8 ms·

So 52 years worth of reserves assuming maximum capacity of 12mm barrels harvested a day. Now I am no mathematician but given a 1-2mm per day average and what wi

So 52 years worth of reserves assuming maximum capacity of 12mm barrels harvested a day. Now I am no mathematician but given a 1-2mm per day average and what will likely become a declining demand for oil over next 20-30 years, they have half a millennia worth of oil lying around. This well seems like a non issue to me.

max_wen 8y ago
"what will likely become a declining demand for oil over next 20-30 years" based on what?
- hanniabu 8y ago
  Just going off of memory, I believe I read that gasoline consumption has plateaued, meaning we're weaning off of it and it's being supplemented by alternative sources. I think it's a fair assumption that this indicates a shift that will lead to declining numbers in the next 20-30 years, if not sooner.
  - max_wen 8y ago
    Plateaued where? In California and Europe maybe but not in the rest of the world.
    - Arnt 8y ago
      It's more complicated than that. Some things keep growing (air traffic for instance), some not (power plants planning/construction for instance) and some seem in decline (ICE cars). If you can read .de-ese: https://www.sueddeutsche.de/wirtschaft/1.4371221 https://www.sueddeutsche.de/wirtschaft/1.4371221 You can add the apples and oranges up and get different results, depending on your judgment. And you get to choose what to assume: You may assume that what happens in California in 2019 definitely won't happen in the rest of the US in the coming years, or that it will. Et cetera.
      - max_wen 8y ago
        thanks it translated pretty well. So I think this story sounds incomplete. I do not think it is mutually exclusive to say that the Bosch burner factory is shutting down and that 95% of all new cars sold worldwide are combustion engine powered. German labor is extremely expensive and German taxes are incredibly high. Welcome to the global economy. I find it much more likely that much like everything else, the Chinese car market wants cars manufactured in China and that those China factories source from Chinese vendors. It's no different than the electronics industry.
        Arnt 8y ago
        If you follow the links, you see that the reduced demand forcecasts are worldwide and most of the layoffs involved are in low-cost countries. Most the companies mentioned are global leaders in their small field (like one of the companies mentioned, which produces not cars, not engines, not cylinders, but parts for cylinders, and 80% of its workforce are in low-wage countries, and its customers are all over the world). A region in Germany is likely to be badly affected and that gets most of the wording. Don't let that fool you. When the investor guidance says "challenging outlook", it doesn't mean "we'll lay off a few people at HQ but the factories will be fine".
        max_wen 8y ago
        i agree. the German factories will not be fine.
- AnthonyMouse 8y ago
  > based on what? Rising popularity of electric cars, increasing vehicle efficiency in general, potential legislation targeting climate change, etc.
  - max_wen 8y ago
    - Electric cars are still less than 5% of new car market. Hardly impactful - The increase in efficiency is more than offset by the growth in overall car market - Potential legislation in China? India? Emerging markets? Sorry but nothing suggests that is happening
    - Arnt 8y ago
      Bosch and about six other manufacturers of car parts disagree with you and expect sharply reduced demand for ICE-specific car parts.
      - max_wen 8y ago
        I agree that at least 6 manufacturers of ICE-car parts in the EU and USA will be seeing reduced demand in the future
        Arnt 8y ago
        Maybe I should have put that differently. Maybe I should have added "AFAIK zero ICE parts manufacturers have issued forecasts of increased demand".
    - AnthonyMouse 8y ago
      > Electric cars are still less than 5% of new car market. Hardly impactful That is up from <1% five years ago, in a market where demand spurs demand by increasing availability of charging points etc. Meanwhile the EV market is currently production capacity constrained and multiple companies are expanding production capacity. I doubt we're going to be at 100% electric cars in ten years but I would not be surprised if it was somewhere in the mid double digits by then. And by that point it becomes a lot easier to target ICE cars with legislation because there is a proven viable alternative. > The increase in efficiency is more than offset by the growth in overall car market Any given factor is more than offset by the growth in the overall car market. But you add them all together. > Potential legislation in China? India? Emerging markets? Sorry but nothing suggests that is happening China has a slate of domestic electric car companies and it's exactly their style to pass legislation that favors domestic companies over foreign competitors. Climate change provides them a really good justification to do that here. And carbon taxes generate revenue, which makes it easy to make them revenue neutral. Use the money to lower other taxes or fund a UBI. This knocks out the "harms the poor/developing countries" argument because the cost becomes only the cost difference between fossil fuels and alternatives, which is rapidly approaching zero. Moreover, most of the current oil demand comes from the US and Europe. If either of them, much less both, passed relevant legislation then not only would their own demand fall off, the increased economies of scale and network effects that would spur in alternatives would also make them more cost effective in countries without any such legislation.
