By the time our great great grandkids are adults, the mining space station on the moon, with fullliving bubble,, will already be functioning with the minerals mined used to support the energy necessary to survive. Buy 50 year futures of rocket fuel.

        • KGC says:

          Oh crap!

          I heard all this back in the 1960’s (when I lived right next to JPL and the best rocket scientists on earth). Here we are in 2020 and we have lost the technology to put a man on the moon again.

          If the country put all it’s resources into space we might put a man on the moon in 10 years. But the heavy lift to haul construction equipment and tools is a long way off.

          Consider this basic problem: How are you going to generate and retain water on the moon? Every drop must be lifted and recycled, and you still have loss. There are issues involved with removing enough water from earth to generate an atmosphere elsewhere. You want to capture and use a meteor? Try finding one with an ice mantle, and then try and figure out the effort required to move one to the moon. Where do you think we’re going to get that kind of capability?

          Earth based life forms require water. Until you find a way to resolve that problem we’re never leaving this planet.

        • andy says:

          They are testing these plastic bubbles in Chicago for outdoor restaurants seating. But too many bullets flying around to make good progress. Plus the plastics will be banned soon, as commenter above outlined.

        • Anthony A. says:

          Andy, we could get Musk working on the plastics that are going to vaporize. I’m sure he could come up with the same kind if invisible shields used on Star Trek to ward off the bullets!

        • Implicit says:

          KJC Asteroids not meteors. It has been pretty well proven they know how to draw minerals from asteroids that will allow them to make the H20. I suggest you read a good novel by Sanford and Ctein named “Saturn Run”
          Sanford is a well known famous author and Ctein is an astrophysicist No need to crap unless you clean it up :>{)

        • Implicit says:

          Correction: Cited the wrong space travel sci fi book.
          See Daniel Suarez’s “Delta-V” well researched and excellent education

      • Rudolf says:

        I recently was shown a map of the Chicago area circa 1920 showing the hundred or more ev charging stations available throughout the city.
        I grew up in LA in the 50’s and loved riding the electric trollies, by far the easiest, cheapest and most fun way to get around town. GM bought and ripped out the tracks and flooded the streets with diesel buses. “Money doesn’t talk; it swears!” Bob Dylan

    • Absur Ditty says:

      ok, I should get an electric car then.

      show me a used electric car that will last as many miles as a used internal combustion car, with equal or lower total cost of ownership. Don’t care about looks or if it’s been in a fender bender.

      I am shopping for a car I can expect to get at least 150,000 miles out of, that can handle a 35 mile one way, 70 mile round trip commute in extremes of hot an cold weather. 10-15k miles annually, for 10 years. A lot of used hondas and toyotas can handle this no problem in the $4,000 to $10,000 dollar range.

      Which used electric cars in this price range can do this?

      • Wolf Richter says:

        You’ll probably get 1 million miles out of an EV power train, and it will still be fine. And no, there are no oil leaks or coolant leaks or blown head gaskets or seized main bearings etc. The door handles will fall off before the electric motor gives out. Battery replacements are now getting cheaper … a whole industry is springing up to do just that. In terms of manufacturing and service, EVs are a game changer that will produce massive shifts — because they’re so simple to manufacture and service.

        • California Bob says:

          “ceased” –> “seized” maybe (though ‘deceased’ works)?

        • California Bob says:

          Hah … you caught it before I could send.

        • Anthony A. says:

          Wolf, FYI have a detailed look at the drive train of the Tesla. You will see an oil sump for the gear case, with oil filter. You will also find a liquid cooling system on the inverter next to the drive case. Not big maintenance stuff, but never the less, not free of lubricants and coolant.

          While electric motor, by itself, is pretty reliable, there are quite a few mechanical parts (gears, bearings, seals, etc) in the drive train that can fail.

        • Absur Ditty says:

          interesting. Last I shopped the used electrics would poop out at 100k miles unless you spent a lot of $$ on a new battery.

          Maybe I will shop again.

          But I ain’t rich, and am not financially able to spend more than on a used internal combustion car to switch.

        • Wolf Richter says:

          To buy a 7-year-old EV, mass-produced by a real automaker, you will have to wait about 6-8 years for there to be any selection. This is a new industry. There are just not a lot of 7-year old EVs out there right now.

          You will have more selection with 2-3-year olds.

        • Ted T. says:

          “Battery replacements are now getting cheaper …” Define cheaper. $100,000.EV’s don’t impress me, take your pick. likewise, $60,000. EV’s are becoming readily available. Mass market penetration of battery cars will require a break through to make them practical.

        • Wolf Richter says:

          Ted T.,

          As I noted elsewhere in this thread: The base Tesla Model 3 is now $35,000, a Nissan Leaf has an MSRP of $32,000 with better deals available. The BMW Mini Cooper Electric has an MSRP of $30,000, etc.

          The “average transaction price” of new vehicles in September for the US auto industry overall, which is mostly ICE vehicles, was $38,600. So those EV prices I mentioned are below the average ICE vehicle prices.

          And unlike ICE vehicles, which only get more expensive, EVs have been getting cheaper. Tesla has cut prices all year long.

      • andy says:

        Absur Ditty,
        Hyunday Ioniq EV advertised lease for $187/month. Just saw it the other day.
        You’re welcome.

      • nick kelly says:

        ‘Owner of all-electric Nissan Leaf frustrated by difficulty of getting new battery
        Social Sharing’

        This car is a 2013 which to me is almost new. The guy saw his range fall to about 80 Kilo ms (this is Canada ) and asked about new bat. When he bought it they said about 5K for new bat.

        Now they say 15K C$… IF there is one. He’s been bounced back and forth between Nissan and the dealer. Last is Nissan is thinking about it cuz of media I guess.

        For 5K you can completely rebuilt any 4 cyl or replace with low k motor/trans.

        To be fair 2013 Leaf bat has no cooling and wears fast. The guy figures as early adopter he should get slack.

        • nick kelly says:

          PS: by ‘to be fair’ I mean Leaf has improved bat.
          Dealer’s solution is: ‘buy new one for 45K. ‘
          Up until 2020 Leaf was No.1 seller until overtaken by Model S by T.

        • Wolf Richter says:

          nick kelly,

          Well, as I said, they’re a still a new industry, and these businesses are starting to spring up as there is more demand. There are not that many 7-year old Leafs out there. But…

          https://cleantechnica.com/2020/08/30/dozens-of-shops-are-now-replacing-nissan-leaf-batteries/

          “Now, EVs are following a similar path. Nissan LEAF batteries are still extremely expensive if you buy them from a dealer, but, just like any other vehicle, the dealer isn’t the place to go unless your battery is still under warranty. A growing number of shops and suppliers are getting into the business, with used but good first-generation LEAF batteries now available for as little as $1000. People with an older LEAF can even get newer 62 kWh packs to get over 200 miles of range in the oldest LEAFs.”

    • Anthony A. says:

      “Kinda nice to see GM, Ford and XOM finally get their comeuppance.”….you mean all your fellow Americans losing their jobs? That’s pretty short sighted of you.

    • Happy1 says:

      If electric cars were cheaper we would all be driving them, we aren’t because they aren’t, not because of a wacko non-existent conspiracy.

