16 ms·

When oil is no longer in demand

230 points by hourislate 10y ago

pg_is_a_butt 10y ago
neopeak oil
izend 10y ago
Total World Consumption (2017 projection) : 96.92 million barrels per day (up from 92.58 million barrels in 2014) EIA outlook: http://www.eia.gov/outlooks/ieo/world.cfm http://www.eia.gov/outlooks/ieo/world.cfm Oil will be in demand for a long time. The demand might peak but headlines like this seem to indicate oil isn't needed anymore. Most people do not realize that 6-7 million barrels of oil per day must be found year over year to replenish the depletion of old oil wells. This requirement will drive exploration and investment.
- melling 10y ago
  Yeah, it's crazy that people think oil is going away. We're 7 billion people on our way to 9 billion, with another billion in the next 15 years. That fossil free future that we dream about isn't getting any closer. Those big solar plants, etc that we read about are a rounding error.
  - moomin 10y ago
    You're right. The price going down has, I think, more to do with the effect of fracking in the US. It's getting to the point that the US could be an exporter if it changed its laws. The effect of petro-states will be much the same, though.
    - ARothfusz 10y ago
      We are an oil exporter. We did change the laws. http://money.cnn.com/2016/06/06/investing/us-oil-exports-increase/ http://money.cnn.com/2016/06/06/investing/us-oil-exports-inc...
      - moomin 10y ago
        I missed that. Thanks for the correction.
      - deleted 10y ago
        [deleted]
    - pragone 10y ago
      The US, like everyone else in the world, will always be an oil exporter and an oil importer. The grades of oil differ throughout the world, and are used in different industries.
    - Spooky23 10y ago
      More to do with the Saudis pumping more.
      - maxerickson 10y ago
        It lacks 2015 and 2016, but the huge ramp up in US production (which fracking has contributed to) has clearly been a big factor: http://www.eia.gov/beta/international/index.cfm?view=production http://www.eia.gov/beta/international/index.cfm?view=product...
  - deleted 10y ago
    [deleted]
  - wcummings 10y ago
    This could change faster than you think, I wouldn't be surprised if there was a lot more solar in 50 years. Solar is now getting to the point it can compete w/ fossil fuels on price, w/o subsidies.
    - toomuchtodo 10y ago
      12-16 years till solar is the dominant form of power generation at its current growth rate. https://en.wikipedia.org/wiki/Growth_of_photovoltaics https://en.wikipedia.org/wiki/Growth_of_photovoltaics There isn't anything to indicate that growth curve will slow; the manufacturing capacity is already in place, and more continues to be added. There are power purchase agreements at 2 cents/kWh, and I would not be surprised if you see prices below 1 cent/kwh in the next five years. http://www.pv-tech.org/news/43695 http://www.pv-tech.org/news/43695 https://www.bloomberg.com/news/articles/2016-05-03/solar-developers-undercut-coal-with-another-record-set-in-dubai https://www.bloomberg.com/news/articles/2016-05-03/solar-dev...
      - coredog64 10y ago
        Can't make fertilizer or plastic out of solar energy.
        msandford 10y ago
        > Can't make fertilizer or plastic out of solar energy. No, but if you're willing to spend a lot of energy you can pull CO2 out of the air and use it as a feedstock to make various fuels or plastics. Right now I think you'd have to burn 10 gallons of oil to make a single gallon so that's not efficient at all. But if you literally had more solar than you knew what to do with (like Germany does on occasion) you could use that energy to make liquid fuels or plastics. It's at least a decade and probably several decades off. But this is an economic problem, not a technical one.
        labster 10y ago
        In California and other deserts, excess solar can be directed to desalination plants. Our water and energy shortages are essentially the same issue; solving one goes a long way to solving the other.
  - tachyonbeam 10y ago
    China installed 20GW of solar in the first half of 2016. They are moving fast.
    - melling 10y ago
      What does 20GW means? If they install 40GW for the next 10 years, is that enough? That's about 1 nuclear power plant: https://www.eia.gov/tools/faqs/faq.cfm?id=104&t=3 https://www.eia.gov/tools/faqs/faq.cfm?id=104&t=3
  - dx034 10y ago
    Added population will be mostly in poor areas where power consumption is very low. Energy demand will likely be driven by US, China and India in the next decade(s), the process there is important and very positive. Have a look at Gansu Wind Farm in China. [1] They build so many wind turbines there that they had to restrict production until they've finished the corresponding amount of high-voltage cables connecting it to major cities on the coast . Many of these connections have a higher capacity than any other existing in Europe/America. [2] The potential for wind farms in this regions are huge. It's basically a large, windy desert. With enough cables, you can easily power major cities with it. You can even use it for baseload by combining them with batteries or pump storage. The reason that China still adds coal is largely one of politics, similar to Trump's promises in the US. Coal adds jobs close to the cities. They've already built too many plants for demand, many will probably only run for a few years (hard to find sources on that, there are no numbers so everyone is just speculating how many there are). But there are enough resources and potential to power the world's largest energy consumer mostly by renewables. And the picture is not that different for the US, where wind power in some regions is competitive without subsidies. [1] https://en.wikipedia.org/wiki/Gansu_Wind_Farm https://en.wikipedia.org/wiki/Gansu_Wind_Farm [2] https://en.wikipedia.org/wiki/List_of_HVDC_projects#Asia https://en.wikipedia.org/wiki/List_of_HVDC_projects#Asia
    - melling 10y ago
      India and China have 1/3 of the world population. The US is less than 5% so it doesn't matter, except we use 20% of the oil. China is already the largest car market and India is rising. China gets over 70% of its electricity from coal. That's great that China is developing solar and wind. Hopefully, it breaks into the double digits in 10 years. We have a long way to go, and we're on a clock.
      - _coldfire 10y ago
        >The US is less than 5% so it doesn't matter The US is the 2nd largest Greenhouse gas emitter on the planet. It matters. https://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions https://en.wikipedia.org/wiki/List_of_countries_by_carbon_di...
- throwaway5752 10y ago
  And plastics.
  - handedness 10y ago
    Notice how food storage boxes changed considerably in the last few years? It's because they're derived from shale byproducts that are essentially free, if not cost-negative. There's an irony in that we have an overabundance of natural gas due to shale, but oil itself is becoming far less important to the plastics industry than ever before. Related viewing: https://www.youtube.com/watch?v=pyfVTBI4dgA https://www.youtube.com/watch?v=pyfVTBI4dgA
