If “peak oil” conjures up thoughts of when oil output will reach its maximum then you’re way behind the times. Now it’s all about demand.
And rather than a debate about the geology, it’s about technology, and when batteries will force consumption of oil – or at least oil used for transport fuels – into terminal decline.
In an assessment last week by Fitch Ratings of credit risks to various sectors from a breakthrough in battery technology, oil came at the top of the list, meriting a “serious threat” diagnosis. While the utilities and automotive sectors can scratch out some new opportunities from the rise of batteries, it’s all downside for oil producers.
With electric vehicles currently less than 1 per cent of automotive sales, the starting point is low, but Fitch is predicting a drawn-out and potentially painful process, particularly if technical advances in batteries come faster than currently assumed.
Still, with a 32.5 per cent compound annual growth rate in EV sales, it would be nearly 20 years before EVs captured a quarter of the global car fleet, leaving plenty of room for oil, Fitch says. Overall growth in the global fleet due to rising emerging-market sales would also limit the impact on oil demand.
That said, the adoption of supportive policy measures could accelerate the transition, with Fitch envisaging an “extreme” scenario where EVs capture a 50 per cent market share over 10 years, destroying about a quarter of European petrol demand. As a result, companies should react early, it says, citing the example of French oil major Total’s $US1.1 billion acquisition of battery player Saft Groupe.
Citigroup’s global energy strategy head Seth Kleinman sees the impact of EVs on oil demand as a story for mid-to-late next-decade. But with EVs passing the landmark 1 million threshold earlier this year and everything pointing to further cost declines for batteries, it is one that is coming, like it or not.
By 2030, oil demand from the passenger vehicle sector is plateauing, in Citi’s forecasts.
BHP Billiton has highlighted the rise of mass-market EVs as one of the striking signals in the energy market emerging in the past 12 months and has bullish forecasts for EVs, predicting about 140 million on the roads by 2035, or about 8 per cent of the global fleet. Its assumptions are much nearer the bullish end of a range of benchmark forecasts.
By 2035, rising EV use is expected to have eroded 2.3 million barrels a day from oil demand, reducing BHP’s assumptions of total oil demand growth to 1 per cent a year over that period. In essence, the increasing size of the car fleet and expanding industrial use only just offsets the impact of fuel efficiency gains and EVs.
While the forecasts may seem too distant to be relevant for many investors, it would be wrong to assume they aren’t having an impact now, at least for some companies.
When Caltex Australia’s whole board flew over to Silicon Valley earlier this month it was with an eye to understanding the transformation being wrought on the fuels sector by technology.
Chairman Greig Gailey says nearer term it will be improved fuel efficiency that will be the greater pressure, shrinking the light vehicle fuel consumption market in Australia by 5 per cent by 2025, despite an increase in kilometres travelled for each car.
But longer term, EVs have the bigger impact, with Caltex working on the assumption that EVs would capture about 10 per cent of new light vehicle sales by mid next decade as they become more affordable and driving ranges increase.
The eventual contraction of the primary market on which Caltex depends is clearly weighing on the board’s mind, with Gailey making it plain that it comes into play when considering acquisitions in the core business – the Woolworths petrol network included.
dissident on Sun, 30th Oct 2016 7:00 am
More BS projections based on nothing but wishful thinking.
rockman on Sun, 30th Oct 2016 7:18 am
Also the profitability of oil production is not nor has it ever been a function of its consumption alone. The last 2 years is clearly proof of that fact.
Davy on Sun, 30th Oct 2016 7:49 am
I feel today journalism is a lost profession of being bought off, incompetent, and increasingly both as this article demonstrates. Peak oil is many things. It is a dynamic of an adaptive human civilization whose foundational energy sources revolves around oil directly or indirectly. All other fossil fuel sources and alternatives need oil. Food and water needs oil. The complexity of globalism needs oil. It is clear affordability as much a depletion of high quality abundant oil is an issues.
