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"what will likely become a declining demand for oil over next 20-30 years" based on what?
by max_wen 8y ago
"what will likely become a declining demand for oil over next 20-30 years"
based on what?
- hanniabu 8y agoJust 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 agoPlateaued where? In California and Europe maybe but not in the rest of the world.
- Arnt 8y agoIt'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 agothanks 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 agoIf 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 agoi 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 agoBosch and about six other manufacturers of car parts disagree with you and expect sharply reduced demand for ICE-specific car parts.
- 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 ago20+% 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)