- max_wen 8y ago
  20+% increase by 2015-2030 https://www.statista.com/statistics/547100/projected-base-oil-demand-globally/ https://www.statista.com/statistics/547100/projected-base-oi... A more realistic assessment from Shell Oil is that oil demand continues to grow over the next 20 years, a view shared by rival BP and energy consultants like Wood Mackenzie. https://www.forbes.com/sites/daneberhart/2018/09/18/forecasts-of-peak-oil-demand-overstated/#e8b15c59b653 https://www.forbes.com/sites/daneberhart/2018/09/18/forecast... Long-term oil demand is expected to increase by 15.8 mb/d, rising from 95.4 mb/d in 2016 to 111.1 mb/d in 2040 https://www.opec.org/opec_web/flipbook/WOO2017/WOO2017/assets/common/downloads/WOO%202017.pdf https://www.opec.org/opec_web/flipbook/WOO2017/WOO2017/asset... (page 101)
  - deleted 8y ago
    [deleted]
  - yread 8y ago
    That's depressing
  - adrianN 8y ago
    It wouldn't be good for Shell's or BP's stock value if they predicted falling demand for their product...
adventured 8y ago
It's a big problem for them. In the case of Saudi Arabia, it's the combination of oil production ceiling vs population, that is almost guaranteed to be the Kingdom's undoing. Their population growth is slowly unsettling their stability by debasing the per capita well-being. This has resulted recently in record unemployment and a struggling economy.[1] The record youth unemployment in particular is very concerning in a region where that can lead to severe destabilization and the formation of revolutionary groups (desperate youth seeking change). Their oil reserves in 1990 were similar to today, except now they have twice as many people and oil's outlook is getting more dim by the year. In 1990 they had a mere 16m people, in ~2035 they'll have 48m people dividing even fewer oil resources than in 1990. Unlike, say, Russia, which has a fixed population (net unchanged in 30 years), Saudi Arabia has rapid population growth and is almost entirely dependent economically on subdividing those oil resources per capita (in one form or another). Their efforts to diversify the economy have failed repeatedly and wealthy developed nations are less interested in doing business with them than at any other time in decades. They've lost 1.5 million expat jobs in just a few years, and haven't been able to replace them with new domestic jobs.[2] Saudi has to figure out how to produce eight million (or more) jobs in just roughly 15 years, when so far they've demonstrated they can hardly produce any net new jobs at all (for Saudis). And these can't be just any jobs, they need to match the present relatively high expectations for a standard of living that Saudis have. If they fail at that vast job creation requirement, the Kingdom is going to fall into violent revolution in some manner. [1] https://www.reuters.com/article/saudi-unemployment/saudi-unemployment-stays-at-record-high-as-companies-struggle-idUSL8N1WY6OK https://www.reuters.com/article/saudi-unemployment/saudi-une... [2] https://www.bloomberg.com/news/articles/2019-04-03/as-expats-leave-saudi-arabia-no-one-is-replacing-them-chart https://www.bloomberg.com/news/articles/2019-04-03/as-expats...
- mikekchar 8y ago
  I think the point is that they will likely destabilise long before they run out of oil. The price/demand/Saudi's share of OPEC's allowance will mean that the dire economic situation that you describe will play out no matter how much oil they have left. Whether that's true or not, I don't know, but that's what I understood from the OP's post.
- 8y ago
chrischen 8y ago
52 years is a blip in human civilization. I'd be curious to see how in the grand scheme the depletion of oil looks. Will our tech/development boom grind to a halt all of a sudden? Do we switch to nuclear?
- cjslep 8y ago
  Good luck making plastic.
  - cfontes 8y ago
    There is already bio-plastic, it's just expensive because oil is super cheap.
    - deleted 8y ago
      [deleted]
- Iv 8y ago
  What I am the most worried about the depletion of oil is that most people assume it will be a bell curve, like US' (conventional) oil production was. Thing is, it was a bell as people switched to other more profitable sources of oil as US' oil was becoming more expensive. I fear the depletion of world's reserve could look a lot more like a cliff. The absence of alternatives changes a lot the fundamentals of the problem.
  - anonymou2 8y ago
    the seneca cliff: https://thesenecatrap.blogspot.com/ https://thesenecatrap.blogspot.com/
- vichu 8y ago
  I wouldn't be too concerned as renewables and nuclear technology should be at the point where it would be able to pick up the slack - we know the end is coming and we can prepare for it. An interesting thought experiment is whether or not humans (or some future species) would be able to reproduce the technological advancements that oil enabled given some sort of apocalypse scenario that resets us to year zero.
perfunctory 8y ago
> but given a 1-2mm per day average Where did you get this number from? They are not pumping at their maximum capacity but I understand it's pretty close on average "Saudi Arabia briefly pumped a record of more than 11 million barrels a day in late 2018."
simonh 8y ago
This is the cheapest oil to pump in the world, therefore it is likely to be the last to ramp down production. All the others will become uneconomical before this one does and therefore, unless they tap out while prices are still high, will stay in the ground longer.