  7. C Sargent says:

    Oil companies are not spending money on developing new fields, only on getting the most out of existing fields. Without replenishment from new fields global oil/gas supplies run down by 2-3% per annum. Without replenishment, even with less travel and WFH in the not too distant future, say 5-10 years, demand will overtake supply and everyone will be panicking again about energy security. Quoting David Byrne – Same as it ever was.

    • Lee says:

      Last time I looked there were something like over 9000 drilled but uncompleted oil wells in the USA.

      You don’t hear much talk about these wells. Why?

      Companies don’t need to drill another well for years unless there is some legal requirement to keep the lease.

      All those wells can be brought into production in a short period of time.

      Lots of supply just waiting to be brought online and into the market.

    • char says:

      But what if it is clear by then that EV are the near future with a market share of 50%. Would you invest in an oil field which needs decades to return the investment while demand will be almost completely gone in a decade?

  8. 2banana says:

    The answer to high oil prices is high oil prices (conservation, alternative supplies, new technologies, etc.)

    The answer to low energy prices is low energy prices (bankruptcy of weak players, capping wells, folks buying bigger cars, etc.)

    The are billions of people in Asia, South America and Africa who want to enter the middle class. This middle class wants a cheap ICE vehicle and a cheap place to vacation. A $50,000+ EV that there is no infrastructure to charge is not part of the equation.

    This is on top of an eventual America recovery.

    • Wolf Richter says:

      2banana,

      “$50,000+” ??? You need to update your knowledge.

      The base Tesla Model 3 is now $35,000, a Nissan Leaf has an MSRP of $32,000 with better deals available. The BMW Mini Cooper Electric has an MSRP of $30,000, etc. Lots of EVs on the way, some with lower prices still (but as always, also some luxury models).

      The “average transaction price” of new vehicles in September for the US auto industry overall, which is mostly ICE vehicles, was $38,600.

      So those EV prices I mentioned are below the average ICE vehicle prices. And that will be the trend going forward. EVs will beat ICE vehicles on price because they’re a LOT cheaper to manufacture, except for the battery, and batteries are becoming off-the-shelf commodity components that can be manufactured anywhere, and prices are coming way down. This battle will be won on price.

      BTW, the Kandi K-27 (made in China) is supposed to go on sale in the US soon. It has an MSRP of $17,500.

      • andy says:

        I’m waiting for Chinese-engineered self-driving car. For the thrills.

      • roddy6667 says:

        I don’t see A/C listed as a feature on the Kandi-27. That’s a deal killer for many people.

      • 2banana says:

        And Tata Motors have brand new ICE vehicles available for $2,500.

        With no government subsidies.

        Available now.

        No electricity infrastructure needed.

        The world is not America with insane regulations.

        • Wolf Richter says:

          OK, so I checked. India is the country of three-wheelers, and a four-wheeler is already an upgrade.

          What’s hot in India are electric three-wheelers because they’re cheaper to operate and maintain. Since they’re used as commercial vehicles (transport people and freight), operating costs a big factor.

          https://www.mahindraelectric.com/vehicles/treo-electric-auto/

          The cheapest Tata 4-wheeler, the Nano GenX, is quoted as starting at 236,000 rupees = $3,159 USD. It’s a bare box with a 624cc engine (mid-size motorcycle engine).

          The cheapest EV in China is the Wuling Hong Guang MINI EV, made by GM’s joint venture Baojun. It costs $4,200 and is a cute compact SUV, and not only that, but it’s so fun to drive that it has become the most popular EV in China and outsells the Model 3.

          Also, India and China are far apart in terms of economic development, and prices and standards are not always comparable – this includes housing and other things. A bare box that might sell in India might not sell in China.

          Neither of these cars will ever make it to the US because they lack the safety features that are required in the US. And the Tata also lacks the emission control systems that are required in the US and that would make the vehicle a lot more expensive. In addition, Americans refuse to buy small cheap econoboxes – that has been tested many times, including at the dealership I used to run.

          The Japanese automakers have made and sold these 600cc mini cars in Japan for many years (favorable tax treatment). They’re everywhere. They’re nice cars (mostly compact SUVs), but narrower than regular cars. But given their lack of power and speed, they’re not allowed on the expressway. None have ever been legally sold in the US.

        • Gandalf says:

          The three wheelers are called tuck-tucks in many countries, including Utila Island, Honduras, where I went scuba diving with my kids last year, pre-pandemic.

          These are basically ICE powered rickshaws. Utila Island does not allow even small cars on its roads – only motorcycles and these tuck-tucks. The tuck tucks fit two in the back seat, another person in the front with the driver, and have no AC, no muffler on the engine, zero safety features, and, of course, zero air pollution controls.

          One of our tuck-tuck taxi drivers revealed in an extended conversation with my Spanish speaking daughter during a drive that he only had one good eye.

          Pretty loud and noisy in the central Utila Town area, with all the unmufflered engines whizzing around.

      • Lee says:

        “The base Tesla Model 3 is now $35,000”

        Maybe in the USA, but not in the rest of the world!!!

        For that USA price tag here in Oz I can buy a used 2017 Mercedes CSL 400 and still ahve change leftover.

        Here are the current prices of the Model 3 in Oz:

        “The base Standard Range Plus model is now priced from $66,900 before on-road costs – representing a decrease of $7000 on previous pricing – while its quoted range has received a 30km boost, now extending to 490km on a single charge (according to the NEDC test).

        The mid-spec Long Range variant has dropped to $83,425 before on-road costs, a price cut of $6000, while its quoted range has climbed to 657km, up from the previous 620km (an increase of 37km).

        Finally, the top-of-the-range Performance variant now costs $92,425 before on-road costs, or $5000 less than before, and offers a claimed range of 628km – marking the largest range increase in the line-up with a boost of 68km.”

        On road costs are various taxes including luxury car tax, GST, state duties, and registration which push up the price even more.

        • Wolf Richter says:

          “The base Standard Range Plus model is now priced from $66,900…” So that would be about USD 47,000, which is a lot for a base version.

        • Lee says:

          Yeah, that is around one year’s median income in Oz for a car like that.

          FYI luxury tax in Australia on cars:

          Cars with a luxury car tax (LCT) value over the LCT threshold attract an LCT rate of 33%.

          For ‘fuel efficient vehicles’ that base rate is A$77,565; others it is A$68,740.

          So add another 33 cents per dollar on top of the costs of any car over that price in Oz.

          People buying those high priced cars are basically paying tax and a lot of it for the ride………………

      • Rcohn says:

        The average TSLA selling price is over $51,000

        • Wolf Richter says:

          The top end of a Tesla is over $100,000. A fully loaded Ford Crew Cab pickup truck can get close to that. There are quite a few new vehicles that cost more than 100k. And they’re selling quite well. And?

  9. Brian d Richards says:

    I know, most people seem to be cheering on the demise of the large oil companies, but unless you think everything is going to be renewable energy in 10 years, this could be disastrous. There is a huge amount of
    embedded energy in gasoline. How soon is this going to be replaced with an equally convenient source?