Peak oil is alive and well. In this article a non-geologist wants to promote batteries and EV’s. Great way to get people’s attention is talk away their doom even though most people’s doom is not peak oil. It still sounds great. The reality of what is going on with oil’s declining rate of growth and declining reserves is peak demand and depletion combined with some technology changes. Alternatives and efficiency are making headway but not much compared to what is needed or to explain declining growth rates with oil consumption. Lower oil prices should be seeing an exploding rate of demand growth and instead we are seeing declining rates of growth. Growth “rate” of growth that is in decline. That is an important point because too often people argue away demand destruction because oil consumption is still growing. Global oil production is still growing but we are near to a peak from demand and profitable production. We don’t know how much storage has played in the equation. China’s SPR is case in point. We here talk about how high quality conventional oil peak back around 05. We know new discoveries are dropping precipitously. We know that the new sources of nonconventional oil are in a price compression now. This price compression is related to demand destruction from economic compression from debt and repressive economic policies.
We also talk about the real state of the global economy around here. The numbers the status quo and mainstream media paint are not showing the true picture of demand destruction that is likely due to the deflationary effects of too much debt and the long term effects of rate repression. These policy features are showing ill effects of the moral hazard of years of bad policy that includes the moral hazard of the corrupting effects of policies that promote artificial yield seeking. The promote leverage and excessive low cost debt utilization resulting in malinvestment. Bubble economics is not sound economic policy. This economics is in practice a moral hazard of wealth transfer and power concentration. One need only watch the American election to see how far off the normal we are today. There was always wealth transfer and political corruption but today it is open season with disregard for the rule of law with extreme apathy for prosecution.
Technology is playing a role in a small energy transition. Renewables are growing and showing better profit. New battery technology are showing promise. Government and people want to decarbonize because most non-deniers know how dangerous climate change is turning out to be. The key here though is rate of time and effect of technology penetration in the market place. It is not happening fast enough and with enough impact. These technologies are not revolutionary. They are not transformative like fossil fuels were. We are not seeing a real energy transition. The batteries are not game changers. Wind and solar are making small incremental advances but mainly in the manufacturing process. Much of that is with places like China manufacturing them cheaply probably below cost. Governments are still subsidizing them to keep the momentum. I am a fan of this new technology. We need to build as much as we can while we can. We need to adapt our lives to these new technology. I am not a fan of the false promise and green propaganda. Renewables and EV’s are having such a small effect on fossil fuels as to be negligible.
The real impactor on oil is economic decline. We have an energy “rate” of growth “rate” in decline. Our economic growth rate is dangerously close to a recession. This is after years of repressing a recession because the powers to be understand the massive dangers debt dynamics creates. They understand what real global decline will do to all the bad debt and excessive leverage of this bad debt. We are going to see a tsunami of demand destruction. Oil is currently part of this having had a bubble period and now having the bubble bust. Oil is sitting on a huge amount of non-preforming debt and sovereign nations in dysfunction from their oil curse. Investments are not being made in an industry that is foundational and must grow to support the global system that is a growth based economic system.
Renewables and EV’s are part of the good side of this energy demand destruction but not near enough. Renewables will likely never survive without an oil based society. They will quickly hit diminishing returns when their niches are filled. There are far too many high quality places in modern society renewables can never supplement. I have seen nowhere where renewables could replicate themselves past a certain point not with the consumption requirements of globalism nor the size of the global population. Some areas will experience more than others like northern Europe especially and some places in the US.
What renewables and EV’s can do is buy us time. They can extend the status quo. We can live a little longer in affluence. I doubt this extension will buy us time for much of a plan B emergence. What I am seeing is the opposite. Society is diving into dysfunction and decline both economic and social. A significant amount of global people will never see any benefits of renewables. I am all for these technologies to help us avoid the worst of collapse but they are not going to save us. Oil is close to a real peak in quantity of economically affordability for a dynamic global system that is witnessing macro decay and decline. We only have a few years before a very bad process of decline and decay occur abruptly which will be a dangerous accelerated of a long term collapse process.