    - tim333 10y ago
      I think plastics have been produced mostly from natural gas rather than oil for many years. Ethane & methane are an easier starting point for making polyethylene et al than the varied hydrocarbons in oil.
- dx034 10y ago
  For a major shift we don't need to see 0 consumption. If consumption for electricity production and transportation is lowered significantly, this would lower demand enough to allow production on low-cost, traditional wells. We could have oil at <$30 and still get at least half the output we get today. This would mean that at least half the countries that are currently producing would be out of business. That includes all production in North America (with some low volume exceptions) and Europe, many African countries and South American countries like Venezuela. A shift in production like this would have major effects. For the order in many emerging countries and the state of the economy and labour markets in developed markets. That the EIA doesn't include a potential collapse of a big US industry sector in their forecast is somehow clear, still doesn't mean that it won't happen. I don't think that they forecasted the decline of coal as drastically as it happened. Oil could be similar, just much bigger.
  - narrowrail 10y ago
    What I'm seeing all over this thread is comments being made that don't comport with my knowledge of the energy industry. >I don't think that they forecasted the decline of coal as drastically as it happened Coal is starting to come back in the US right now because natural gas prices are starting to rise. For the first time, as of this month, the US is a net exporter of natural gas. Natural gas production increased 70% '05-'14, which caused it to become cheaper than coal. As the US increases exports, the price will make coal more competitive. US power generation facilities often have both NG and coal based turbines allowing them to switch between the two depending on cost. Be careful forecasting the future of energy from short periods of data; the entire energy industry is cyclical going back to when my grandfather was drilling for oil in the 1920s (he went broke).
shanemhansen 10y ago
I live in Utah and I can tell you exactly what happens when oil is no longer in demand. They offer numerous tax breaks per well to encourage exploration and increase production. I believe the term is "corporate welfare". One of the tax breaks has a stated goal of providing tax relief when oil prices are low. https://oilgas.ogm.utah.gov/pub/Publications/Lists/tax_incentives_IOGCC.pdf https://oilgas.ogm.utah.gov/pub/Publications/Lists/tax_incen... This is the same government attempting to roll back solar tax credits because they insist that the solar industry needs to stand on it's own 2 feet and compete in the "free" market.
- edblarney 10y ago
  'Tax breaks' are offered to all sorts of industries. Almost all entertainment in Canada for example, is done nearly tax free. Pharma, energy, small business etc. etc..
  - graeme 10y ago
    It's particularly perverse, however, to give tax breaks for an industry that has immense negative externalities.
    - edblarney 10y ago
      Oil companies don't emit a whole lot of CO2. You emit the CO2 when you use your car (almost 50% of CO2 emissions are from autos). And a bunch of other industries are responsible for most of the rest of CO2 emissions.
      - monknomo 10y ago
        I think you're missing the negative externalities inherent in oil extraction, like groundwater pollution, earthquakes, above ground pipelines, etc. Not to mention it's a little like saying Pablo Escobar doesn't OD on drugs or steal your TV very often, it's the crackheads that do that...
peterjlee 10y ago
I wonder what will happen to the price of jet fuel once electric cars are wide spread. Petroleum production will go down as demand for gasoline will go down while jet fuel demand will probably remain similar. So will that lead to a rise in jet fuel price?
- joshaidan 10y ago
  Or would it potentially increase the supply of Jet A (jet fuel), as less oil needs to be converted to automobile fuel.
  - peterjlee 10y ago
    Is the refining process flexible enough to do that? I was under the impression that refining is more of a separation process so the amount of each petroleum product you get is already determined by the petroleum you have before you even start the process.
    - maxerickson 10y ago
      There's all sorts of processes used to convert stuff. https://en.wikipedia.org/wiki/Cracking_(chemistry) https://en.wikipedia.org/wiki/Cracking_(chemistry)
    - hx87 10y ago
      You can crack the fuel to go from heavier to lighter grade, and use Fischer-Tropsch process to go the other way.
- gizmo686 10y ago
  Doubtful. Under basic economic theory, as demand goes down, so does price. The petroleum production that shuts down first will tend to be the most expensive production, causing a drop in the average cost, and price (we should see a similar effect in upstream products like crude). The main way this effect breaks down is if the market shrinks so much that we loose the economy of scale; but it seams unlikely demand will fall far enough for that to occur.
stoic 10y ago
The recent market conditions are more a consequence of changes in supply than in demand. I heard someone refer to something called the "Economist effect", where an article in the Economist about a particular trend signals its end. Sure enough: https://www.bloomberg.com/news/articles/2016-11-30/opec-said-to-agree-oil-production-cuts-as-saudis-soften-on-iran https://www.bloomberg.com/news/articles/2016-11-30/opec-said... e: word order
- PhantomGremlin 10y ago
  the "Economist effect" It's real. Someone on HN mentioned them as a contra-indicator during a previous discussion. https://news.ycombinator.com/item?id=12516078 https://news.ycombinator.com/item?id=12516078 My supporting argument to him was that The Economist argued in 1999 that $10 oil was too expensive and that it could be headed to $5. So of course oil rose to $140 over the next decade! https://news.ycombinator.com/item?id=12517258 https://news.ycombinator.com/item?id=12517258
  - dx034 10y ago
    You can replace that with any newspaper reports. The oil price follows in part a pork cycle, so a period of falling prices will likely lead to a sharp reverse at some point (and vice versa). Once you have enough data supporting the lower price regime, oil will likely spike again. The interesting question is if it's gonna be different this time. Many argue that with shale production supply will be much more elastic, but it could also just be a false lead. Pork cycle: https://en.wikipedia.org/wiki/Pork_cycle https://en.wikipedia.org/wiki/Pork_cycle
ghouse 10y ago
