Long term OIL

[bryant.coleman]

I agree that for transportation, there is a long way to go before fossil fuels are displaced as the dominant source of energy. But the cars are already affordable, it's just production scale that's lacking. The Tesla Model 3 is beginning production (this week I believe), and Chevy has the Bolt, which is similarly priced in the $35,000 range and has a slightly better range. As for batteries, Tesla has the Giga Factory which is currently only operating at a fraction of capacity. When it is at 100% capacity, that single factory will be producing more lithium ion batteries than the rest of the world combined. They built that factory because they forecast that demand. The question is how quickly the demand will materialize.

$35,000 for the Model 3 is still a bit high for me. But I have heard that there are additional expenses as well. For the Model S, the battery needs to be replaced every seven or eight years, and this is going to cost you a fortune. Eight years is not a very short duration. But when your Tesla Model S 70 costs around $80,000, you may be expecting it to last at least ten years.

[jaysabi]

I agree that for transportation, there is a long way to go before fossil fuels are displaced as the dominant source of energy. But the cars are already affordable, it's just production scale that's lacking. The Tesla Model 3 is beginning production (this week I believe), and Chevy has the Bolt, which is similarly priced in the $35,000 range and has a slightly better range. As for batteries, Tesla has the Giga Factory which is currently only operating at a fraction of capacity. When it is at 100% capacity, that single factory will be producing more lithium ion batteries than the rest of the world combined. They built that factory because they forecast that demand. The question is how quickly the demand will materialize.

$35,000 for the Model 3 is still a bit high for me. But I have heard that there are additional expenses as well. For the Model S, the battery needs to be replaced every seven or eight years, and this is going to cost you a fortune. Eight years is not a very short duration. But when your Tesla Model S 70 costs around $80,000, you may be expecting it to last at least ten years.

I've had a hybrid car since 2006. The battery system is indeed expensive to replace. Eight years was about how long my car went before the battery system (it is comprised of 100 lithium ion battery cells) was no longer holding a charge for very long and was relying almost solely on the gasoline engine for acceleration. The manufacturer (Honda) replaced the battery cells without charge though since they had determined that the software that controlled the battery system was not configured properly and caused the batteries to be maintained in a sub-optimal way, which cut the battery life short. Because the batteries were under recall due to this, they replaced them all at no charge. So while I got lucky there, it does also suggest that the batteries (in this hybrid at least) are intended to last longer than 8 years. Perhaps with a pure electric cars, they are not projected to last as long because there is so much more charging and discharging of the battery.

[d5000]

Apart from that, I still don't think that distinguishing between "conventional" and "unconventional" oil makes any sense in respect to their prices. In other words, it is total volume of oil production that affects prices, i.e. you can't say that the price of conventional oil goes up while unconventional oil goes down. Indeed, oil comes in a wide variety of sorts and sizes (so to speak), but as I see it, if we exclude distance and transportation factors, these types of oil can be easily substituted with each other

We could also replace "conventional oil" with "oil sorts that can be profitably extracted for prices under 50$" - technology wouldn't matter. That would be the point - if this kind of "cheap oil" is sold out (or becomes more scarce) then extractors/sellers can dictate a price increase.

There would be only two cases I see with downtrending or stagnating prices:

1)  if the State (e.g. the US or China) invests heavily in non-conventional (="expensive to extract") oil exploration/extraction and not the extraction companies, but the tax payers must pay for it. That scheme could run for some years but in my opinion not infinitely as it would put this country in a competitive disadvantage, so eventually the prices would rise again.

2)  if technological progress is so fast that the otherwise expensive oil can be extracted in a much cheaper way. That's certainly possible, but I consider it unlikely as unconventional extraction techniques need lots of real resources (power, water etc.).

If oil prices were really set to grow, then they would most certainly expand production, not limit it.

PS: I consider the phrase I highlighted a conceptual error, as recent oil production levels are based on recent prices and not future price estimations. Why should I sell my oil cheap now if I can sell it more expensively in the future?

Maybe, because you need money now, not in the future?

Yes but that wouldn't apply to the case you describe in the first sentence. If an oil-extracting country/business faces a probable bull market, it makes no sense for them to expand production (and above all, selling) only because of the bullish prediction. An expansion of production can be decided because of necessity, but the reason for the expansion we saw some years ago most probably was with the intention to drive the "unconventional" sources out of the market - with limited success, as I think I already wrote.