onlooker on Sun, 30th Oct 2016 8:26 am
I doubt this extension will buy us time for much of a plan B emergence. –I fully agree. Society is beyond the point of being able to effectively transition gracefully to a non fossil fuel energy regime. This was already investigated by the Govt via the Hirsh report. It deemed society needed a 15 to 30 years head start to the advent of peak oil and its deleterious effects to effectively transition to a non fossil fuel energy regime. Well its evident that deleterious effects are being felt already and that the Oil Industry is on shaky ground already. So the Economy and its condition is no longer conducive for a mass scale energy conversion
Xerxes Yttrium Zorgon on Sun, 30th Oct 2016 9:14 am
If you don’t understand that supply equals demand then you’re way behind the times. Peak oil doesn’t just conjure thoughts of when production reaches a maximum, its the very definition. The real question is what effect declining production will have on society.
makati1 on Sun, 30th Oct 2016 9:30 am
Hmm. Lithium batteries are dependent on Chinese exports of lithium, if my current reading is correct.
http://seekingalpha.com/article/4014657-chinas-ev-battery-industry-repeat-solar-rare-earth-dominance
“Based on industry estimates, rebuilding a U.S. rare earth supply chain may take up to 15 years and is dependent on several factors, including securing capital investments in processing infrastructure, developing new technologies, and acquiring patents, which are currently held by international companies.”
Interesting that the whole US electric auto industry depends on China.
onlooker on Sun, 30th Oct 2016 9:46 am
By the same token US is number one trading partner of China. I would say their relation is very symbolic
https://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_China
Ghung on Sun, 30th Oct 2016 10:02 am
Mak said; “Hmm. Lithium batteries are dependent on Chinese exports of lithium, if my current reading is correct.”
Not really:
“….much of the global lithium supply comes from huge conglomerates in Chile, Argentina, and Australia.”
…and it turns out Musk’s new battery factory could have a large supply just a couple of hundred miles south:
“….On the edge of this desolate landscape is the tiny town of Silver Peak. Founded in 1863 as an outpost for silver and gold miners, it’s one of Nevada’s oldest mining communities. A century later the lithium mine, dubbed the Silver Peak mine, was built nearby. It uses thousands of acres of evaporation ponds to slowly uncover the metal.
Today the lithium mine is owned by chemical giant Albemarle ALB, which also has much larger lithium operations in countries like Chile. Albemarle is one of four huge conglomerates that control much of the world’s lithium supply.”
http://fortune.com/2016/03/29/lithium-tesla-mine-nevada/
Albemarle is head-quartered right here in North Carolina.
sunweb on Sun, 30th Oct 2016 10:47 am
More business as usual. More environmental destruction for us the entitled elite who can afford these tech “toys”.
I agree totally with what Alice said in an earlier post:
Alice Friedemann on Thu, 27th Oct 2016 9:09 pm
Either way, you’ve wasted energy on electricity contraptions that could have been used to insulate homes, clean up nuclear and industrial waste for thousands of future generations, relocated anyone willing to move to the midwest where most of our food is grown (80% of calories but 80% of people live within 200 miles of the coast). If Ferroni & Hopkirk’s paper is wrong, it doesn’t matter since electricity doesn’t solve the energy crisis. This is a liquid fuel transportation crisis only solvable with a cheap drop-in replacement diesel fuel that can flow in existing oil pipelines (biodiesel can’t).
John on Sun, 30th Oct 2016 10:58 am
There are 1,200 million vehicles on the roads of the world and electric vehicles will be 1 million next year.
http://www.greencarreports.com/news/1093560_1-2-billion-vehicles-on-worlds-roads-now-2-billion-by-2035-report
I think peak production will come some years before demand naturally peaks
joe on Sun, 30th Oct 2016 11:07 am
Yup, oil companies buying clean energy ones. They snap em up, kill their R+D then spin em off again when they got their patents sold safely off to people who will never use em. This is why if batteries can surpass oil, it will have to be a disruptive change. The world is like Angkor Wat, so proud, and while their society failed due to water issue and succumed to invasion, ours will fail when oil can no longer be supplied.
penury on Sun, 30th Oct 2016 11:28 am
Of course batteries are the answer. Haven’t you heard? Batteries will be self re=charging. No more silly batteries running down. All is saved.