Resource extraction companies (oil, mining, etc..) usually are required to post security for reclamation. However, large companies are permitted to not post cash or bond, but on their word (credit). Which works while commodity prices are high. But when prices crash, so do the companies and society (the tax payer) is left holding the bag for cleanup.
jpatokal 10y ago
The title exaggerates. Charts elsewhere in the same report project demand going from the current ~4.2bn tonnes to anywhere between 3.2 to 4.7bn by 2040, meaning demand may actually increase over the next 25 years. http://www.economist.com/news/special-report/21710628-worlds-use-oil-approaching-tipping-point-writes-henry-tricks-dont-expect http://www.economist.com/news/special-report/21710628-worlds...
hkmurakami 10y ago
As the developing world develops, demand for petroleum based products (plastics, and even some paper products) will certainly rise, even if power plants and transportation moves away from fossil fuels. Demand will never go to zero even if our energy needs our met renewably. I wonder what the ratios will be though.
- XorNot 10y ago
  Usage in plastics is a tiny highly substitutable use compared to fuels. A realignment where it becomes a buyer's market for oil will be a massive change to the status quo.
205guy 10y ago
Interesting that the Economist is looking at a future where oil demand is lower, but that realization hasn't hit the public yet, at least not in the US. I have been thinking about the Standing Rock protests in North Dakota, and they are objecting to the environmental risk of pipelines. But in the big picture, oil is getting more expensive to extract, more dangerous to ship, and contributes to global warming then used. Given electric cars, some fueled from solar power, there could really be a time soon in the US when the whole gasoline industry is reduced to almost nothing. I think the concept is in the back of many poeple's mind, but the status quo is dominant and electric-everything on the road seems futuristic still. But as more and more people try electric cars and install solar panels, more people will see it and accept it as the new normal, and then things could change quickly, within 5 years perhaps. And yes, this comment is intended to speed up that change.
- tanderson92 10y ago
  So? It's still an environmental risk to their community at the present time. Oil's days being numbered must be cold comfort to them.
  - 205guy 10y ago
    "Cold comfort" indeed in a North Dakota blizzard. But I'm in no way criticizing the standing rock protests, what I'm saying is that it's representative of things to come. When more people realize we can live exactly the same without gasoline pollution in all its forms (fracking water injection, leaking pipelines, leaking tanks at gas stations, air pollution and greenhouse gasses), it will seem like a no brainer.
- handedness 10y ago
  > But in the big picture, oil is getting more expensive to extract, more dangerous to ship, and contributes to global warming then used. These assertions don't match the reality of what's happening. The cost to extract oil has plummeted, and that's reshaping the world order. It's destroyed Russia's entire financial plan. In the US it's become far safer to ship. US domestic production has increased to the point of effective independence, and the US no longer depends on the Strait of Hormuz for its energy supply. Oil's vastly easier to move than natural gas. Current natural gas production exists as a byproduct of shale oil production. It's also becoming far cleaner to extract. The progress shale has made in just a few years is astounding. The extraction methods used today are orders of magnitude cleaner than the ones used just a few years ago. Known domestic supplies are also increasing exponentially, which means the industry is highly unlikely to be "reduced to almost nothing" any time soon. The cheapest form of energy always wins, and even incentives and penalties can only somewhat mitigate that. Sure, we'll have self-driving electric cards on the roads soon enough, but most of that energy isn't going to come from nuclear power, solar, or wind sources. This landscape is changing quickly, and a lot of assumptions people hold–assumptions that are based on many decades of reality–aren't true. Here's a lecture that's relatively current (though 9 months is nearly stale given how quickly shale tech is progressing), and does a decent job of outlining the situation: https://www.youtube.com/watch?v=pyfVTBI4dgA https://www.youtube.com/watch?v=pyfVTBI4dgA
thirstysusrando 10y ago
Hubbert's Peak "World oil production will start to fall sometime during this decade, never to rise again. In 1956, M. King Hubbert predicted that U.S. oil production would peak in the early 1970's. Although Hubbert was widely criticized by some oil experts and economists, in 1971 Hubbert's prediction came true. The 100 year period when most of the world's oil is being discovered became known as "Hubbert's Peak". The peak stands in contrast to the hundreds of millions of years the oil deposits took to form. Hubbert's methods predict a peak in world oil production less than five years away." http://www.princeton.edu/hubbert/the-peak.html http://www.princeton.edu/hubbert/the-peak.html
- mdpopescu 10y ago
  > Hubbert's methods predict a peak in world oil production less than five years away. According to the wayback machine [1], that page was first written in 2001. [1] https://web.archive.org/web/20011121173642/http://www.princeton.edu/hubbert/the-peak.html https://web.archive.org/web/20011121173642/http://www.prince...
solarsavior 10y ago
I was wondering about this lately as I live in Houston in an area greatly dependent upon oil and gas. What happens when so many vehicles are charged by solar panels on rooftops (Tesla Energy)? What about oil and gas? Well, it turns out that tons of things are made from oil and gas and once we stop burning it to make vehicles go down the street, we can start using it for other things. I'm unable to find the origin of the "burning Picassos for heat" quote, but it is catchy. "An oil executive once observed that burning oil for energy is like burning Picassos for heat. Oil is extraordinarily valuable as the basis for so many products we use every day that the thought of simply burning it ought to be unthinkable. So versatile are oil molecules that they can be transformed into substances that serve as clothing, medicines, building materials, carpet, skin care products, sporting goods, agricultural chemicals, perfumes, and myriad other products." http://www.resilience.org/stories/2012-11-04/burning-picassos-for-heat-why-we-need-to-electrify-transportation http://www.resilience.org/stories/2012-11-04/burning-picasso... I can foresee things like plastic wood being used to build all sorts of things.
- dx034 10y ago