    • Petunia says:

      I don’t have anything against new forms of energy, however, I think the greenies have gone too far with their get rid of all carbon based energy agenda. It’s worse than crazy, it’s stupid.

      • Old School says:

        It is definitely virtue signaling. One of the biggest carbon footprints is the size house you live in and the distance you travel. Bloomberg or any other celebrity with half a dozen 10,000 sq ft mansions all over the world don’t believe in it enough to change their behavior. I say it’s about the money. If you get to write the regulation, you get to determine where the money is going to be made.

        • Petunia says:

          It’s really about control. The greenies really don’t want to get rid of carbon based energy, they want to be able to tax it as a wealth transfer/punishment mechanism. This enables them to pick winners and losers with their virtue signalling hypocrisy.

      • Alberta says:

        The Great Reset Petunia,

        Greens bringing economies to a standstill with covid (demonstrators in Florence, GB and The Netherlands for food, fuel and work).

        It’s a fine line between socialism and communism — my European friend age (85) family starved to death, she survived by eating frozen potatoes scavenged from fields.

        Our country is spoiled and I dont think young folks can fathom that it can happen here.

        Wolf, please report on Bretton Woods 3/Great Reset. Thanks for all you do.

        • nick kelly says:

          ‘It’s a fine line between socialism and communism — my European friend age (85) family starved to death, she survived by eating frozen potatoes scavenged from fields.’

          Sorry, I’m a right- winger, but I can’t let than one slide by.

          She’s 85? So let’s see, 85 years ago would be:
          1935. So she was at potato- digging age during WWII. I have known many Dutch people, now mostly passed, who half a century after the war, would not eat salad. It reminded them of the tulip bulbs they’d had to eat.
          But Holland wasn’t and isn’t communist so let’s not drag in what grandma had to do during the war to equate socialism and communism.

          Americans often describe Sweden, to name one country, as socialist, and most Swedes would agree. This does not make Sweden ‘sort of communist’ or on the road to communism or anything of the kind.
          It has a very active stock market, lots of millionaires (neither are commie favs ).
          By consent of the governed, it is a high tax, high service economy. The government does not own the ‘means of production’ as it would in a communist state. In fact, Canada not too long ago, had a higher portion in state hands.
          But of course Canada is often referred to as ‘socialist’ in US jingoism,

      • Implicit says:

        Don’t agree with the vilification of nat, gas, especially. Awesome availability, cost and relative footprint size.
        If they would stop cutting down the rainforest, and people saw the value of trees, instead of cutting them all down for developments. The CO2 taken up by trees is enormous, and would make any transition to alternatives practical.
        After all, the scraping the earth’s epidermis for rare earth metals is not without it’s ecological costs.

        • Anthony A. says:

          You don’t have to worry about trees being cut down in West Texas for oil & gas development (100+ years of it and counting). There were no trees on 99% of the land to start with!

        • andy says:

          Can’t we make up for rainforest with marijuana growths?

        • Implicit says:

          I can only hope so Andy :>{)

    • EJ says:

      Nothing is even close.

      But another factor is getting the energy out of the gas. Sources that produce electricity instead of producing heat have a large efficiency and cost advantage in a car. Hence one doesn’t have to beat gas’s energy density, they just have to beat today’s best batteries by a little bit.

      Planes, drones, and anything that flies are a whole different ballgame. Energy density is *everything*, and even a small change has a dramatic impact on performance. Jet Fuel is not going away there anytime soon.

      • Implicit says:

        Nat. gas vehicles with tailored catalytic converters concentrating on CO2 diminishment.. Presently cat. converters using palladium and platinum are expensive.
        DNA manipulated CO2 eating microorganisms that are tested safe for commercial development might be used in the future, These metals, and the rare earth metals have a mining footprint like all metals. getting rid of used batteries has it’s own set of problems, as does spent nuclear fuel, even more so.
        Ultimately, we will need nuclear and rocket fuel to leave this planet when we have wrung it dry. There is still a lot of mining to do on asteroids, other planets and the moon.

        • andy says:

          CO2 eating microbes would make for a great IPO, about a month ago.

        • Crunchy says:

          CO2-eating microorganisms?
          You mean plants?

        • Anthony A. says:

          “There is still a lot of mining to do on asteroids, other planets and the moon…..”

          Good idea….no solution on getting very heavy equipment, oxygen, water and people up to these far away, hostile places.

          And, what are you going to fuel the mining equipment with that doesn’t need liquid fuel or oxygen, both in large quantities?

        • Implicit says:

          Crunchy-Yep modified plants

          Anthony A-. Please read “Saturn Run” by Sanford and Ctein, and you could become a believer.

          Andy- Notjhing would surprise me as far as IPOs

      • nick kelly says:

        Harbor Air, the airline that flies from Van Isle to Van is converting some DH Single Otters to electric.
        However this is a 20 min flight with long idle (i.e. charging) times late nite and AM, so that works.
        They expect to save big on overhaul of turbine ( this will be second conversion for some. First was from piston to turbo-prop at a cost of about one million C. per)

    • info says:

      If it happens. Then we will be subject to declining conventional oil again. Provided the decline is slowed down which gives us time to innovate and adapt.

    • Prof. Emeritus says:

      Instead of seeking a replacement maybe it would be a good plan to investigate whether the economy really needs that much energy or is it simply wasted on exotic holidays, commuting to work, motorsports and other irrational human behaviours. The industry values energy right – households don’t.

      • Lisa_Hooker says:

        I shall never give up my electric dog polisher. Never.

        • BuySome says:

          “Laugh it up, fuzzball”.* But when the doorway doggie dander vacuum is invented, everyone will install at least two. The bait will be a coooookie.
          *Han Solo, S.Wz.

      • Happy1 says:

        Those are decisions made by billions of individuals. They don’t require your approval, nor should they.

        • Prof. Emeritus says:

          No one is talking of approval, it’s about behaviour. Individuals are proven to be poor decision makers. Oil peak is (was?) a result of such poor decisions – and not necessarily from an environmental point of view, but mainly from an energy market perspective. It’s like toilet paper hoarding amongst a pandemic: is it really the most important resource one needs for survival? No, but what’s the comfy soft-touch for paper is energy density for oil products: it’s very appealing and marketable even though we aren’t really sure if it offers us the biggest utility for the price.
          Of course, we will still need paper rolls much like oil, but it’s hard to tell how much. 10% less? Maybe -20% or -30%? Only time will tell.

      • William says:

        I reply here since I can’t reply to the other comment.

        1. why do you identify yourself as Prof. Emeritus? Trying to appear as an authority figure perhaps?

        2. “Individuals are proven to be poor decision makers.” Said every totalitarian in history. Give individuals the full picture and they will be outstanding decision makers. Lie to them, as is the case nowadays, and they will look hopelessly stupid.

        • Prof. Emeritus says:

          1. I wanted to pick the sexiest nickname on the internet and what’s sexier than science? I’m glad there are people jealous of it.

          2. If Thaler’s Nobel Prize* worthy theory on the topic is totalitarian I still fully support it. Heck – now that you mention it, that revelation puts human history in a new perspective.

          *it’s actually Nobel memorial, but whatever

    • RoundAbout says:

      I agree. Nothing goes to hell in a straight line right?