Ghung on Sun, 30th Oct 2016 11:39 am
Gosh, Sunweb, we’re all used to you pointing out what won’t work, and what will possibly make things worse. You may be surprised to know that I agree with much of your point of view. What I haven’t seen is you posting anything at all pro-active. What, exactly, do you propose that people do? Just give up? To not attempt to mitigate their own circumstances as this mess unfolds?
onlooker on Sun, 30th Oct 2016 11:56 am
haha Penury. Or maybe they will build a battery the size of Texas. Presto energy problems solved
penury on Sun, 30th Oct 2016 11:57 am
Ghung would like to see postings of what people can do pro-actively, Individually there are things which people can do to decrease the pain when the descent happens, However, there is nothing that anyone can do to prevent the decay of the economy and life styles as we currently know them, Protect yourself and your loved ones and pretend that everything will be better tomorrow.
onlooker on Sun, 30th Oct 2016 12:03 pm
I second what Penury. Individually we can do things to become more self sufficiently. Think of it like getting your life raft ready knowing the ship is going down
Ghung on Sun, 30th Oct 2016 12:08 pm
The problem isn’t batteries, how big they are, or how we charge them. The problem is our collective behavior, our expectations, and how we use energy. Fossil fuels have set a very high bar in that respect, and flippant comments won’t change that. I changed our behavior and expectations, here at home, and have been living quite well indeed on solar/battery power for almost two decades, with a relatively low income.
Can everybody do that? Obviously not. Some don’t have the wherewithal to change their circumstances, and many simply won’t. They feel entitled to their current levels of consumption and resent any suggestion that it’s their behavior needs to change.
Our collective behavior WILL change. Most won’t like it very much.
onlooker on Sun, 30th Oct 2016 12:17 pm
Well said Ghung. A mass consumerism world is no longer possible. The problem is the great majority depend on it for their needs and wants. Being self sufficient recognizes this and your attitude Ghung is precisely the one to have
Ghung on Sun, 30th Oct 2016 12:17 pm
onlooker said; “Think of it like getting your life raft ready knowing the ship is going down.”
I think of it as more than that. People notice when other people change their behavior and live well doing that. It becomes obvious that not having all of this stuff and consumption isn’t the end of the world and their sense of entitlement begins to look silly. Not many, perhaps, but it’s a start.
Davy on Sun, 30th Oct 2016 12:42 pm
“The problem is our collective behavior, our expectations, and how we use energy.” Yea, definitely, but even if we changed attitudes, expectations and the way we use energy it is too late for anything normal about an energy transition. Longer term it is likely too late for modern civilization as we know it. We dug our hole and we will pay the price. No amount of enlightenment will change this. If we do change attitudes more can be saved longer. Changed attitudes can buy us time. Changed attitudes can prevent the hole from getting deeper. Otherwise we can continue to extend the madness we call the status quo with unrealistic expectations. We can use energy more efficiently only to waste it elsewhere. We can continue the narrative of lies and self-deception because we can. That is until we can’t and that day it rushing towards us.
onlooker on Sun, 30th Oct 2016 12:51 pm
Well said by Davy. A collapse is inevitable now no matter what we do. Too overpopulated, too reliant on waning fossil fuels, Environment is too compromised and too many humans either ignorant or too invested physically and emotionally in a consumerism lifestyle. Oh an Economy too corrupt and too dysfunctional. Did I mention Elites gaining too much from BAU
Apneaman on Sun, 30th Oct 2016 1:07 pm
Ghung, true. I have been living on an average of $15000 Canadian for the last 6-7 years and look at how happy – mother fu^@er coc* sucker grumble grumble groan drool Arrrrg! – and well adjusted I am.