  As pointed out in another comment, the use of oil for plastics, streets, etc is less than 5% of overall oil consumption in the US. You could get that kind of output with a tiny domestic industry. With modern refineries, you can get a good control over the output mix and only produce what is needed.I think Houston would be hugely affected by a decline in the oil industry. Even if they can create jobs in the production of renewables, the job profile is often different from working at wells and the huge shipping sector would be largely non-existant. So even if we increase plastic consumption by 2x (don't really see where that should come from), it's still a potential decline in oil consumption of 90%. Enough to basically destroy several industries (refining, drilling, well maintenance, pipelines, shipping). Another interesting question is regarding gas stations. You'll still need some stations on interstates to re-charge for long distance trips. But you could basically get rid of all of them in cities. They would continue to exist as convenience stores, but probably with half the number of employees. This would be another huge sector that often employess untrained people, many of whom will likely not be qualified enough to work in battery factories. Link to EIA report: http://www.eia.gov/energyexplained/index.cfm?page=oil_use http://www.eia.gov/energyexplained/index.cfm?page=oil_use
plg 10y ago
water
Mao_Zedang 10y ago
If oil is no longer in demand it will trigger the biggest mass migration from the middle east to the west the world has ever seen. These countries import 90% of their food, food which they pay for with oil income.
- UniversalBlue 10y ago
  Yeah, because we need more "refugees". As if the ones we already got haven't caused enough damage.
  - majewsky 10y ago
    Europe will get refugees regardless of its need for them, in the same way that we got climate change without needing it. What we're debating is not the "if", it's what to do with them. The most endorsed answer thus far seems to be letting them drown in the Mediterranean Sea.
- sytelus 10y ago
  Highly unlikely. Most of the oil revenues and profits end up at wealthy top and a tiny portion would be spent for food imports. If revenues dry up, there will be political revolutions and probably communist style rule.
- guard-of-terra 10y ago
  The West doesn't have to accept them.
stuartalex 10y ago
A web developer from Aberdeen here. The transition from wealthy to poor in Aberdeen has been instantaneous. Everyone I know in the city has been affected—my fiancee was made redundant, my Dad (after 25 years at BP) and my best mate’s dad (after 25 years at Shell) too. I studied CS at Robert Gordon University, which is cutting academic staff. I also worked at a design and dev shop, but that went bust in December last year. It’s actually a really bleak time, but this outcome was avoidable. Although my friends and family all live in Aberdeen, I feel like I can’t sustain myself there. I currently live in Wellington, NZ, which is beautiful, vibrant and diverse.
- T2_t2 10y ago
  So you basically hate/have never seen the sun?
- cr1895 10y ago
  Have you noticed any pick-up from the offshore wind industry? There's certainly some overlap between oil and wind industries, and Scotland is doing quite a lot of offshore wind development nowadays.
  - stuartalex 10y ago
    Nah, unfortunately not. Scotland in general is very well placed for renewable energy, with both great geography and skilled labour. I feel like the businesses based in Aberdeen haven’t realised that opportunity though. The local industry has been a one-trick pony with no ambition to diversify. The end result is what we’re currently seeing.
- nevetsh71 10y ago
  Its trying to change. There is a programme to support digital start ups being developed, a recognition that the single reliance on Oil & Gas is not healthy and significant investment being raised to support next generation energy technologies...who wants to hunt for oil using ML ...we will be opening up a lot of data next year so if you want to know more drop me a line at steve dot harrison "at"scotent dot co dot uk...but I do understand that NZ is lovely...
gragas 10y ago
>As the world enters what could be the twilight of the oil age This is the point when I stopped taking the article seriously.
vegabook 10y ago
A few counterpoints: * In the market oil is a very popular short. So much so that despite Iran coming back onstream, oil has since risen 20 points. * Aramco's IPO will force it to open kimono on its reserves. Is there a negative surprise waiting there? * Nobody is going to put electric cars into the southern hemisphere anytime soon, because the distances are too long and infrastructure too sparse. As Africa develops, oil demand there will increase, especially with increasing chinese involvement. Ditto Latam. Ditto central Asia, Middle east. * We are seeing inflation picking up around the world, and oil is the classic inflation trade. Finally, anecdotally, the economist has a long history of being a counter-indicator due to its susceptibility to consensus thinking.
SmokyBorbon 10y ago
When oil is oversupplied. Only a fool would think demand has decreased.
codecamper 10y ago
Why does pumping CO2 under water not sound as stable as having carbon locked in a petrochemical under the ground?
gadders 10y ago
I think the best thing of oil no longer being in demand is the US and the UK could end their relationships with Saudi Arabia, and hold them accountable for the vile regime they run there.
nateburke 10y ago
As long as we have ground wars, we'll have demand for oil (i.e. gasoline). As an energy source, stored gasoline is far more modular and transportable than anything requiring the electric grid. Consequently, it is easier to defend and remains the ideal energy solution for supply lines in battle. As long as we have air wars, we'll also have demand for oil. The logistics of moving an airforce around the world require floating airfields doubling as standalone fueling stations. How efficient would solar need to be for an aircraft carrier + all of its planes to run on solar? As long as we have wars fought on the open seas... you get the idea. Oil, as a power source, moves quite easily and this cannot be ignored, strategically. Militaries and governments know this. As long as we have physical borders that need to be defended, we'll have a demand for oil.
- toyg 10y ago
  Purely military purposes would need relatively low volumes, though. Even just decoupling consumer demand from military demand would dramatically alter the economies of oil production. It might not fix all oil-related wars and restructure all Middle-Eastern alliances, but it would certainly change the landscape.
- kerbalspacepro 10y ago
  George Friedman describes a ~2030/2040 military that uses batteries in power armor that are recharged by solar power satellites.
Chuckalucky89 10y ago
This discussion should really come to the forefront of the energy conversation in the US with the Trump presidency. His commitment to ramping up oil production and reversing all of the initiatives to increase investment in alternative, sustainable energy resources will hurt the US' progress towards relying less on fossil fuels which are not sustainable. His motivations are obviously to prioritize the big oil companies making money.

