Analysts See Oil Demand Peaking by 2030 as Electric Vehicles Boom

https://www.bloomberg.com/news/articles/2018-01-22/bofa-sees-oil-demand-peaking-by-2030-as-electric-vehicles-boom

by uptown • 9 years ago

38 86 9 years ago

bcaulfield• 9 years ago

When will it make sense for a practical, skinflint commuter to make the switch?

Is your commute under 40 miles round trip? You can get a Nissan Leaf today for ~$10k used, or $20k-30k new. Or a Chevy Volt, Chevy Bolt, or a reservation for a Tesla Model 3.

Makes great financial sense, as it's half the cost per mile to drive an EV vs an internal combustion vehicle [1].

EDIT: I own a Nissan Leaf I paid $10k for. I charge at home (6 cents/kwh, $3 for a full charge), and my employer offers free charging at my parking garage (which I use whenever I'm not working from home).

[1] http://www.umich.edu/~umtriswt/PDF/SWT-2018-1_Abstract_Engli... WARNING: PDF

ghostbrainalpha2• 9 years ago

With the Tax incentive in California, a used Nissan Leaf could effectively cost $6K used now.

And then if your work or city offers subsidized electric charging stations... it would definitely be worth switching now.

However I think there is a real chance that a fleet of automatic driving Ubers may make ride sharing cheaper than buying an electric car for most people.

CapitalistCartr2• 9 years ago

I can get a 2014 Nissan Versa in good shape with 60,000 miles for ~$7,000 here, so the maintenance and fuel savings would have to be more than $3,000.

alkonaut• 9 years ago

I pay around $1/mile to drive my (rather new) ICE car. Of that, less than a quarter is fuel. The majority is value depreciation. I haven’t seen any detailed calculations of EV ownership costs but I think it looks optimistic to hope for half the cost.

Or was the “half” just the marginal cost of the last mile driven and not the TCO per year divided my miles driven?

sokoloff• 9 years ago

If you're going to buy a car anyway, it might already be today.

If you're deciding between a used Nissan LEAF and a ~2005 Honda Civic, the Honda is still going to be cheaper all-in. By a lot.

I daily drive a LEAF and like it a lot. It's still cost us a LOT more than my wife's 2005 CR-V over the last 3 years, because of depreciation and carrying collision insurance (due to financing the car at a 0% interest rate, but I still need to carry insurance, so the collision insurance is effectively the finance charge for me).

Per mile, I pay about 0.25 kWh, which at MA electric rates comes to ~$0.05/mile for power. That would equate to a 35 mpg car buying gas at $1.75/gallon. Plus, the car needs no oil changes and is very easy on brake pads. But a 12 year old Honda (or Toyota) will be tough to beat with an electric on an all-in basis.

EngineerBetter2• 9 years ago

Used Renault Zoes are exceptionally cheap in the UK. £69/month battery lease, and then about £2k for the car.

maxsilver2• 9 years ago

Yesterday?

If you only need typical commuter distances (less than 50 miles per day), then it's already practical to switch today. Go buy a Bolt / Volt / i3 / Leaf / Zoe / whatever. Used ones are already around, and reasonably cheap.

It's only really the edge cases that aren't super practical right now. (i.e., 'what about roadtrips?', or 'what about rural lifestyles', or 'what about cross-country trips', 'what about hauling a lot of freight', etc).

unethical_ban• 9 years ago

Urban = Core

Suburban, inter-city = Fringe

Your point stands, but your assumptions are a bit off.

niftich• 9 years ago

Range anxiety is real, and you're underestimating its magnitude. Today, gas stations are practically ubiquitous along major population and travel corridors, so there's a huge install base of infrastructure when you're stuck in unfortunate or unusual circumstances and you need to acquire more fuel.