Jerry McManus on Sun, 30th Oct 2016 1:19 pm
Sunweb is right, and no amount of wailing about “fatalism” is going to change that.
Where exactly do they think all of these high-tech toys are going to come from? Are these EV’s going to spring out of people’s arse like unicorn farts?
Those kinds of complex electro-mechanical devices are only made possible by a vast network of fossil fueled industries connected by an equally vast fossil fueled infrastructure.
Anyone who has been paying attention knows that this arrangement has been steadily destroying the biosphere of the entire planet, and destroying the future for countless generations, and it has been doing so for at least the last two centuries.
As the exponential growth from that mother of all trust fund parties inevitably reverses into exponential decay then we can expect a lot of people to get squeezed.
And I don’t mean in a good way.
Ghung on Sun, 30th Oct 2016 3:22 pm
Jerry said; “…no amount of wailing about “fatalism” is going to change that.”
Being a little hyperbolic, Jerry? I haven’t seen anyone here “wailing”, and suggesting people be a bit more proactive can’t hurt, can it? No more than repeatedly claiming that we’re all screwed and that there’s no point in trying to adapt to that.
mx on Sun, 30th Oct 2016 6:06 pm
All the Oil Majors are in serious denial. They continue to predict “linear” growth. That’s not going to happen. We’re seeing near-geometric growth on Solar, Wind, EV’s and Battery advancements and market share.
If you’re an oil shareholder, you owe it to yourself to do what BMW and Mercedes shareholders did. At the next meeting: RIOT.
mx on Sun, 30th Oct 2016 6:08 pm
Pro Tip: Your biggest expense is heat. Add Zones to your home. This is the least expensive way to cut your heating bill.
For radiator heat, the pipes are typically laid out in zones already, the builder just didn’t add the thermostats. But you can.
makati1 on Sun, 30th Oct 2016 6:17 pm
All this bickering is not going to change the fact that ALL of these predictions come from promoters of something to consume/sell. THAT will all end or be drastically curtained when the SHTF and the economy of the West, and maybe the world, collapses. Globalization is already collapsing and is picking up speed. It is too late to change course. The capitalist world is going down.
You might be able to cushion the fall for yourself and your family, but that is all. And that takes resources you may not have. Certainly most in-debt Americans have little or no excess to spend on things like solar panels or a place off the beaten track. And that takes in about 80% of Americans. Debt is killing your future as quick as, or faster than, peak oil or peak energy of any kind. Electric cars are toys for the tech addicts, not the future.
But, I have said this all before as have others here. But nothing will change for the better. It is way too late. The course was set after WW2 by the Imperial US and it is set to take it back down.
“For the most part, the majority of those supporting Trump believe him when he says: “Let’s Make America Great Again”. It’s Nationalism pure and simple. There is a problem though. Nationalism is not in the best interest of the Deep State War Machine and the financial elite globalists. They want to tear down America so they can build their new world order and they won’t let a little piece of paper with “We the People” written on it, stop them.”
http://www.theburningplatform.com/2016/10/29/winners-who-won-the-wind/#more-135143
On several occasions here, I have mentioned that the US has to be taken down to the same level as the rest of the world average (about $10,000 per year)* so that it can be ruled by the global government. You are seeing that process at work today. Look around Americans. You are being sold down the river by your corporate and banking bosses.
* http://www.gallup.com/poll/166211/worldwide-median-household-income-000.aspx
Fluff articles like the above are distractions, nothing more.
makati1 on Sun, 30th Oct 2016 6:29 pm
mx. not riot, sell your shares and prep for the crash. The oil majors know exactly what is happening but they are not going to tell the suckers ..er.. stockholders that and have them all jump ship. They are not fools.
Anonymous on Sun, 30th Oct 2016 8:50 pm
Did no one tell the writer that batteries, no matter how ‘good’ (lithium aint even that good, but they do wear out fast) they are energy STORAGE devices, not energy PRODUCING devices?