230 points by hourislate 10y ago

neopeak oil

izend 10y ago

Total World Consumption (2017 projection) : 96.92 million barrels per day (up from 92.58 million barrels in 2014) EIA outlook: http://www.eia.gov/outlooks/ieo/world.cfm http://www.eia.gov/outlooks/ieo/world.cfm Oil will be in demand for a long time. The demand might peak but headlines like this seem to indicate oil isn't needed anymore. Most people do not realize that 6-7 million barrels of oil per day must be found year over year to replenish the depletion of old oil wells. This requirement will drive exploration and investment.

melling 10y ago
Yeah, it's crazy that people think oil is going away. We're 7 billion people on our way to 9 billion, with another billion in the next 15 years. That fossil free future that we dream about isn't getting any closer. Those big solar plants, etc that we read about are a rounding error.
- moomin 10y ago
  You're right. The price going down has, I think, more to do with the effect of fracking in the US. It's getting to the point that the US could be an exporter if it changed its laws. The effect of petro-states will be much the same, though.
  - ARothfusz 10y ago
    We are an oil exporter. We did change the laws. http://money.cnn.com/2016/06/06/investing/us-oil-exports-increase/ http://money.cnn.com/2016/06/06/investing/us-oil-exports-inc...
    - moomin 10y ago
      I missed that. Thanks for the correction.
    - deleted 10y ago
      [deleted]
  - pragone 10y ago
    The US, like everyone else in the world, will always be an oil exporter and an oil importer. The grades of oil differ throughout the world, and are used in different industries.
  - Spooky23 10y ago
    More to do with the Saudis pumping more.
    - maxerickson 10y ago
      It lacks 2015 and 2016, but the huge ramp up in US production (which fracking has contributed to) has clearly been a big factor: http://www.eia.gov/beta/international/index.cfm?view=production http://www.eia.gov/beta/international/index.cfm?view=product...
- deleted 10y ago
  [deleted]
- wcummings 10y ago
  This could change faster than you think, I wouldn't be surprised if there was a lot more solar in 50 years. Solar is now getting to the point it can compete w/ fossil fuels on price, w/o subsidies.
  - toomuchtodo 10y ago
    12-16 years till solar is the dominant form of power generation at its current growth rate. https://en.wikipedia.org/wiki/Growth_of_photovoltaics https://en.wikipedia.org/wiki/Growth_of_photovoltaics There isn't anything to indicate that growth curve will slow; the manufacturing capacity is already in place, and more continues to be added. There are power purchase agreements at 2 cents/kWh, and I would not be surprised if you see prices below 1 cent/kwh in the next five years. http://www.pv-tech.org/news/43695 http://www.pv-tech.org/news/43695 https://www.bloomberg.com/news/articles/2016-05-03/solar-developers-undercut-coal-with-another-record-set-in-dubai https://www.bloomberg.com/news/articles/2016-05-03/solar-dev...
    - coredog64 10y ago
      Can't make fertilizer or plastic out of solar energy.
      - msandford 10y ago
        > Can't make fertilizer or plastic out of solar energy. No, but if you're willing to spend a lot of energy you can pull CO2 out of the air and use it as a feedstock to make various fuels or plastics. Right now I think you'd have to burn 10 gallons of oil to make a single gallon so that's not efficient at all. But if you literally had more solar than you knew what to do with (like Germany does on occasion) you could use that energy to make liquid fuels or plastics. It's at least a decade and probably several decades off. But this is an economic problem, not a technical one.
        labster 10y ago
        In California and other deserts, excess solar can be directed to desalination plants. Our water and energy shortages are essentially the same issue; solving one goes a long way to solving the other.
- tachyonbeam 10y ago
  China installed 20GW of solar in the first half of 2016. They are moving fast.
  - melling 10y ago
    What does 20GW means? If they install 40GW for the next 10 years, is that enough? That's about 1 nuclear power plant: https://www.eia.gov/tools/faqs/faq.cfm?id=104&t=3 https://www.eia.gov/tools/faqs/faq.cfm?id=104&t=3
- dx034 10y ago
  Added population will be mostly in poor areas where power consumption is very low. Energy demand will likely be driven by US, China and India in the next decade(s), the process there is important and very positive. Have a look at Gansu Wind Farm in China. [1] They build so many wind turbines there that they had to restrict production until they've finished the corresponding amount of high-voltage cables connecting it to major cities on the coast . Many of these connections have a higher capacity than any other existing in Europe/America. [2] The potential for wind farms in this regions are huge. It's basically a large, windy desert. With enough cables, you can easily power major cities with it. You can even use it for baseload by combining them with batteries or pump storage. The reason that China still adds coal is largely one of politics, similar to Trump's promises in the US. Coal adds jobs close to the cities. They've already built too many plants for demand, many will probably only run for a few years (hard to find sources on that, there are no numbers so everyone is just speculating how many there are). But there are enough resources and potential to power the world's largest energy consumer mostly by renewables. And the picture is not that different for the US, where wind power in some regions is competitive without subsidies. [1] https://en.wikipedia.org/wiki/Gansu_Wind_Farm https://en.wikipedia.org/wiki/Gansu_Wind_Farm [2] https://en.wikipedia.org/wiki/List_of_HVDC_projects#Asia https://en.wikipedia.org/wiki/List_of_HVDC_projects#Asia
  - melling 10y ago
    India and China have 1/3 of the world population. The US is less than 5% so it doesn't matter, except we use 20% of the oil. China is already the largest car market and India is rising. China gets over 70% of its electricity from coal. That's great that China is developing solar and wind. Hopefully, it breaks into the double digits in 10 years. We have a long way to go, and we're on a clock.
    - _coldfire 10y ago
      >The US is less than 5% so it doesn't matter The US is the 2nd largest Greenhouse gas emitter on the planet. It matters. https://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions https://en.wikipedia.org/wiki/List_of_countries_by_carbon_di...
throwaway5752 10y ago
And plastics.
- handedness 10y ago
  Notice how food storage boxes changed considerably in the last few years? It's because they're derived from shale byproducts that are essentially free, if not cost-negative. There's an irony in that we have an overabundance of natural gas due to shale, but oil itself is becoming far less important to the plastics industry than ever before. Related viewing: https://www.youtube.com/watch?v=pyfVTBI4dgA https://www.youtube.com/watch?v=pyfVTBI4dgA
  - tim333 10y ago
    I think plastics have been produced mostly from natural gas rather than oil for many years. Ethane & methane are an easier starting point for making polyethylene et al than the varied hydrocarbons in oil.
dx034 10y ago
For a major shift we don't need to see 0 consumption. If consumption for electricity production and transportation is lowered significantly, this would lower demand enough to allow production on low-cost, traditional wells. We could have oil at <$30 and still get at least half the output we get today. This would mean that at least half the countries that are currently producing would be out of business. That includes all production in North America (with some low volume exceptions) and Europe, many African countries and South American countries like Venezuela. A shift in production like this would have major effects. For the order in many emerging countries and the state of the economy and labour markets in developed markets. That the EIA doesn't include a potential collapse of a big US industry sector in their forecast is somehow clear, still doesn't mean that it won't happen. I don't think that they forecasted the decline of coal as drastically as it happened. Oil could be similar, just much bigger.
- narrowrail 10y ago
  What I'm seeing all over this thread is comments being made that don't comport with my knowledge of the energy industry. >I don't think that they forecasted the decline of coal as drastically as it happened Coal is starting to come back in the US right now because natural gas prices are starting to rise. For the first time, as of this month, the US is a net exporter of natural gas. Natural gas production increased 70% '05-'14, which caused it to become cheaper than coal. As the US increases exports, the price will make coal more competitive. US power generation facilities often have both NG and coal based turbines allowing them to switch between the two depending on cost. Be careful forecasting the future of energy from short periods of data; the entire energy industry is cyclical going back to when my grandfather was drilling for oil in the 1920s (he went broke).