EV-related infrastructure has a lot of catching up to do, when your EV is one traffic detour away from being inoperable, because only dozens of charging stations exist in your area.

derekp7• 9 years ago

To add to the edge case -- my normal commute is 50 miles a day. But on closing day of the sale of my old house, and purchase of the new one, I had two closings to attend to, in different locations. Had to drive from my old house to the one closing (about 30 miles in one direction), then to the closing on the new house (30 miles back, plus another 20 miles to get to that closing's location). Then had to drive to the storage unit to get a few things I needed for that night at the new house (bedding, some furniture items). An electric car with a 200 mile range would have had me extremely anxious. Oh, and when it was all over, still had to drive into the office for an hour for a meeting.

adrianN• 9 years ago

As soon as you have somewhere to charge your car? Driving electrics is already cheaper today than driving a newish ICE car.

Anon84• 9 years ago

Oil demand has been "peaking" since the 90s...

learc83• 9 years ago

I've never heard people saying that. There have been plenty of "peak oil" predictions, but that refers to supply not demand.

Maybe I missed something?

stouset• 9 years ago

Another commenter replied to your misunderstanding between peak supply and peak demand, but I’ll address the issue you actually mentioned too.

Since 1980, we have never had a year where we found more untapped oil reserves than were consumed[1]. Can you explain to me how oil production can continue keep up with demand when demand outstrips new discoveries — and has, for nearly forty years?

[1] https://dothemath.ucsd.edu/2011/11/peak-oil-perspective/

bryanlarsen• 9 years ago

That's actually a pretty good link. It's pretty easy to read that document and come to the complete opposite conclusion. All it takes is a little more confidence that we could weather a spike in oil prices while tar sands production ramps up to meet demand.

Theodores• 9 years ago

Control of oil is about who extracts it and what currency they sell it in. There is plenty of oil but we are always told that it is scarce. All of this was established in the Standard Oil days when there was a glut of oil meaning that nobody could make money at it. The trick was to manage the supply so the price was high.

This is not to deny that we are burning the oil at a silly rate to therefore run out. However, the story of scarcity told along the way is not quite what the peak oil believers would have you believe.

adventured• 9 years ago

At the same time the Permian has been found to contain tens of billions of barrels of oil beyond what was anticipated could be extracted just ten years ago. Undercounting is almost universal throughout oil's industrial history, and tilts toward there being a lot more.

Pioneer pegs Spraberry/Wolfcamp at 50 billion barrels (and Eagle Ford at 25 billion). The Permian will end up being comparable in size only to Ghawar, with ~100 billion barrels or more (Pioneer says 150+ billion, other studies say 70-80 billion, and so on). That's based on today's technology, tomorrow we'll be able to extract more.

Cross the border into Mexico, you're going to find more massive shale deposits that we haven't even looked at yet (it doesn't just magically stop at the Texas border very obviously). That'll happen in the next ten years.

There's $6 or $7 trillion worth of oil in Texas that was almost entirely off the table as a resource as recently as 2007.

kbutler• 9 years ago

Given that demand growth has outstripped discoveries, how is it that we've continued to grow production for these last 40 years?

The answer lies in the metric "proven reserves" - oil that we have the technology to recover today - which has outpaced production increases over the last 40 years (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3866387/figure/...), leaving us with 50 years of production at today's rates, up from 30 years in 1980. Figure from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3866387/

The weakness of most peak oil supply discussions, including that "peak-oil-perspective" link, is that they only count "Conventional" oil. Ignoring "Unconventional oil" https://en.wikipedia.org/wiki/Unconventional_oil has caused these predictions to be invalidated every time. Hubbert's original "peak oil" prediction did not consider "unconventional" oil, because there was no "unconventional" oil production at that time (and the term still remains loosely defined - basically oil that costs more than other oil to produce).

Increased prices provide incentives to create technologies to recover previously unusable sources and to bring previously uneconomic sources into production. Today's "unconventional" oil includes sources that most people just expect to be counted as part of the oil supply, like fracking and offshore drilling. Increased prices also motivate developing and shifting to other energy sources which were previously not economically viable, like wind and solar.