[Sithara007]

I've had a hybrid car since 2006. The battery system is indeed expensive to replace. Eight years was about how long my car went before the battery system (it is comprised of 100 lithium ion battery cells) was no longer holding a charge for very long and was relying almost solely on the gasoline engine for acceleration. The manufacturer (Honda) replaced the battery cells without charge though since they had determined that the software that controlled the battery system was not configured properly and caused the batteries to be maintained in a sub-optimal way, which cut the battery life short. Because the batteries were under recall due to this, they replaced them all at no charge. So while I got lucky there, it does also suggest that the batteries (in this hybrid at least) are intended to last longer than 8 years. Perhaps with a pure electric cars, they are not projected to last as long because there is so much more charging and discharging of the battery.

I am not sure about this, but I have heard that Tesla is recommending replacement of the battery for Model S, every eight years. But then, Tesla is also subsidizing the replacement.

[MeizuNN22]

I've had a hybrid car since 2006. The battery system is indeed expensive to replace. Eight years was about how long my car went before the battery system (it is comprised of 100 lithium ion battery cells) was no longer holding a charge for very long and was relying almost solely on the gasoline engine for acceleration. The manufacturer (Honda) replaced the battery cells without charge though since they had determined that the software that controlled the battery system was not configured properly and caused the batteries to be maintained in a sub-optimal way, which cut the battery life short. Because the batteries were under recall due to this, they replaced them all at no charge. So while I got lucky there, it does also suggest that the batteries (in this hybrid at least) are intended to last longer than 8 years. Perhaps with a pure electric cars, they are not projected to last as long because there is so much more charging and discharging of the battery.

I am not sure about this, but I have heard that Tesla is recommending replacement of the battery for Model S, every eight years. But then, Tesla is also subsidizing the replacement.

It seems to me that hybrid cars is a dead end. With the price of batteries even for use in the city, these cars will be too expensive. I think that the situation will not change until not come up with a new type of engine which will be cheap to produce electricity.

[deisik]

I've had a hybrid car since 2006. The battery system is indeed expensive to replace. Eight years was about how long my car went before the battery system (it is comprised of 100 lithium ion battery cells) was no longer holding a charge for very long and was relying almost solely on the gasoline engine for acceleration. The manufacturer (Honda) replaced the battery cells without charge though since they had determined that the software that controlled the battery system was not configured properly and caused the batteries to be maintained in a sub-optimal way, which cut the battery life short. Because the batteries were under recall due to this, they replaced them all at no charge. So while I got lucky there, it does also suggest that the batteries (in this hybrid at least) are intended to last longer than 8 years. Perhaps with a pure electric cars, they are not projected to last as long because there is so much more charging and discharging of the battery.

I am not sure about this, but I have heard that Tesla is recommending replacement of the battery for Model S, every eight years. But then, Tesla is also subsidizing the replacement.

It seems to me that hybrid cars is a dead end. With the price of batteries even for use in the city, these cars will be too expensive. I think that the situation will not change until not come up with a new type of engine which will be cheap to produce electricity

I suspect we may have to wait too long

If we exclude some marginal ideas like cold fusion of Andrea Rossi's fame and similar things, there is nothing new which can be invented in the foreseeable future. Basically, we already hit the wall from the engineer's perspective (a few more %% of efficiency won't change anything). This doesn't in the least mean that it is impossible per se (since it is our knowledge that is the only real limit), but when it becomes possible and we finally get there, we may not need any cars any more

[bryant.coleman]

It seems to me that hybrid cars is a dead end. With the price of batteries even for use in the city, these cars will be too expensive. I think that the situation will not change until not come up with a new type of engine which will be cheap to produce electricity

I suspect we may have to wait too long

If we exclude some marginal ideas like cold fusion of Andrea Rossi's fame and similar things, there is nothing new which can be invented in the foreseeable future. Basically, we already hit the wall from the engineer's perspective (a few more %% of efficiency won't change anything). This doesn't in the least mean that it is impossible per se (since it is our knowledge that is the only real limit), but when it becomes possible and we finally get there, we may not need any cars any more

We may need to wait for some time. But I am sure that someone will invent a portable source of electricity, just like MeizuNN22 posted. But still, I am not sure whether it is going to be nuclear or non-nuclear. If it is non-nuclear, then it will be much safer and convenient. Even if it is a nuclear device, it will be capable of replacing the gasoline-run cars.

[STT]

Conventional oil is well below $50 production cost.  Saudi arabia can get oil for $10 maybe, its literally gushing out of the ground.  The problem they have is a fiscal deficit that occurs if oil is not at a certain price, the production alone is not at fault more their wider economy.

Fracking is something else, its clever technology and higher natural cost.  They did bring it down some and so on.  Some places the oil costs over 100 to extract, thats all the abnormal resources.  Oil will never run out just like coal never did and was said to many times be near to an end.