shanemhansen 10y ago

I live in Utah and I can tell you exactly what happens when oil is no longer in demand. They offer numerous tax breaks per well to encourage exploration and increase production. I believe the term is "corporate welfare". One of the tax breaks has a stated goal of providing tax relief when oil prices are low. https://oilgas.ogm.utah.gov/pub/Publications/Lists/tax_incentives_IOGCC.pdf https://oilgas.ogm.utah.gov/pub/Publications/Lists/tax_incen... This is the same government attempting to roll back solar tax credits because they insist that the solar industry needs to stand on it's own 2 feet and compete in the "free" market.

edblarney 10y ago
'Tax breaks' are offered to all sorts of industries. Almost all entertainment in Canada for example, is done nearly tax free. Pharma, energy, small business etc. etc..
- graeme 10y ago
  It's particularly perverse, however, to give tax breaks for an industry that has immense negative externalities.
  - edblarney 10y ago
    Oil companies don't emit a whole lot of CO2. You emit the CO2 when you use your car (almost 50% of CO2 emissions are from autos). And a bunch of other industries are responsible for most of the rest of CO2 emissions.
    - monknomo 10y ago
      I think you're missing the negative externalities inherent in oil extraction, like groundwater pollution, earthquakes, above ground pipelines, etc. Not to mention it's a little like saying Pablo Escobar doesn't OD on drugs or steal your TV very often, it's the crackheads that do that...

peterjlee 10y ago

I wonder what will happen to the price of jet fuel once electric cars are wide spread. Petroleum production will go down as demand for gasoline will go down while jet fuel demand will probably remain similar. So will that lead to a rise in jet fuel price?

joshaidan 10y ago
Or would it potentially increase the supply of Jet A (jet fuel), as less oil needs to be converted to automobile fuel.
- peterjlee 10y ago
  Is the refining process flexible enough to do that? I was under the impression that refining is more of a separation process so the amount of each petroleum product you get is already determined by the petroleum you have before you even start the process.
  - maxerickson 10y ago
    There's all sorts of processes used to convert stuff. https://en.wikipedia.org/wiki/Cracking_(chemistry) https://en.wikipedia.org/wiki/Cracking_(chemistry)
  - hx87 10y ago
    You can crack the fuel to go from heavier to lighter grade, and use Fischer-Tropsch process to go the other way.
gizmo686 10y ago
Doubtful. Under basic economic theory, as demand goes down, so does price. The petroleum production that shuts down first will tend to be the most expensive production, causing a drop in the average cost, and price (we should see a similar effect in upstream products like crude). The main way this effect breaks down is if the market shrinks so much that we loose the economy of scale; but it seams unlikely demand will fall far enough for that to occur.

stoic 10y ago

The recent market conditions are more a consequence of changes in supply than in demand. I heard someone refer to something called the "Economist effect", where an article in the Economist about a particular trend signals its end. Sure enough: https://www.bloomberg.com/news/articles/2016-11-30/opec-said-to-agree-oil-production-cuts-as-saudis-soften-on-iran https://www.bloomberg.com/news/articles/2016-11-30/opec-said... e: word order

PhantomGremlin 10y ago
the "Economist effect" It's real. Someone on HN mentioned them as a contra-indicator during a previous discussion. https://news.ycombinator.com/item?id=12516078 https://news.ycombinator.com/item?id=12516078 My supporting argument to him was that The Economist argued in 1999 that $10 oil was too expensive and that it could be headed to $5. So of course oil rose to $140 over the next decade! https://news.ycombinator.com/item?id=12517258 https://news.ycombinator.com/item?id=12517258
- dx034 10y ago
  You can replace that with any newspaper reports. The oil price follows in part a pork cycle, so a period of falling prices will likely lead to a sharp reverse at some point (and vice versa). Once you have enough data supporting the lower price regime, oil will likely spike again. The interesting question is if it's gonna be different this time. Many argue that with shale production supply will be much more elastic, but it could also just be a false lead. Pork cycle: https://en.wikipedia.org/wiki/Pork_cycle https://en.wikipedia.org/wiki/Pork_cycle

ghouse 10y ago

Resource extraction companies (oil, mining, etc..) usually are required to post security for reclamation. However, large companies are permitted to not post cash or bond, but on their word (credit). Which works while commodity prices are high. But when prices crash, so do the companies and society (the tax payer) is left holding the bag for cleanup.