This article http://www.artberman.com/the-crude-oil-export-ban-what-me-wo... does better, but in his eagerness to declare peak oil supply, he ignores economics and his peak oil supply declaration failed immediately as world oil supply continued to grow: https://www.eia.gov/outlooks/steo/report/global_oil.php

Turning your question around, "Can you explain to me how we can hit peak oil production, when growth in proven reserves outstrips production growth — and has, for nearly forty years?" (It's possible, but it seems likely we will hit peak demand and reduce oil demand well before we hit peak supply).

asdasdas342• 9 years ago

The article is saying that it will peak in 2030, as in after that it will decrease.

JohnStudio2• 9 years ago

My question is the demand collapse, and transition to a demand spike. The current models of increased load, like demand reduction and management companies that do nothing more than broker kW for incentives for shut-down during high peak times - et al. https://energy.gov/eere/wipo/demand-reduction-0 // --> so, as we shift away from fossil fuels/oil .. who are the great tycoons of electrical grid creeping?

nordsieck• 9 years ago

Very little oil is used to power the grid. It's almost all used in transportation.

rgbrenner4• 9 years ago

but the grid does use natural gas for peaker plants to respond to demand changes.

Natural gas comes from oil wells. If demand for oil reduces, and wells close, natural gas production will decline too.

switchbak• 9 years ago

According to the U.S. Energy Information Administration, you are correct in that very little fossil fuel is used in electrical energy production [1]. However, quite a lot of natural gas is used, which is what the GP was describing, so I think his question is still quite relevant.

[1] https://www.eia.gov/energyexplained/images/charts/consumptio...

toomuchtodo5• 9 years ago

You're already seeing utility scale battery storage displace the most expensive oil and natural gas peakers who operate less than hundreds of hours per year (Tesla has an additional order in Australia, and a new order in New Zealand after the press from the Hornsdale Power Reserve [1]).

The winners will be renewables, battery storage owners who can arbitrage, and technology companies who can arbitrage using distributed resources in partnership with owners of those resources (ie Tesla and company).

[1] https://en.wikipedia.org/wiki/Hornsdale_Wind_Farm#Hornsdale_...

JohnStudio2• 9 years ago

Minus Elon Musk ... like who are the big players though?

pm907• 9 years ago

Its a good question. I think Tesla is on to something with home Solar re chargers though. If we transition to a model where every (or sufficiently many) homes rely on solar power to generate electricity, the increase in EV's wouldn't much change the demand of electricity from the grid. That seems like a great solution to prevent the grid from being the bottleneck for the growth of EV.

(With self-driving cars I see an even better future: drive your car to the office, then indicate its not required for the next 8 hours. It searches for a nearby solar recharge station and drives itself, charges itself and returns by the time you need to leave. Seems like Sci-Fi right now but oh well... I can still dream )

zhjansbnas5• 9 years ago

Using electric car batteries to smooth out load on the grid is a good idea, but there’s no need for the car to be physically proximate to electricity sources. We already have a much more efficient way of transporting power through space - the grid.

rohit2412• 9 years ago

While home solar is great, it is nowhere as reliable as the grid. You can have days when the sun doesn't shine. You expect the grid to bear your super heavy load (once every home goes ev and solar) on cloudy days and don't use it any other day. The grid is going to get much more costlier than you know, or there will be a hefty grid connection fee

olfactory3• 9 years ago

Shouldn’t this change US Mideast policy immediately? My guess is that planners don’t believe this to be true.

splouk• 9 years ago

Why would it?

olfactory3• 9 years ago

Most of the “investments” in “stability” of the region have payoffs in the many decades.