But, thats really kind of irrelevant since we don’t have an ‘energy crisis’, but an energy consumption crisis. We need to ‘produce’ more cheap energy(not really possible) so we can keep wasting it building ever more expensive toys.
Guess they don’t educate people enough down there to difference between the two in crackerland uSa.
GregT on Sun, 30th Oct 2016 9:02 pm
“Did no one tell the writer that batteries, no matter how ‘good’ (lithium aint even that good, but they do wear out fast) they are energy STORAGE devices, not energy PRODUCING devices?”
Shhhh. You’re killing the buzz Anonymous.
Boat on Sun, 30th Oct 2016 10:20 pm
greggiet,
Many regions charge according to supply and demand. Imagine that. Demand is higher during the day requiring utilities to ramp up. Batteries can collect energy when it’s cheaper and return it when more expensive. Some will never grasp that simple concept, imagine that. Rhetoric from the “shallow state”. Lol
makati1 on Sun, 30th Oct 2016 10:31 pm
Boat, imagine if 10,000 Huston EV owners plug their cars in at night, raising demand and the power company notices the demand and raises the price to the higher levels. OR … the plug ins cause a power outage. Or … you need to recharge during a hurricane and the power is off. Or … Yep. Reliable as a flashlight left on by accident.
Boat on Sun, 30th Oct 2016 10:50 pm
mak,
Wind is stronger at night. Texas/Houston has a much bigger demand during the day. Solar will explode in Tx over the next 10 years to fill that hole. Electricity prices are projected to drop.
GregT on Sun, 30th Oct 2016 11:02 pm
“Some will never grasp that simple concept, imagine that. Rhetoric from the “shallow state”. Lol”
I already have three separate PV systems installed Boat, and I am very well aware of their limitations.
You, on the other hand, will in all likelihood remain clueless. LOL
GregT on Sun, 30th Oct 2016 11:12 pm
And also Kevin,
Within the next ten years or so, you’ll be wishing that you got the hell of out Texas/Houston a long time ago. You’re setting yourself up for an entire world of hurt.
You deserve everything that’s coming to you. Stupid is, as stupid does. 🙂
makati1 on Mon, 31st Oct 2016 2:31 am
GregT, the stupid die young…lol. Wind has nothing to do with a power failure or a storm black out. He doesn’t seem to grasp that reality. Maybe a few more floods next year will help him wake up? Nah! too deep in denail.
makati1 on Mon, 31st Oct 2016 2:34 am
GregT, the stupid die young…lol. Wind has nothing to do with a power failure or a storm black out. He doesn’t seem to grasp that reality. Maybe a few more floods next year will help him wake up? Nah! Too deep in denial.
orbit7er on Mon, 31st Oct 2016 10:09 am
Car oil demand will be down because people won’t be able to afford to drive! Unless we provide Green Transit non Auto Addiction alternatives people are going to have a hard time getting around!
mx on Mon, 31st Oct 2016 11:51 am
GregT, i believe is referring to the SouthWestern Drought.
Google US Drought Monitor
Yeah, you guys in Texas should really move ASAP, before your property value goes to ZERO.
Or, elect some Democrats and not climate change denying fools. You can see the rapid decline of ice in Greenland, the Arctic and Antarctic with your Eyes now. No need for fancy NASA images. The ice melt is creating vast high speed rivers of water running to the oceans.
Kenz300 on Wed, 2nd Nov 2016 11:38 am
Electric cars, electric trucks, bicycles and mass transit are the future. Fossil fuel ICE cars are the past.
NO EMISSIONS. Climate change is real.
The world is moving away from fossil fuels.
The sooner the better.
Kenz300 on Thu, 3rd Nov 2016 11:00 am
Save energy = save money.
How battery-powered homes are unplugging Australia
http://www.smh.com.au/business/energy/how-batterypowered-homes-are-unplugging-australia-20150731-giogk2.html
Cheap Solar Power in Texas May Depress Peak Electricity Prices
http://www.renewableenergyworld.com/articles/2016/10/cheap-solar-power-in-texas-may-depress-peak-electricity-prices.html