      Lets add some context. California cannot even keep the lights on during a hot summer day. Since that is the case now, how can you go all electric vehicle? The reality is its going to take more than a decade. Oil is not going away soon.

      During the initial stages of covid we had lows in oil majors. Prior to that, for instance XLE, these levels now are at early 2004 year level — a 16 year low. The price is more of a function of the covid situation.

      Add to the fire Saudi starting the price war at precisely the wrong moment and a Biden win being priced in. Pennsylvania and Texas should be interesting to watch this week.

      At some point, the situation might change. Might sell of some more and have a bounce from being oversold.

      • char says:

        The Saudi’s didn’t start a price war. They saw covid coming* with it seriously depressed demand and to not harm their fields they needed space to store their oil production. And they created that space by emptying their storage using the claim of a price war. Hitting their competitors was just icing on the cake

        *) Covid was hitting Iran hard at that time

    • BoyfromTottenham says:

      Brian d – and don’t forget roads are topped with bitumen, a by-product of oil refining. No oil, no bitumen. The nearest alternative is concrete, which needs huge amounts of energy (usually gas?) to produce, and is way more expensive to maintain. Ask the Greens / Liberals to come up with an alternative.

      • Wisdom Seeker says:

        Don’t worry – the Greens will tell you that in the sustainable human-powered eco-friendly future, we will just eliminate paved roads and shift over to gravel bicycle trails. And for those who cannot, or don’t want to, pedal themselves – rickshaws! And the next-generation UBER gig workers will be the fittest people on the planet!

      • Fat Chewer. says:

        I bet you’re not aware that used car tyres make a fine replacement for bitumen. Some company made it a long time ago, but the existing bitumen companies killed it. It is quieter, cheaper and FAR more resistant to cracking. You know why the bitumen companies love bitumen so much? Every time it cracks, it has to be replaced. Lots of big fat government contract$. Bitumen companies are no friend of the taxpayer.

  10. Michael Engel says:

    1) Inexpensive gas fill the president gas tank.
    2) Hi tech data centers benefit from low energy cost.
    3) Warren Buffett bought good assets that can survive more then 25 years, when interest rate was 12%. Their 2000 value was x3 times higher than in 1990.
    4) Today assets can be great investment if interest rates will be minus 12% in 2030.
    5) Wall street sharks disagree with minus 12%.
    6) They demand plus 18% to 25% annual returns, because its very risky in in the deep oceans and in the underground world.
    7) They will strike when oil price is right.
    8) There is not much difference between the two presidential candidates about oil.
    9) If the winner will get rid of the weeds in the next two years, wall street sharks will benefit. They will get assets at cheaper prices.
    10) Election results delay the sharks attack.

    • 6) If corporate Libertarians continue to gain power the risk premium in drilling will drop to zero line.
      5) Wall St sharks prefer renewables, the shark has to keep swimming or it will die..
      4) Blowback in energy investment is not as big or as significant as Fed support of the junk credit business.
      3) A rise in yields lifts all junk, as high yields approach par they are like “whores and politicians, who if they live long enough, they become “respectable…”
      2) On candidate wants no oil, the other sells only oil from the snake..
      1) Putin launches small conventional wars in Eastern Europe, to use his oil before he loses it. Recaptures part of the old Soviet empire, before he is removed from office. Mother Russia implodes. Pro Democracy movements cover the globe. With everyone on the same side and no nationalist tensions oil demand craters. DOD still largest user of oil but Wolf does not report that.
      0) Most popular Christmas gift in 2020 parents take children for a drive in the country.

  11. Michael Engel says:

    11) On the zero line : the US 10Y from 1% to 0.5%, to 0.25$, to 0.13%…
    12) Sharks don’t care about asymptotic stimulation. They will bite
    when they catch their prey.

  12. JLS says:

    I try to save energy by self imposed moderate austerity.

    Clean air and water, quality food and safe neighborhood. Otherwise, I try to save as much as possible.

    So many sick landwhales borrow huge amounts of money to buy SUVs and trucks. How can they afford fuel if (and when) oil prices jump?

    It is difficult to predict energy markets. More difficult to choose between driving and food.

    • Old School says:

      I am much like you, but I have gotten to the point I need to be a little less austere and help some people that are working and provide good services.

      I listen to Dave Ramsey and buying a new $50,000 truck is one of the big mistakes people make when they really should be digging out of debt instead of going further in.

      If you live in a rural area it’s nice to have a truck, but even used they tend to be pricey compared to a car. I have always gotten by without one, but my Father has always kept one and I use it once every year or two to move that item too big or messy for a car.

      • Freedomnowandhow says:

        Yes, at least in my mind trucks are still a utility vehicle. It’s always nice to have one available even if you borrow one from family, friends, neighbor. I did a lot of hauling and moving when I owned one, but the downside is the expense to operate, physical size when parking or storage, and sometimes having to say, ” No, my truck isn’t a loaner ” and saving my back. I have known people who have bought one but refuse to haul anything in fear of damaging the truck bed. Go figure.

        • Fat Chewer. says:

          Some of these beds are as little as 600mm (about 2ft). Ford Raptor has one of them. What can you put in that? Kegs!

      • M. Contrarian says:

        If you only need a truck 1 or 2 times a year, rent one, and save the associated expenses of ownership (purchase/payments/lease, depreciation, insurance)

        • Bobber says:

          Manhood is not something you cannot rent, or put on display when it’s convenient. A real man has his beer belly perched above others at all times. When you step on the gas to pass those schmucks obeying the speed limit, the billowing smoke lets others know that the boss has arrived – the man who is superior, the man who makes his own rules.

        • Lisa_Hooker says:

          @Bobber
          No amount of money can buy happiness, enough money can rent it. – Lisa_Hooker

      • andy says:

        The last time around $50K+ “raised” trucks from GM and Ford showed up around 2006. Yes, people raise trucks. To fit bigger tires I suppose. To run over those Teslas I guess.

      • Dave says:

        OY, Dave Ramsey!

        Man is making money off telling people what they should already know.

        Not sure which disturbs me more, him making bank while repeating (no original content/thought) COMMON SENSE financial decisions OR that people are so stupid they need to be told how not to be financially stupid!

        There was a schtick on SNL about not buying stuff you can’t afford from the late 1970’s or early 1980’s……. it is basically what Dave Ramsey says, except it is funny.

    • VFatalis says:

      More “if” than “when”. Oil price has been falling since 2014.

    • Implicit says:

      Recycle, buy a used car. There is a lot of energy going into making new cars. Apparently, Cuba has done a good job recycling old US cars, Necessity is still the mother of invention and ingenuity.

  13. Bet says:

    I am hearing from former family (ex) the the oil royalty checks have dropped precipitously. Penny pinching has started
    No more splurging. Fracked wells are known to drop up to 90 percent after one year. Fracking is long term folly. Jimmy Carter had it right. Where would we be now if those policies had been pursued over thirty plus years ago. China is going to kick our butts on renewable energy. Yes I know about China’s coal plants. But have you seen their push for solar and ev. I was in Shanghai 18 months ago. All gas motor cycles had been banned. It’s all electric
    Americans are so short sighted refusing stubbornly to see what must come
    You sit on your laurels and then someone will steal them

    • Old School says:

      We have a pretty good system. Free enterprise to grow wealth and a representative democracy with checks and balances to keep it in check. When and if green energy reaches the required popularity in the country laws and regulations will be implemented. Otherwise states have a lot of freedom to put in their own priorities. We battle back and forth politically, but our system of checks, balances, rule of law and private property has led to a pretty high standard of living and freedom for us.