It is inevitable to pay 180$ a barrel

Absolutely correct without doubt because dollars will depreciate, its certain oil price will rise.  However this doesnt help margins as costs then also rise and the tax on oil revenue also rises.   Look at oil to gold ratio for a better gauge, alot of oil is used in mining extraction as its naturally located in remote locations most suited to oil use.   Oil is still the most efficient energy by weight I think, its dynamics like that matter really not our own perceptions of price which is secondary.  Electric cars are still not efficient enough but make sense in cities I think

[bryant.coleman]

Conventional oil is well below $50 production cost.  Saudi arabia can get oil for $10 maybe, its literally gushing out of the ground.  The problem they have is a fiscal deficit that occurs if oil is not at a certain price, the production alone is not at fault more their wider economy.

The crude oil average lifting costs for Rosneft (Russian petroleum) is around $2.1 per barrel. Taking into account the other expenses such as capex and transport, the total expenses will come to somewhere around $5 to $10 per barrel. And I am sure that the production costs for Aramco is much lower than that of Rosneft. They may be producing oil at $2 per barrel.

[DocGTR]

It seems to me that hybrid cars is a dead end. With the price of batteries even for use in the city, these cars will be too expensive. I think that the situation will not change until not come up with a new type of engine which will be cheap to produce electricity

I suspect we may have to wait too long

If we exclude some marginal ideas like cold fusion of Andrea Rossi's fame and similar things, there is nothing new which can be invented in the foreseeable future. Basically, we already hit the wall from the engineer's perspective (a few more %% of efficiency won't change anything). This doesn't in the least mean that it is impossible per se (since it is our knowledge that is the only real limit), but when it becomes possible and we finally get there, we may not need any cars any more

We may need to wait for some time. But I am sure that someone will invent a portable source of electricity, just like MeizuNN22 posted. But still, I am not sure whether it is going to be nuclear or non-nuclear. If it is non-nuclear, then it will be much safer and convenient. Even if it is a nuclear device, it will be capable of replacing the gasoline-run cars.

The main thing that this source of energy was safe. I also believe that the oil industry is in decline across the 20-50 years

[jaysabi]

I've had a hybrid car since 2006. The battery system is indeed expensive to replace. Eight years was about how long my car went before the battery system (it is comprised of 100 lithium ion battery cells) was no longer holding a charge for very long and was relying almost solely on the gasoline engine for acceleration. The manufacturer (Honda) replaced the battery cells without charge though since they had determined that the software that controlled the battery system was not configured properly and caused the batteries to be maintained in a sub-optimal way, which cut the battery life short. Because the batteries were under recall due to this, they replaced them all at no charge. So while I got lucky there, it does also suggest that the batteries (in this hybrid at least) are intended to last longer than 8 years. Perhaps with a pure electric cars, they are not projected to last as long because there is so much more charging and discharging of the battery.

I am not sure about this, but I have heard that Tesla is recommending replacement of the battery for Model S, every eight years. But then, Tesla is also subsidizing the replacement.

It seems to me that hybrid cars is a dead end. With the price of batteries even for use in the city, these cars will be too expensive. I think that the situation will not change until not come up with a new type of engine which will be cheap to produce electricity.

Hybrid cars are the most easily and readily available way to reduce oil consumption related to transportation. Unlike pure electric cars, hybrid cars are not significantly more expensive (e.g. Honda's hybrid models are a couple thousand dollars more than the same model that is not hybrid), and the added cost is easily recouped in saved gasoline expense within 2-3 years of owning the car (less time for heavy driving.) Furthermore, the cars are not plug-in hybrids, all electricity generation comes from regenerative braking.

[jaysabi]

A study published yesterday in the Journal of Environmental Science and Technology showed that fracking caused 6648 spills over the last ten years in four states alone. Researches found that up to 16% of fracking wells could be leaking hydrocarbons or the chemically saturated water used to frack. Roughly 50% of spills were linked to storage and moving fluids through pipelines.

First, this seems incredibly high. Much higher than I would have anticipated. Second, this has implications where Trump has promised to remove restrictions and regulations on facking. With a track record like this, I wonder if less restrictions and regulations is really a prudent move for the environment.

[Sithara007]

Furthermore, the cars are not plug-in hybrids, all electricity generation comes from regenerative braking.

What is regenerative braking? Never heard of this term before. If the electricity is generated while driving itself, then the need for an invertor is eliminated. Also, a cheaper battery will do the trick, instead of an expensive one made out of Lithium and Cobalt.

[deisik]

Furthermore, the cars are not plug-in hybrids, all electricity generation comes from regenerative braking.

What is regenerative braking? Never heard of this term before. If the electricity is generated while driving itself, then the need for an invertor is eliminated. Also, a cheaper battery will do the trick, instead of an expensive one made out of Lithium and Cobalt.