max_wen 8y ago

"what will likely become a declining demand for oil over next 20-30 years" based on what?

hanniabu 8y ago
Just going off of memory, I believe I read that gasoline consumption has plateaued, meaning we're weaning off of it and it's being supplemented by alternative sources. I think it's a fair assumption that this indicates a shift that will lead to declining numbers in the next 20-30 years, if not sooner.
- max_wen 8y ago
  Plateaued where? In California and Europe maybe but not in the rest of the world.
  - Arnt 8y ago
    It's more complicated than that. Some things keep growing (air traffic for instance), some not (power plants planning/construction for instance) and some seem in decline (ICE cars). If you can read .de-ese: https://www.sueddeutsche.de/wirtschaft/1.4371221 https://www.sueddeutsche.de/wirtschaft/1.4371221 You can add the apples and oranges up and get different results, depending on your judgment. And you get to choose what to assume: You may assume that what happens in California in 2019 definitely won't happen in the rest of the US in the coming years, or that it will. Et cetera.
    - max_wen 8y ago
      thanks it translated pretty well. So I think this story sounds incomplete. I do not think it is mutually exclusive to say that the Bosch burner factory is shutting down and that 95% of all new cars sold worldwide are combustion engine powered. German labor is extremely expensive and German taxes are incredibly high. Welcome to the global economy. I find it much more likely that much like everything else, the Chinese car market wants cars manufactured in China and that those China factories source from Chinese vendors. It's no different than the electronics industry.
      - Arnt 8y ago
        If you follow the links, you see that the reduced demand forcecasts are worldwide and most of the layoffs involved are in low-cost countries. Most the companies mentioned are global leaders in their small field (like one of the companies mentioned, which produces not cars, not engines, not cylinders, but parts for cylinders, and 80% of its workforce are in low-wage countries, and its customers are all over the world). A region in Germany is likely to be badly affected and that gets most of the wording. Don't let that fool you. When the investor guidance says "challenging outlook", it doesn't mean "we'll lay off a few people at HQ but the factories will be fine".
        max_wen 8y ago
        i agree. the German factories will not be fine.
AnthonyMouse 8y ago
> based on what? Rising popularity of electric cars, increasing vehicle efficiency in general, potential legislation targeting climate change, etc.
- max_wen 8y ago
  - Electric cars are still less than 5% of new car market. Hardly impactful - The increase in efficiency is more than offset by the growth in overall car market - Potential legislation in China? India? Emerging markets? Sorry but nothing suggests that is happening
  - Arnt 8y ago
    Bosch and about six other manufacturers of car parts disagree with you and expect sharply reduced demand for ICE-specific car parts.
    - max_wen 8y ago
      I agree that at least 6 manufacturers of ICE-car parts in the EU and USA will be seeing reduced demand in the future
      - Arnt 8y ago
        Maybe I should have put that differently. Maybe I should have added "AFAIK zero ICE parts manufacturers have issued forecasts of increased demand".
  - AnthonyMouse 8y ago
    > Electric cars are still less than 5% of new car market. Hardly impactful That is up from <1% five years ago, in a market where demand spurs demand by increasing availability of charging points etc. Meanwhile the EV market is currently production capacity constrained and multiple companies are expanding production capacity. I doubt we're going to be at 100% electric cars in ten years but I would not be surprised if it was somewhere in the mid double digits by then. And by that point it becomes a lot easier to target ICE cars with legislation because there is a proven viable alternative. > The increase in efficiency is more than offset by the growth in overall car market Any given factor is more than offset by the growth in the overall car market. But you add them all together. > Potential legislation in China? India? Emerging markets? Sorry but nothing suggests that is happening China has a slate of domestic electric car companies and it's exactly their style to pass legislation that favors domestic companies over foreign competitors. Climate change provides them a really good justification to do that here. And carbon taxes generate revenue, which makes it easy to make them revenue neutral. Use the money to lower other taxes or fund a UBI. This knocks out the "harms the poor/developing countries" argument because the cost becomes only the cost difference between fossil fuels and alternatives, which is rapidly approaching zero. Moreover, most of the current oil demand comes from the US and Europe. If either of them, much less both, passed relevant legislation then not only would their own demand fall off, the increased economies of scale and network effects that would spur in alternatives would also make them more cost effective in countries without any such legislation.
max_wen 8y ago
20+% increase by 2015-2030 https://www.statista.com/statistics/547100/projected-base-oil-demand-globally/ https://www.statista.com/statistics/547100/projected-base-oi... A more realistic assessment from Shell Oil is that oil demand continues to grow over the next 20 years, a view shared by rival BP and energy consultants like Wood Mackenzie. https://www.forbes.com/sites/daneberhart/2018/09/18/forecasts-of-peak-oil-demand-overstated/#e8b15c59b653 https://www.forbes.com/sites/daneberhart/2018/09/18/forecast... Long-term oil demand is expected to increase by 15.8 mb/d, rising from 95.4 mb/d in 2016 to 111.1 mb/d in 2040 https://www.opec.org/opec_web/flipbook/WOO2017/WOO2017/assets/common/downloads/WOO%202017.pdf https://www.opec.org/opec_web/flipbook/WOO2017/WOO2017/asset... (page 101)
- deleted 8y ago
  [deleted]
- yread 8y ago
  That's depressing
- adrianN 8y ago
  It wouldn't be good for Shell's or BP's stock value if they predicted falling demand for their product...