CapitalistCartr2• 9 years ago

The year petroleum usage peaks is unknowable at present, but it obvious its coming. But the year will only be significant in hindsight. There have been many plateau years before. In 2007 Worldwide usage was 86.3 MBPD, in '08 it was 85.8, in '09 it was 84.3, then in 2010 it was back up to 86.4. All due to the economic slump, of course, but now every pundit will saying with every tiny slowdown "the end is nigh".

pwaai9• 9 years ago

I'm not really convinced we will see oil go away. We've been saying peak oil since the 70s. The US military as a whole still relies heavily on oil. Burning oil is still the only reliable propulsion for space programs.

But more importantly the whole global warming, anti-oil movement has been to minimize the impact of OPEC on US, and put pressure on oil producing nations, largely Russia.

OPEC remains the only organization to outwit the US by exploiting their reliance on it. Take a look at the oil shock during Carter's administration.

With fracking the US does not need OPEC/Saudi as they used to and they are freaking out. The main countries whose economy largely depends on oil have already suffered the economic consequences: Venezuela, Russia, etc. They also happen to have earned the ire of US by not submitting to their rule.

Electric cars will still be well out of reach from the rest of the population (Tesla shareholders/shills will say not for long) and combustion engine will still be in demand.

It was one thing to confront the US as USSR or when US oil production was low, it's a whole new ball game now.

It's no coincidence with fracking on US soil, we started to see a decline in crude oil prices, and oil producing countries panicking.

tonyedgecombe• 9 years ago

But more importantly the whole global warming, anti-oil movement has been to minimize the impact of OPEC on US, and put pressure on oil producing nations, largely Russia

I don't think so.

pwaai9• 9 years ago

I don't think so.

care to explain? is it coincidence the global warming narrative began suddenly picking up momentum post-Crimea?

hollerith• 9 years ago

Burning oil is still the only reliable propulsion for space programs.

Not true. The space shuttle for example burned a solid fuel (namely, ammonium perchlorate composite propellant) and liquid hydrogen.

pwaai9• 9 years ago

solid fuel

...and where does that come from?

rgbrenner4• 9 years ago

Oil isn't going to disappear because of oil. Oil disappears because of batteries and the improvements that have been made over decades.

To say oil will win over batteries (where applicable) is to say that either 1) battery improvements will not continue; or 2) that oil is somehow immune to economics.

Any discussion of the end of oil without mentioning batteries is incomplete. They are the driver of the change.

pwaai9• 9 years ago

so who is going to replace all the oil that is being used in jets, diesel trucks in third world countries, tanks, humvees, non-nuclear powered naval ships?

Tesla built the largest battery producing plant and they are going to meet the demand? They can't even meet their own supply targets for their cars! Are they going to retrofit F-22s with batteries? How about a farmer in India, is he going to be able to afford a Tesla Tractor vs the one he was using since he's grandfather?

You seem to be absolutely sure that the oil will be replaced by batteries without taking into a lot of uncertainties around it.

blibble• 9 years ago

We've been saying peak oil since the 70s.

peak oil supply yes, but this is peak oil demand, which is new

pwaai9• 9 years ago

I used peak oil because I knew somebody would trip up on the wording. Peak oil describes both sides, either we run out (we aren't) or we just wake up and stop using it altogether (batteries are expensive, doesn't have economies of scale, and pricing is kicked down to the consumer).

It's easy to say battery is going to replace oil in a country where you don't see poverty or people don't live on a $1 a day. Oil demand will increase in majority of the world where people are still poor.

freehunter• 9 years ago

You had me until you said climate change is a government conspiracy to hurt Russia.

pwaai9• 9 years ago

Is it a conspiracy that the US controls the global media and people just buy up whatever they read? After all, Russia was able to exploit this very fact into their favor.

Is it a conspiracy that the World Bank and US backed institution shackle poor countries with debt by corrupting their leaders to do their bidding? Talk to people from South America, they will have a very different opinion of US: See Panama, Colombia, Ecuador, Honduras. Talk to Iran and Afghanis. Talk to people on the receiving end of US "freedom". I mean a fucking institution that was supposed to document Amazonian language ended up displacing entire communities so US companies could dig oil out of it. But whose narrative did you buy? The only one they show to American citizens. How about United Fruits? How about the Shah of Iran who conspired with Roosevelt's grandson to kick out his own father to sell off the countries oil only to have the wrath come back in a non-secular fashion? How many 'dictators' who fought against American corporatocracy are alive?