      We will see about EV in China. Nobody probably even knows if the world has the resources to quickly convert over to 50 – 75 million new cars per year. Too much government incentive will probably lead to boom, then bust scenario. I am all for government research and light regulation, but the market needs to pull the speed of implementation in my opinion.

      • VintageVNvet says:

        Exactly correct with ”…the market needs to pull the speed of implementation…” os:
        Maybe I missed it, but don’t remember a ton of legislation or guv mint involvement with the last major transition of personal transportation, from horses, ( including ”shank’s mare” of course ) to automobiles. From what I have read, Ford, Dodge, DuPont, Edison, etc., did their work on their own nickel, certainly at first.
        Seems to me that the entire transportation system is due for a major transition to more direct translation/harvesting, and use of available energy/forces, and I have a lot of hopium that it will be very much market driven, if not totally.
        There is currently a lot of research happening regarding the coordination of various theories of physics, especially the likely multiplying factors of quantum theories combined with Einsteinian and Euclidian that will lead to much more efficient methods of harvesting of energy sources such that fuel will only be needed, and only at first iterations, to initiate these processes until the refinement of the new methods.
        This will produce a global boom of manufacturing and trade that will make it absurd to have much if any financial inequality.
        Guv mint should be funding basic research of all kinds, clearly the best function of guv mint to help all people.

        • Lisa_Hooker says:

          VV, I laud your hopes. But, there are many who consider manufacturing and trade as a game and financial inequality as a means of keeping score. This will continue. We need a change in human nature. I will hope, but I will not hold my breath.

        • char says:

          You have a very rosy in a free market way image of the late 19th, early 20th century. Besides the obvious counterpoint that cars need roads and those roads did not exist and needed the guv to be created.

          ps. There is a reason why a T-ford looks more like an all-terrain vehicle than a modern car.

      • cb says:

        @ Old School –
        and yet wealth continues to concentrate and we have homeless encampments all over the place. at least in California

        • Implicit says:

          This is why it is ludicrous to expect the green agenda to be implemented by hopium laws that are not thought out for their implication for the majority of US, and certainly the world citizens.
          For instance some rich folk determining that they don’t want to support companies that use child labor<16. It hurts poor families in India and other areas that now suffer. Kids enjoy working, or should get used to it.
          Also most people can not afford to buy new cars, solar panels and other energy efficient house designs yet, so why make laws that shouldn't be enforced. Perhaps make energy laws tailored to what you can afford, or better yet don't make any laws pushing an unsustainable agenda. Do you hear me California?

        • char says:

          @implicit,

          Weirdly, i associate the word teenager with the word lazy. Don’t know why as they obviously love working

      • Chillbro says:

        This sounds right if someone said it 40 years ago. We are about to have second generation ie gen z to start their lives on the wrong foot. This prosperity you are talking about is not accessible to the vast majority of the under class ie lower 80% of working adults.

        • Sierra7 says:

          Chilbro: (and others)
          “This prosperity you are talking about is not accessible to the vast majority of the under class….”
          Having a large handfull of hard working grandkids and listening to their ideas of how the world should “run”, I would venture to say that they may have a different idea of what “prosperity” means………..

      • roddy6667 says:

        The idea of having a representative democracy to regulate capitalism hasn’t worked for a long time. The top 5% gets most of the money. The middle class in America has been backsliding for 50 years.

    • Implicit says:

      Maybe we can steal from them this time ; )
      Wondering if all the electric vehicles are digitized for easy control and access by their dictatorships.

  14. Michael Engel says:

    1) There are two sides in each bubble.
    2) Suppose we are on the left side. Instead of minus 12% the 10Y will to jump to 15% or higher.
    3) On the way up, at around 4% to 6%, the DOW will takeoff like a missile as it did in 1957 and the 1949 GDP jumped was the highest until Q3 2020.
    4) The worst news bite After the bottom, at the bottom test, because wall street biggies pay.

  15. Dano says:

    Roughly 50% of the workforce earns roughly $35k/yr. There are no expensive Tesla’s in their future.

    Despite the talk of truck sales, every year the average age of the overall passenger fleet climbs slowly higher.

    The fantasy that has will go away is just that, a fantasy. The lower the price at the pump, the less incentive to trade up to a higher MPG vehicle — hence pickup sales.

    The lowered demand is wreaking havoc on E&P budgets. Meanwhile fracking wells are going to peter out with nothing behind them.

    Mexico put all their eggs in the Cantarell field, which is in severe decline. When they had the money to explore for more oil they didn’t, now they don’t.

    Most of the 2nd & 3rd world countries have no oil of their own. Nor do they have electric charging stations, or Tesla’s, it the fiscal means to go there. While China may be banning gas scooters, they’re cheap and needed transport in these other countries.

    Wher travel demand returns, and it will as people are tired of being locked down, we will be years behind in E&P that was sacrificed for dividends and deals.

    That my friends, is when gas at <$2/gal will be wistfully looked at as “the good old days”.

    • Old School says:

      Fracking has been good because it has been able to ramp up and down with demand. A lot of businesses work I n zero interest rate policy.

      It’s a little like the meat industry. Very hard to balance demand with beef having long lead time. Chicken protein is quick about two months from egg to full chicken dinner.

    • MCH says:

      Cheap EVs are coming, don’t worry, just look at all of the new entrants. That market dynamics spurred on by CA’s new car EV only mandate coming in the near future will usher in a new green era that will make rainbow shitting unicorns look like your Daddy’s old F-150.

      If that doesn’t work, gas tax can be jacked up one billion percent.

      Mark my words, the green revolution is coming. Either we will all have EVs, or we will all be in much better shape due to the need to walk back and forth to the local grocery store pushing our shopping carts.

      • Jdog says:

        There will be no “green revolution” until every drop of cheap oil is drained from the 3rd tier countries so willing to supply it. It is not a ecological or economic issue, it is a geopolitical one.
        Energy is geopolitical power, and must be controlled to ensure the power remains in the hands of those who currently wield it….
        That does not mean alternatives will not be developed and marketed, it simply means those alternatives will not dominate the market.
        There are far more patents for previously developed alternative energy sitting in files than you would even believe.

        • MCH says:

          Wait… are you actually saying that we need to deprive the Saudis and the Iranians, and the Russians of all of their potential ecological resources. Well, I can’t disagree with that.

          I for one can’t wait until the day when the guys at middle east whine about something, and the wolrd just tunes them all out.

        • char says:

          It is not an American decision but a Chinese and to a lesser extent European. The US controls most of the oil so if your economy runs on oil than the US controls you. China does not want to be controlled by the US so they need EV to succeed.

          EV outside of the battery are cheaper and easier to make. Battery price is going down fast so it is very likely that EV will dominate the market within a decade. At some local support because they are zero emission and they will be the only one you can buy.