adventured 8y ago

It's a big problem for them. In the case of Saudi Arabia, it's the combination of oil production ceiling vs population, that is almost guaranteed to be the Kingdom's undoing. Their population growth is slowly unsettling their stability by debasing the per capita well-being. This has resulted recently in record unemployment and a struggling economy.[1] The record youth unemployment in particular is very concerning in a region where that can lead to severe destabilization and the formation of revolutionary groups (desperate youth seeking change). Their oil reserves in 1990 were similar to today, except now they have twice as many people and oil's outlook is getting more dim by the year. In 1990 they had a mere 16m people, in ~2035 they'll have 48m people dividing even fewer oil resources than in 1990. Unlike, say, Russia, which has a fixed population (net unchanged in 30 years), Saudi Arabia has rapid population growth and is almost entirely dependent economically on subdividing those oil resources per capita (in one form or another). Their efforts to diversify the economy have failed repeatedly and wealthy developed nations are less interested in doing business with them than at any other time in decades. They've lost 1.5 million expat jobs in just a few years, and haven't been able to replace them with new domestic jobs.[2] Saudi has to figure out how to produce eight million (or more) jobs in just roughly 15 years, when so far they've demonstrated they can hardly produce any net new jobs at all (for Saudis). And these can't be just any jobs, they need to match the present relatively high expectations for a standard of living that Saudis have. If they fail at that vast job creation requirement, the Kingdom is going to fall into violent revolution in some manner. [1] https://www.reuters.com/article/saudi-unemployment/saudi-unemployment-stays-at-record-high-as-companies-struggle-idUSL8N1WY6OK https://www.reuters.com/article/saudi-unemployment/saudi-une... [2] https://www.bloomberg.com/news/articles/2019-04-03/as-expats-leave-saudi-arabia-no-one-is-replacing-them-chart https://www.bloomberg.com/news/articles/2019-04-03/as-expats...

mikekchar 8y ago
I think the point is that they will likely destabilise long before they run out of oil. The price/demand/Saudi's share of OPEC's allowance will mean that the dire economic situation that you describe will play out no matter how much oil they have left. Whether that's true or not, I don't know, but that's what I understood from the OP's post.
8y ago

chrischen 8y ago

52 years is a blip in human civilization. I'd be curious to see how in the grand scheme the depletion of oil looks. Will our tech/development boom grind to a halt all of a sudden? Do we switch to nuclear?

cjslep 8y ago
Good luck making plastic.
- cfontes 8y ago
  There is already bio-plastic, it's just expensive because oil is super cheap.
  - deleted 8y ago
    [deleted]
Iv 8y ago
What I am the most worried about the depletion of oil is that most people assume it will be a bell curve, like US' (conventional) oil production was. Thing is, it was a bell as people switched to other more profitable sources of oil as US' oil was becoming more expensive. I fear the depletion of world's reserve could look a lot more like a cliff. The absence of alternatives changes a lot the fundamentals of the problem.
- anonymou2 8y ago
  the seneca cliff: https://thesenecatrap.blogspot.com/ https://thesenecatrap.blogspot.com/
vichu 8y ago
I wouldn't be too concerned as renewables and nuclear technology should be at the point where it would be able to pick up the slack - we know the end is coming and we can prepare for it. An interesting thought experiment is whether or not humans (or some future species) would be able to reproduce the technological advancements that oil enabled given some sort of apocalypse scenario that resets us to year zero.

perfunctory 8y ago

> but given a 1-2mm per day average Where did you get this number from? They are not pumping at their maximum capacity but I understand it's pretty close on average "Saudi Arabia briefly pumped a record of more than 11 million barrels a day in late 2018."

simonh 8y ago

This is the cheapest oil to pump in the world, therefore it is likely to be the last to ramp down production. All the others will become uneconomical before this one does and therefore, unless they tap out while prices are still high, will stay in the ground longer.