jpatokal 10y ago

The title exaggerates. Charts elsewhere in the same report project demand going from the current ~4.2bn tonnes to anywhere between 3.2 to 4.7bn by 2040, meaning demand may actually increase over the next 25 years. http://www.economist.com/news/special-report/21710628-worlds-use-oil-approaching-tipping-point-writes-henry-tricks-dont-expect http://www.economist.com/news/special-report/21710628-worlds...

hkmurakami 10y ago

As the developing world develops, demand for petroleum based products (plastics, and even some paper products) will certainly rise, even if power plants and transportation moves away from fossil fuels. Demand will never go to zero even if our energy needs our met renewably. I wonder what the ratios will be though.

XorNot 10y ago
Usage in plastics is a tiny highly substitutable use compared to fuels. A realignment where it becomes a buyer's market for oil will be a massive change to the status quo.

205guy 10y ago

Interesting that the Economist is looking at a future where oil demand is lower, but that realization hasn't hit the public yet, at least not in the US. I have been thinking about the Standing Rock protests in North Dakota, and they are objecting to the environmental risk of pipelines. But in the big picture, oil is getting more expensive to extract, more dangerous to ship, and contributes to global warming then used. Given electric cars, some fueled from solar power, there could really be a time soon in the US when the whole gasoline industry is reduced to almost nothing. I think the concept is in the back of many poeple's mind, but the status quo is dominant and electric-everything on the road seems futuristic still. But as more and more people try electric cars and install solar panels, more people will see it and accept it as the new normal, and then things could change quickly, within 5 years perhaps. And yes, this comment is intended to speed up that change.

tanderson92 10y ago
So? It's still an environmental risk to their community at the present time. Oil's days being numbered must be cold comfort to them.
- 205guy 10y ago
  "Cold comfort" indeed in a North Dakota blizzard. But I'm in no way criticizing the standing rock protests, what I'm saying is that it's representative of things to come. When more people realize we can live exactly the same without gasoline pollution in all its forms (fracking water injection, leaking pipelines, leaking tanks at gas stations, air pollution and greenhouse gasses), it will seem like a no brainer.
handedness 10y ago
> But in the big picture, oil is getting more expensive to extract, more dangerous to ship, and contributes to global warming then used. These assertions don't match the reality of what's happening. The cost to extract oil has plummeted, and that's reshaping the world order. It's destroyed Russia's entire financial plan. In the US it's become far safer to ship. US domestic production has increased to the point of effective independence, and the US no longer depends on the Strait of Hormuz for its energy supply. Oil's vastly easier to move than natural gas. Current natural gas production exists as a byproduct of shale oil production. It's also becoming far cleaner to extract. The progress shale has made in just a few years is astounding. The extraction methods used today are orders of magnitude cleaner than the ones used just a few years ago. Known domestic supplies are also increasing exponentially, which means the industry is highly unlikely to be "reduced to almost nothing" any time soon. The cheapest form of energy always wins, and even incentives and penalties can only somewhat mitigate that. Sure, we'll have self-driving electric cards on the roads soon enough, but most of that energy isn't going to come from nuclear power, solar, or wind sources. This landscape is changing quickly, and a lot of assumptions people hold–assumptions that are based on many decades of reality–aren't true. Here's a lecture that's relatively current (though 9 months is nearly stale given how quickly shale tech is progressing), and does a decent job of outlining the situation: https://www.youtube.com/watch?v=pyfVTBI4dgA https://www.youtube.com/watch?v=pyfVTBI4dgA

thirstysusrando 10y ago

Hubbert's Peak "World oil production will start to fall sometime during this decade, never to rise again. In 1956, M. King Hubbert predicted that U.S. oil production would peak in the early 1970's. Although Hubbert was widely criticized by some oil experts and economists, in 1971 Hubbert's prediction came true. The 100 year period when most of the world's oil is being discovered became known as "Hubbert's Peak". The peak stands in contrast to the hundreds of millions of years the oil deposits took to form. Hubbert's methods predict a peak in world oil production less than five years away." http://www.princeton.edu/hubbert/the-peak.html http://www.princeton.edu/hubbert/the-peak.html

mdpopescu 10y ago
> Hubbert's methods predict a peak in world oil production less than five years away. According to the wayback machine [1], that page was first written in 2001. [1] https://web.archive.org/web/20011121173642/http://www.princeton.edu/hubbert/the-peak.html https://web.archive.org/web/20011121173642/http://www.prince...

solarsavior 10y ago

I was wondering about this lately as I live in Houston in an area greatly dependent upon oil and gas. What happens when so many vehicles are charged by solar panels on rooftops (Tesla Energy)? What about oil and gas? Well, it turns out that tons of things are made from oil and gas and once we stop burning it to make vehicles go down the street, we can start using it for other things. I'm unable to find the origin of the "burning Picassos for heat" quote, but it is catchy. "An oil executive once observed that burning oil for energy is like burning Picassos for heat. Oil is extraordinarily valuable as the basis for so many products we use every day that the thought of simply burning it ought to be unthinkable. So versatile are oil molecules that they can be transformed into substances that serve as clothing, medicines, building materials, carpet, skin care products, sporting goods, agricultural chemicals, perfumes, and myriad other products." http://www.resilience.org/stories/2012-11-04/burning-picassos-for-heat-why-we-need-to-electrify-transportation http://www.resilience.org/stories/2012-11-04/burning-picasso... I can foresee things like plastic wood being used to build all sorts of things.