    • Anthony A. says:

      Yep, like they say,the cure for low oil prices is low oil prices. I really don’t think the Saudis and Russians are happy about $35 – $40 oil.

    • jm says:

      Also, EV growth will be throttled to some degree by supply constraints in copper for wiring and rare earth elements for motor magnets. Projected copper demand for EVs is 10% of world production just by 2027, when EVs will still be only a small fraction of vehicles. Rare earth demand growth also very high. As EV copper will be 100% recyclable, in long run not an insurmountable problem, but will strain supplies on way up. Though rare earths not rare, economically and environmentally viable rare earth mines are.

    • Fat Chewer. says:

      Horses were once cheaper than cars. It’s a fact! Happy Melbourne Cup Day!

      • Fat Chewer. says:

        Especially now. Feed, agistment, veterinary costs (which have skyrocketed lately), grooming, etc. You have to be a millionaire to own one. 😂
        Happy Melbourne Cup Day!

        • Lee says:

          You have to be a millionaire to buy a house in Sydney, almost one in Melbourne, and now it looks like more than a millionaire to buy one in many parts of Queensland.

          Even winning first prize in the Saturday Lotto here usually won’t give you enough to buy a house now.

  16. China is making record US oil imports, which does not square with recent chart of our trade deficit. China removed the tariff, but post Covid negative oil futures, prices have been pinned to the $40 level. As a matter of national policy if you like seeing the US oil companies collect the difference, rather than paying, a policy which restricts fracking would make more sense.

    • Implicit says:

      I always wonder why the frack are they doing that :>{)

      • Anthony A. says:

        In case most people here don’t know this, but oil and gas wells have been “fracced” since the early 1900’s. How else do you think you can get hydrocarbons out of rock?

        We (the U.S.) only were able to get more (lots more!) hydrocarbons out of reservoirs by developing the ability to conduct horizontal drilling.

  17. Martha Careful says:

    Things don’t look good going forward:

    (a) US Regular All Formulations Gas Price, Dollars per Gallon, Not Seasonally Adjusted (GASREGW)

    (b) Personal consumption expenditures per capita, Dollars, Seasonally Adjusted Annual

    (a) 2-Year Treasury Constant Maturity Rate, Percent, Not Seasonally Adjusted (DGS2)

    (b) Personal consumption expenditures per capita, Dollars, Seasonally Adjusted Annual Rate (A794RC0Q052SBEA)
    Rate (A794RC0Q052SBEA)

    https://fred.stlouisfed.org/graph/?g=xgrH

  18. California Bob says:

    ‘Sister(?)’ site Naked Capitalism just yesterday posted an article on petroleum execs trying to foist yet more plastic production–and discarding–on our already-trashed environment, in order to offset declining fuel consumption:

    https://www.nakedcapitalism.com/2020/11/plastic-watch-plastic-pushers-seek-to-use-trade-negotiations-to-rescind-plastic-bans.html

  19. Bobber says:

    So are oil companies worth an investment at this point in time?

    Oil demand is down 10-20% from pre-COVID levels, but stock prices are down 50% or more. Oil price is down 50% or more.

    I think the industry will be turning the corner at some point, with reduced oil production capacity and a stabilized oil price, which I expect will be around $40/barrel or more.

    I’m gradually investing some money in big oil concerns because the oil price seems to have more stability at current levels. The current price of $35-$45/barrel is sufficient to cut out a ton of over-investment. In my opinion, companies that can permanently cut their asset values and cash flows by 30-40% from pre-COVID levels, while successfully servicing debts, might be worth investing in. That rules a lot of companies in the sector.

    • Bobber says:

      Last sentence S/B “That rules out a lot of companies in the sector”. Darn typos.

    • Prof. Emeritus says:

      There’s a huge risk (if it’s appropriate to call it risk) that if and when the oil market recovers bulk of the profit will shift from Western companies to Iran & Venezuela. Especially if one calculates with 40$ barrel. Know any big oil with access to their markets? Me neither, Glencore and co. may “wash” the black gold to white – for a prize -, but the heydays of big oil and the petrodollar are certainly over. I don’t think anyone expects a quick downfall, so the biggest traded oil companies will still be major players on a 10-20 year horizon, but they will lose a lot of power.
      Refinery margins are just part of the story, upstream is where the big changes can occur in a blink of an eye.

    • Mistake many investors make bottom fishing stocks which have a nominally low share price is to disregard the potential losses in percentage terms from seemingly small drops in price. A $5 stock which goes to $4 loses 20%. XOM price is where it was in 2003. If you read “Blowout” you might gain some perspective on the global oil business as it relates to Exxon. (and my thought that Russia is going to collapse a second time) The second mistake is confusing the company with the commodity. Then you want to know what the DOD is doing, which is probably winding down operations. This term in the presidency is the first in a long while without new major military operations, or the contintuation of previous wars. So compare the 70s oil crisis to the 80s oil glut. The counterveiling force to an oil shortage in this context, after massive shutdowns in production, due to corporate debt, which is more resilent than most imagine, is renewables. The beloved EV. The US actually exports oil, imagine that.

  20. Tony22 says:

    See how expensive shellfish, fish, shrimp and rice are? You can thank British Petroleum for destroying the ecosystem of the Gulf of Mexico ten years ago with their months long five million barrel of oil uncontrolled blowout and the billions of gallons of Corexit to disperse the oil into wetlands, fields, lungs, water and the air. No, the ecosystem has not “recovered” and will not in your lifetime. You know which oil company to strensously boycott.

    • KGC says:

      As someone who’s been on the Gulf Coast, and Valdez, AK, and a couple other places that have had “spills”, I can say it will recover, and faster than you can imagine. The costs of those seafood items you’re mentioning is due to processing costs more than anything other than overfishing, neither of which were impacted by BP. Shellfish, crabs, and lobster this year were lower on the dock than they have been in over 20 years. Why? Because the restaurant market dried up. And yet the cost of such in your local store didn’t drop 40% over last year.

      Overfishing is what’s killing the ocean, and it has been for decades. Jacques Cousteau used to preach this every week on TV, but nobody wants to stop it. Climate change and oil spills are popular scapegoats today but they’re not the major culprit.

    • Happy1 says:

      The spill you mentioned has had a negligible long term impact on the gulf ecosystem.

      • Tony22 says:

        I and most people will believe these “Everything’s OK” comments when B.P. executives and their children and grandchildren sit down for a week of only eating proctored meals of gulf shrimp, crab and fish.

        Same reason nuclear power is for sure safe when executives move their mansions inside, or just outside the power plant gates.

  21. NoFreeLunch says:

    People tend to think of oil supply and demand in the US as a closed system. It is not. Oil and refined products are exported too. Large populations in many third world countries still cook on spent agricultural products (think cow chips), and go to sleep when the sun goes down from having no electricity. The Prime Minister of India said to the developed world, clean energy is renewable energy, but to the developing world, clean energy is oil and gas. The US may just join the many countries of the world who use very little of the oil and gas they produce, but still produce a lot.

  22. Michael Engel says:

    Google, FB, Twitter bs. Zaban in the trading boilers.
    Zaban became the 2020 conquistador.