When the car slows down, the electric motor starts working as an electric generator by transforming the kinetic energy of the moving car into the electric energy, thereby recharging the battery. Cheaper battery means that it will be made from, for example, plumbum, but it is heavy and not very suitable for passenger cars. Lithium is the lightest of metals (excluding metallic hydrogen and helium), so its choice is quite justified

In fact, it is lighter than water (almost twice)

[botany]

OPEC's pledges to stick to allocations might not have that much impact, if the US boosts output.
The price seems to be dropping now.
http://www.reuters.com/article/us-global-oil-idUSKBN163059

[Marcus_2017]

OPEC's pledges to stick to allocations might not have that much impact, if the US boosts output.
The price seems to be dropping now.
http://www.reuters.com/article/us-global-oil-idUSKBN163059

Why should Americans reduce oil prices if they want to sell their oil? I think that the decline in oil prices may occur if you remove the sanctions against Iran, but Trump obviously doesn't want it.

[bryant.coleman]

OPEC's pledges to stick to allocations might not have that much impact, if the US boosts output.
The price seems to be dropping now.
http://www.reuters.com/article/us-global-oil-idUSKBN163059

The American frackers don't have the flexibility which Saudi Arabia and Russia enjoys. Their rigs are located in complicated terrain, and it takes some time to either start, or to shut down the pumping of crude oil. Finding the labor force is another hassle. If they pump crude oil at full speed now, then the oil prices will crash and their revenues will take a hit.

[STT]

The problem with the price vs OPEC reductions is many countries keep a strategic central store of oil.   China is a giant size country with almost no oil under control by itself, how can it aspire to be a future superpower if unable to even supply itself and its army.    They store much oil and keep this as a buffer to any reduction in supply vs their own growing supply.

The alteration in supply is an ongoing that effect that will take years to unfold in the price.   When supplies everywhere are low vs demand which itself must grow in order that OPEC is proved correct in its projections then you have a rising price effect.
World growth is not as strong as it should, many large countries have a population with average age below 30 and the expansion is quite below what it could be.

I believe China is buying into various oil deposits with its reduced dollar holdings and will not be part of OPEC or any control of price.  Russia and USA are both outside OPEC and are possibly not restricting supply though Russia has agreed in theory, nobody is ever sure they can be trusted.

Fracking is a long term effect, its mostly that this oil source exists at all.  Its in effect a technology rival to old oil large operations, long term we know technology will replace oil just like coal passed by into a more minor role

[criptix]

OPEC's pledges to stick to allocations might not have that much impact, if the US boosts output.
The price seems to be dropping now.
http://www.reuters.com/article/us-global-oil-idUSKBN163059

The American frackers don't have the flexibility which Saudi Arabia and Russia enjoys. Their rigs are located in complicated terrain, and it takes some time to either start, or to shut down the pumping of crude oil. Finding the labor force is another hassle. If they pump crude oil at full speed now, then the oil prices will crash and their revenues will take a hit.

Yes and no.
The US frackers are preparing for trumps US oil independence. Of course they wont be able to compete with the sauds, russia or iran except in the case trump will enact a tariff for importing oil - which he said he will.

[criptix]

The problem with the price vs OPEC reductions is many countries keep a strategic central store of oil.   China is a giant size country with almost no oil under control by itself, how can it aspire to be a future superpower if unable to even supply itself and its army.    They store much oil and keep this as a buffer to any reduction in supply vs their own growing supply.

The alteration in supply is an ongoing that effect that will take years to unfold in the price.   When supplies everywhere are low vs demand which itself must grow in order that OPEC is proved correct in its projections then you have a rising price effect.
World growth is not as strong as it should, many large countries have a population with average age below 30 and the expansion is quite below what it could be.

I believe China is buying into various oil deposits with its reduced dollar holdings and will not be part of OPEC or any control of price.  Russia and USA are both outside OPEC and are possibly not restricting supply though Russia has agreed in theory, nobody is ever sure they can be trusted.

Fracking is a long term effect, its mostly that this oil source exists at all.  Its in effect a technology rival to old oil large operations, long term we know technology will replace oil just like coal passed by into a more minor role

That should be their strategy if they are planning on using oil.
But i think right now everything points to renewables.
China just bought the biggest cobalt producer of the world in kongo and holds majority of the production now. Cobalt is mainly used for electric car batteries.
The newest energy study says that china is progressing much faster on renewables as anticipated (
https://newclimate.org/2017/02/09/a-turnaround-of-global-greenhouse-gas-emission-trends-on-the-horizon-regardless-of-pres-trump/ )
Looking at the enviromental destruction and contamination china has no choice anyway - they still have like 500 million people who want to drive cars, have smartphones etc. Pp.

I cant think of oil and coal as a choice for them. They have to say goodbye to it in the medium term (until 2050?).