All I'm saying is just to be conscious and careful when buying into such narrative from a party with a long history of manipulation. Have you gone out and done your own studies whether to check their narrative is true? Does the average HN user have the resources and technological powers to verify the results for themselves?

Or are you one of those people who think the US goes around all over the world spreading 'freedom' for the sake of the good of those people?

njarboe3• 9 years ago

I always find it strange that people in the oil business talk about the "oil demand" without respect to price. Maybe this idea comes from when the West was pumping oil at maximum rates, fracking did not exist, and the OPEC cartel could control the price by fiat (and before OPEC I have heard the oil price was controlled by the output in Texas). At that time there was a price set by OPEC and they pumped to meet demand at that price. In that environment the using the phrase "oil demand" for "oil usage" made sense. But in today's world OPEC does not seem to be able to set the price very well. Peak "oil demand", where demand is determined by the peak amount of oil consumed, will depend on the price and uses of oil in the future.

Some crazy future tech in 2045 which makes heavy oil and tar sands profitable to extract and turn into carbon fiber at $100 a ton might replace structural steel. This could push oil usage up to a new peak, even if a previous "oil demand" peak happened in 2030, when we decided it was really stupid to burn this great chemical stock for raw energy.

pm907• 9 years ago

When I studied organic chemistry in high school, I vividly recall one of the authors of the chemistry textbook saying something to the tune of: its unbelievable how much stuff you can make with petroleum but our civilization has decided the best use is to burn it.

If the world's population continues to grow at its current pace, and more people are lifted out of poverty, the demand for petrochemicals and petroleum derived products will only keep increasing. And in the further future when humans colonize other planets, petroleum will be a uniquely Earth-based resource making it even more valuable.

philipkglass3• 9 years ago

And in the further future when humans colonize other planets, petroleum will be a uniquely Earth-based resource making it even more valuable.

If you have electricity, water, and a carbon source, you can manufacture the hydrocarbons currently sourced from petroleum. Small scientific colonies would import terrestrial hydrocarbons just like they would import terrestrial aluminum and glass, of course, but if you're picturing self-sustaining space industrialization and colonization, it won't be worth sending hydrocarbons from Earth to Mars.

Hydrocarbon synthesis also puts an (admittedly high) upper limit on the cost of making organic chemicals on Earth. Some Peak Oilers were confused about this, imagining fossil resources as irreplaceable magic. "It's not just fuel -- pesticides, pharmaceuticals, and dyes are made from oil too!" they'd say, implying that you can't have modern pharmaceuticals without oil. But that's like saying that you can't make paper without trees. The reason that paper is overwhelmingly made from trees is because that's currently the cheapest way, not because other ways are unknown. If the abundance/cheapness of feedstocks changes, so will their share of the market. (And costs will go up too, of course. The cost of refined liquid fuels goes up nearly linearly with the cost of crude oil. The cost of drugs/dyes/pesticides rises much less, because only a small share of their total cost of production came from simple hydrocarbon feedstocks in the first place.)

With the exception of nuclear fuels, which are truly "used up" during fission or fusion, all atoms are recyclable.

rhino369• 9 years ago

Partially its because demand is fairly inelastic at historical price levels. As electric cars begin competing with ICE cars that won't be the case any longer.

tristanj• 9 years ago

Another reading of this report:

Oil consumption will remain at today's level or higher through 2040. Present oil consumption is 99 Mb/d, will peak at 106 Mb/d in 2030, then decrease to ~97 Mb/d by 2045.

Honestly it's a lot less rosy than the title suggests.

Analysts See Oil Demand Peaking by 2030 as Electric Vehicles Boom

Related Stories