  23. polecat says:

    Those graphs seem to put paid to the opinion of the late Mathew Simmons, that we reached a planetary peak in oil production around 2005 .. and have been riding a rather bumpy plateau since then …

    Maybe the C-demic was a godsend for the oil majors & big
    corporate consumers of petroleum, giving them the excuse under cover, to shed unproductive activities and assets before decline really sets in.

    • polecat says:

      So of course, here’s the really bid deal man …

      We lowly mokes will have the pleasure of going full-on green, settling for the conveyniance of pulling blue donkey carts – with us filling in as the beasts of burden – whilst the higher-planed Cloud People wave, as they jet .. to and fro, as is their want!

  24. Michael Engel says:

    1) The zoomers generation, born in the late 1990’s, who graduate today are likely to find jobs at lower pay, if they do.
    2) More than 50% of the zoomers live at home with mommy.
    3) From mommy to high tech and energy infrastructure, because the
    restaurants are closed.
    4) Most of them will be absorbed in some form of technical support jobs, earning more than in the service sector.
    5) That rotation will be long and painful, because the high tech and the energy sectors have their own slush.
    6) The recovery will be boom and bust in repetitions. One step forwards until 2022 and two steps down.
    7) In that process will roundup the weeds.
    8) At low interest rates, high tech command high prices close to five years from now.
    9) Lower interest might help high tech, but will lift the most suppressed, the energy sector.
    10) OPEC cut production 8% y/y, but US cut 14% y/y, Canada & Russia 18% y/y.
    11) Oil rigs are down from 1,700 to under 200. We are very indepentent !
    12) Since our refineries are old we will have to import heavy oil. Iran
    and Venezuela are out of question. Canada is the only country with heavy oil.

  25. Marta says:

    The technology-led selloff that sent the Nasdaq 100 into a correction over a three-day span has likely run its course, according to JPMorgan Chase & Co.’s Marko Kolanovic.

    That great call was Sept 15, 2020

    The future value of low is lower, as is gdp and all these market hype gurus are looking more and more like idiots!

  26. The Original Colorado Kid says:

    And the way things are going, there won’t be a shortage of anything except the human race.

  27. MonkeyBusiness says:

    Nature knows how to fix itself.

    As usual, the score is Nature 1 million – human monkeys zero. I am sure we’ll keep trying to win though.

  28. MonkeyBusiness says:

    Early Asian trading. WTI just tumbled to 33. That’s almost 20 percent down from 3 days ago.

    Europe shutdown, election jitters. Oh boy, tomorrow there might be a bloodbath in the markets.

  29. Kasadour says:

    This situation really tracks to the demand destruction/end-of-cheap-oil narrative. But this is hardly 1980, “morning in America”. The collapse in EROI across the board, which began in earnest in 2014 in the oil sector, necessitated govt subsidies which obscured the dire situation to those who do cursory-level reading or are disinterested in the subject all together.

    • Fat Chewer. says:

      Yes. The ones who are economically literate enough to read Wolf Street do puzzle me a bit though. I suspect it has more to do with their personal involvement with the O&G industry. They are trying to protect their patch. It’s not that they don’t understand the counter arguments, it’s that they cannot acknowledge that there is an alternative since that would undermine their own position. It’s human nature, but it’s also human nature to progress. In such a titanic clash, the only possible outcome is for the oil and gas to run out. Just as in the 16th century, firewood ran out in England before they switched to coal and started the industrial revolution.

      An Early Energy Crisis and Its Consequences

      John U. Nef

      Scientific American

      Vol. 237, No. 5 (November 1977), pp. 140-151 (14 pages)

      Check the date there. Long before climate change became a thing.

      • Fat Chewer. says:

        By the way, this is a very famous article (I first read it as a teen) and it is the basis of any environmentalist’s argument, but the author was actually writing in response to the 1970’s oil crisis. Double deja vu.

      • fajensen says:

        I suspect it has more to do with their personal involvement with the O&G industry.

        I think it is human nature. While growing up and becoming an adult person, people optimise their skills, behaviours and looks until they succeed in some measure and then “what they arrived at” becomes their identity.

        Then a lot of them just get stuck hard on “what worked” – back then!

        Like we see men in their 50’s (with huge bellies) still buying Ford F-150’s and Dodge RAM 3000’s because “back in the day” when they were 23-25 they were really “pickup trucks” (to pick up wimmen with, obviously). (Maybe they were muscular and handsome from outdoor physical work then and the wimmen naver cared about the truck, but, the men believed that they did).

        Every day I see several past-middle age men with haircuts, jewelry, and clothing styles that were seen as “trendy” sometimes in the 1970’s Heavy Rock or even Punk scenes. It worked for them “back then”, it became their identity and they never changed after.

        Every month I have arguments at work with electrical engineers that cannot comprehend that we are not in the 1960’s any more, stuck on what they were good at while recently graduated, they are not very good now!

        Not because they are stupid or incompetent, but because they will not understand that things are changing much faster now and they will change “their professional identity” too or they will be replaced (which is a challenge since very few did electrical engineering since the 1980’s or so, it was seen as boring, conservative, old fart territory)!

  30. Rcohn says:

    Marathon Oil recently closed a refinery in Northern CA. Another nearby refinery needed an investment of $110 million last year to keep up with state mandated rules. Given today’s much lower negative crack margins , this refinery will also close down some time in the near future. So it should come as no surprise that prices at the pump do not come down as the price of crude declines .
    With the large% of oil that is refined into transportation fuels ( gasoline and jet fuel), it is inevitable that more and more refineries will close in the future if crack margins remain negative.
    Now what will happen if there is a disruption of supplies from overseas. Think of the 1970’s when drivers waited in long lines as prices skyrocketed .

  31. Cashboy says:

    It is funny that when you bought a flight ticket, if you itemised the ticket cost there has been a fuel surcharge item since oil reached US$100 a barrel a few years ago. That surcharge has never been taken away or reduced when oil became sub US$80 let alone US$40.

    Petrol in the UK was at one time £1.40 a litre and is now £1.12 a litre; that is a fall of 20% when a barrel of oil has fallen from US$100 to US$30; a fall of 70%. Similarly 72% of the cost is UK government tax and a lot of it was specifically set for the EU buro-craps.

    • char says:

      EU buro-craps made the UK to have one of the highest fuel taxes in the EU. Even before EU buro-craps were involved with those taxes. I know Brexiteers really believe that. It is not like the British government has as policy of high fuel taxes since Thatcher. A state needs money and if you have low income tax than you need high other taxes.

  32. Cashboy says:

    What happened to peak oil ?

  33. makruger says:

    I was reading that EV’s will be need to exist in mass quantities before solar or wind energy can really begin to replace fossil fuels. Apparently there is grand plan to leverage their battery capacity as a means of storing and releasing energy back to the grid for those times when the wind isn’t blowing and the sun is not shining. Rather clever idea, but I imagine this would have a negative effect on battery life. Maybe in the future people can rent the batteries in their car from the utility company like they do a water heater.