dx034 10y ago
As pointed out in another comment, the use of oil for plastics, streets, etc is less than 5% of overall oil consumption in the US. You could get that kind of output with a tiny domestic industry. With modern refineries, you can get a good control over the output mix and only produce what is needed.I think Houston would be hugely affected by a decline in the oil industry. Even if they can create jobs in the production of renewables, the job profile is often different from working at wells and the huge shipping sector would be largely non-existant. So even if we increase plastic consumption by 2x (don't really see where that should come from), it's still a potential decline in oil consumption of 90%. Enough to basically destroy several industries (refining, drilling, well maintenance, pipelines, shipping). Another interesting question is regarding gas stations. You'll still need some stations on interstates to re-charge for long distance trips. But you could basically get rid of all of them in cities. They would continue to exist as convenience stores, but probably with half the number of employees. This would be another huge sector that often employess untrained people, many of whom will likely not be qualified enough to work in battery factories. Link to EIA report: http://www.eia.gov/energyexplained/index.cfm?page=oil_use http://www.eia.gov/energyexplained/index.cfm?page=oil_use

plg 10y ago

water

Mao_Zedang 10y ago

If oil is no longer in demand it will trigger the biggest mass migration from the middle east to the west the world has ever seen. These countries import 90% of their food, food which they pay for with oil income.

UniversalBlue 10y ago
Yeah, because we need more "refugees". As if the ones we already got haven't caused enough damage.
- majewsky 10y ago
  Europe will get refugees regardless of its need for them, in the same way that we got climate change without needing it. What we're debating is not the "if", it's what to do with them. The most endorsed answer thus far seems to be letting them drown in the Mediterranean Sea.
sytelus 10y ago
Highly unlikely. Most of the oil revenues and profits end up at wealthy top and a tiny portion would be spent for food imports. If revenues dry up, there will be political revolutions and probably communist style rule.
guard-of-terra 10y ago
The West doesn't have to accept them.

stuartalex 10y ago

A web developer from Aberdeen here. The transition from wealthy to poor in Aberdeen has been instantaneous. Everyone I know in the city has been affected—my fiancee was made redundant, my Dad (after 25 years at BP) and my best mate’s dad (after 25 years at Shell) too. I studied CS at Robert Gordon University, which is cutting academic staff. I also worked at a design and dev shop, but that went bust in December last year. It’s actually a really bleak time, but this outcome was avoidable. Although my friends and family all live in Aberdeen, I feel like I can’t sustain myself there. I currently live in Wellington, NZ, which is beautiful, vibrant and diverse.

T2_t2 10y ago
So you basically hate/have never seen the sun?
cr1895 10y ago
Have you noticed any pick-up from the offshore wind industry? There's certainly some overlap between oil and wind industries, and Scotland is doing quite a lot of offshore wind development nowadays.
- stuartalex 10y ago
  Nah, unfortunately not. Scotland in general is very well placed for renewable energy, with both great geography and skilled labour. I feel like the businesses based in Aberdeen haven’t realised that opportunity though. The local industry has been a one-trick pony with no ambition to diversify. The end result is what we’re currently seeing.
nevetsh71 10y ago
Its trying to change. There is a programme to support digital start ups being developed, a recognition that the single reliance on Oil & Gas is not healthy and significant investment being raised to support next generation energy technologies...who wants to hunt for oil using ML ...we will be opening up a lot of data next year so if you want to know more drop me a line at steve dot harrison "at"scotent dot co dot uk...but I do understand that NZ is lovely...

gragas 10y ago

>As the world enters what could be the twilight of the oil age This is the point when I stopped taking the article seriously.

vegabook 10y ago

A few counterpoints: * In the market oil is a very popular short. So much so that despite Iran coming back onstream, oil has since risen 20 points. * Aramco's IPO will force it to open kimono on its reserves. Is there a negative surprise waiting there? * Nobody is going to put electric cars into the southern hemisphere anytime soon, because the distances are too long and infrastructure too sparse. As Africa develops, oil demand there will increase, especially with increasing chinese involvement. Ditto Latam. Ditto central Asia, Middle east. * We are seeing inflation picking up around the world, and oil is the classic inflation trade. Finally, anecdotally, the economist has a long history of being a counter-indicator due to its susceptibility to consensus thinking.

SmokyBorbon 10y ago

When oil is oversupplied. Only a fool would think demand has decreased.

codecamper 10y ago

Why does pumping CO2 under water not sound as stable as having carbon locked in a petrochemical under the ground?

gadders 10y ago

I think the best thing of oil no longer being in demand is the US and the UK could end their relationships with Saudi Arabia, and hold them accountable for the vile regime they run there.

nateburke 10y ago

As long as we have ground wars, we'll have demand for oil (i.e. gasoline). As an energy source, stored gasoline is far more modular and transportable than anything requiring the electric grid. Consequently, it is easier to defend and remains the ideal energy solution for supply lines in battle. As long as we have air wars, we'll also have demand for oil. The logistics of moving an airforce around the world require floating airfields doubling as standalone fueling stations. How efficient would solar need to be for an aircraft carrier + all of its planes to run on solar? As long as we have wars fought on the open seas... you get the idea. Oil, as a power source, moves quite easily and this cannot be ignored, strategically. Militaries and governments know this. As long as we have physical borders that need to be defended, we'll have a demand for oil.

toyg 10y ago
Purely military purposes would need relatively low volumes, though. Even just decoupling consumer demand from military demand would dramatically alter the economies of oil production. It might not fix all oil-related wars and restructure all Middle-Eastern alliances, but it would certainly change the landscape.
kerbalspacepro 10y ago
George Friedman describes a ~2030/2040 military that uses batteries in power armor that are recharged by solar power satellites.

Chuckalucky89 10y ago

This discussion should really come to the forefront of the energy conversation in the US with the Trump presidency. His commitment to ramping up oil production and reversing all of the initiatives to increase investment in alternative, sustainable energy resources will hurt the US' progress towards relying less on fossil fuels which are not sustainable. His motivations are obviously to prioritize the big oil companies making money.