  34. Michael Engel says:

    1) Trump lifted the eight years embargo on the Keystone XL pipeline. 2) It’s getting cold. Coal plants burn 15,000 tons coal per day transported by rail. Oil by rail is growing due to pipelines constrictions.
    3) The difference between WTI and Western Canadian oil (WCS) is minus $10. Since WTI is $35, WCS is $25. Jet fuel is dead. CV19 killed the oil industry and caused many BK’s. Murphy’s law at peak in the oil industry.
    4) Enbridge Line 3 to Minnesota will be completed within half a year. The Trans Mountain TMX pipeline, connecting Canadian oil fields and the pacific, is being built. The new vaccine will moderate fears. Life will return to normal. US and the global demand will grow again. The resilient energy sector have better, brighter days.
    5) Pipelines constriction along along with growing demand for heavy crude oil, will have the same effect as Canadian oil embargo on US, unless we buy from Venezuela…
    6) The WCS & WTI negative gap will soon shrink and approaching zero from below.
    7) WCS will turn positive and stay that way for a long time.

  35. Michael Engel says:

    Maharaja Prinz 4 600 cc will beat EV.

  36. gitoffmylawn says:

    Mining of battery minerals is NOT done by electric vehicles. There will never be an electric drilling rig – already been tried, so oil begets oil from the mining side. I venture to say with the ore tonnage now required for a ton of copper, iron and aluminum – they will never be mined using battery powered vehicles except as a ‘green stunt’.

    Why are ships not powered by electricity and batteries? They can float most anything and can be huge – yet they are not electric. The same holds true for trains and trucks – the energy density and needs require a highly dense, portable fuel. Even propane requires larger vehicle tanks due to energy density.

    Every single part of any EV is built on the back of materials mined, refined, manufactured and shipped via OIL.

    You might displace a market segment, but the guts of the industrial world will not be run on EVs. Just as flying will not be had – the energy density is needed to move significant amounts of most anything.

    Maybe someone in the future will solve nuclear fusion, but it is also all built on the back of oil.

    If you remove everything that is built using oil as raw material or as mechanical means of harvesting or refining – you will be left standing in your driveway naked.

    Batteries are NOT the answer either – especially today. I cannot even pull my boat with an EV truck to get to a lake that is 2 hours away – and once there, I would need a recharge!

    Having already seen the long recharging lines on the road to Vegas for the Teslas, I do not see how building out another power infrastructure to feed a huge EV fleet makes any kind of economic sense. Cali and many other places struggle to just maintain residential electricity delivery – and we are going to piggyback a huge swap to EVs using the current setup?

    As an investment – I see it being a great one to jump in on, as PT Barnum was certainly correct in his admonition regarding suckers. But I simply do not see this ever taking off as a boots-on-the-ground thing due to complexity of fuel delivery, battery longevity and the fact that oil is required for every piece of these vehicles to exist.

    Buddy, when they start selling electric powered tractors for me to use on my farm, then I might take another look at this. But the only electric tractor I have ever seen required a battery pack equal to the tractor footprint for 7 hours of operating time…..

    • fajensen says:

      … venture to say with the ore tonnage now required for a ton of copper, iron and aluminum – they will never be mined using battery powered vehicles except as a ‘green stunt’.

      Sure, except the “green stunt” outperforms and outcompetes the “fossil one-trick pony”. Mining is going fully robotic, “sadly”, those stone-eyed capitalists cares about making money rather than the proud tradition of honking diesel fumes all over.

      If we had the internet 150 years ago the same kinds of people would be whining about how Steam was going out of business and how all manner of misery would flow from that vast injustice & global conspiracy!

      BTW, it is sad that the country who sent men to the moon with less computing power than a Nokia flip-phone 50 years ago now cannot do anything new – or even maintain centuries old technologies like the electrical grid.

      https://new.abb.com/mining/future-of-mining

  37. Yort says:

    I believe a future version of A.I., say “Watson 5.0”, will solve our energy issues by absorbing all the world’s data at once and formulating a logical solution, devoid of emotions. That said, we as humans will most likely not like what Watson 5.0 suggests. For starters, simply lowering the fertility rate to 2.1 in advanced countries, and 3.4 in third world countries (with higher mortality rates) would place the energy and climate issues on a much slower upward trajectory. Are we willing to have less children because a carbon based entity, using the equivilant processing power of the entire human race at once, tells us how to survive for the next 100,000 years? Probably not, as it is because we do not survive for 100,000 years, that is why we are a short term thinking species. For an A.I. with no human-like concept of death or temporal fears, the logic will be brutally honest and thus most likely ignored and defined as “in-human”. Well yes, of course a carbon based, god-level intellect A.I. entity will not be “human” by any means…yet I regress…

    On the topic of EV versus oil, I have owned and operated a lot of heavy machinery. With heavy machines, physics comes into play. For example, a $700,000 loaded, large combine loads out at almost 50,000 lbs on the front axle. That is why the tires are huge, yet I’m not sure adding 25-50% more to the combine weight is even possible as compaction (hurst yields), tire ruts (causes errosion), and getting stuck in fields (time is money) is already an issue at today’s combine weights. As far as increased price, 20% increase for battery cost would be $140,000. Unless the government prints free money for all EV heavy equipment upgrades, it will take a battery miracle for heavy equipment to go EV in 10 years. I also run excavators that push 90,000 lbs (note thousands of pounds are physics required “counter-weights”), medium sized tracked bulldozers pushing 30-50 thousand lbs, and other heavy machines (mostly under 90,000 as that is the transfer highway load limits without very expensive special permits). The amount of diesel usage is beyond belief to be honest, I really hope we find a better way, and fast. That said, I honestly think that heavy equipment will skip the EV era, as hydrogen will have the energy density to allow heavy equipment to move past oil consumption, less mass in the process, and keep similar energy density. Again, at least 10 years to reach hydrogen tech capable of being mass produced at economically feasible pricing. I really thought by 2020 we would have economical hydrogen engines. EV is great, yet it is going to delay the hydrogen era a few decades. The real issue is we can not crack hydrogen from any source economically….yet. We need other green technologies to improve quickly, such as doubling solar efficiency yet again, etc. Technologies are tied together, so we need every technology to move forward as a team. Perhaps there would be less emotional conflict with using oil if more people understood it comes from “biomass”, not dead dinasaurs: (per plasticstoday dot com):

    Oil and natural gas do not come from fossilized dinosaurs! Thus, they are not fossil fuels. That’s a myth

    Petroleum, natural gas and coal come from biomass, primarily from plankton and decaying marine organisms, and “single-celled bacteria” that “evolved in the Earth’s oceans about three billion years ago.” Over millions of years, layers of sediment built up, along with plants (plankton and algae) and bacteria. Heat and pressure began to rise. The degree of heat and the amount of pressure, along with the type of biomass, determine if the material becomes petroleum or natural gas.

    • char says:

      Agricultural vehicles have become bigger and bigger so one man can do more. But robotization and tele-presence will lead to smaller but more vehicles. No need for one big combine harvester if one man can operate three smaller combine harvesters at ones. Also biofuel is a likely way for farm equipment to operate as fuel precursor is already pressent

      Oil & gas come from fossilized plankton etc. so definitely fossil fuel

Comments are closed.