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Saudi America Will Overtake Saudi Arabia As Top producer

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby ROCKMAN » Tue 03 May 2016, 11:01:03

h-man: Thanks...didn't realize that. Predicting production, especially the global rate, isn't as difficult given those dynamics aren't as volatile. Say 2 or 3 years out...not a big problem. Further out...big problem. But consider the US shale boom: it developed because of the price increase. If one isn't predicting a significant increase in prices today then it's easy to predict future NEW shale production: it ain't going to be much.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby Tanada » Tue 19 Sep 2017, 10:10:19

Anyone have a handy list of the top ten world oil producers that is current?

Anyone but me notice that the glut seems to be winding down pretty fast and we might find ourselves back to the races by next spring?
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby ROCKMAN » Tue 19 Sep 2017, 11:35:20

P - Not what you asked but I think it's interesting. The country producing the most fossil fuel Btu's: as of 2016 the USA.

https://www.eia.gov/todayinenergy/detail.php?id=26352

A variety of bean counters out there. This is supposed to be sourced from the EIA: the US is #2 behind Saudi.

https://financesonline.com/top-10-oil-p ... -dominion/

But given the top 3 (the KSA, USA and Russia) are all within about 10% of each other the ranking doesn't seem too important IMHO. For instance while the KSA produces more oil then the US we supply the world with more consumable fossil fuel products then any other country. No one in Europe or S. America burns KSA oil in their cars. But they burn a lot of motor fuel produced by US refineries.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby AdamB » Tue 19 Sep 2017, 13:36:41

Tanada wrote:Anyone have a handy list of the top ten world oil producers that is current?

Anyone but me notice that the glut seems to be winding down pretty fast and we might find ourselves back to the races by next spring?


Races? Do you mean yet more peak oils? It is fascinating that the sine wave model of oil production hasn't been picked up by the talking heads of the world by now.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby Tanada » Tue 19 Sep 2017, 21:33:05

AdamB wrote:
Tanada wrote:Anyone have a handy list of the top ten world oil producers that is current?

Anyone but me notice that the glut seems to be winding down pretty fast and we might find ourselves back to the races by next spring?


Races? Do you mean yet more peak oils? It is fascinating that the sine wave model of oil production hasn't been picked up by the talking heads of the world by now.


I mean six months from now, around March 2018, the world oil demand will be very close to world oil production and price will start inching up to whatever level is necessary for tight oil fracked in the USA/Argentina/world wide production to maintain supply. So far the USA has been drilling at about half the 2013 rate for around a year now and so long as no major interruption in a large producer takes place the USA could oddly find itself in the position as producer of last resort. This will make the OPEC producers with low lifting costs extremely happy as every dollar increase in world oil price is a $6MM a day gift to KSA, and it is the gift that keeps on giving day after day. Whatever production they 'shut in' to 'restore stability' can be quietly put back into production as a gradual increase in exports from KSA if they do not believe it will hurt world oil prices. History shows that OPEC members often cheat on their quota's if they think they can get away with it and there is nothing stopping a skillfully done increase. It is when cheaters get greedy and really greatly over produce that prices crash.

In any case ROCKMAN's statements about USA refined fuels powering South America is rather beside the point. The USA is still a multiple million barrel a day importing country and that is highly likely to remain the case so long as world oil markets continue to function. Even if Fracking takes off like crazy between now and 2020 we have a mighty big gap between production and consumption in this country.

If I turn out to be correct for a change (laughing at myself) then world oil prices in 2018 will be doing the same as they were in 2005, creeping upward in fits and starts as people once again get conditioned to higher oil prices. It wasn't actually all that long ago that WTI was in the $80/$105 band and it stayed there for half a decade. Rather like your sign wave theory I believe that having spent the last two years on the down side of the wave we are going to start heading back in the other direction. I don't know when we will get back to $80/bbl but I am pretty sure all the big producers find the prospect a cheerful outcome. The biggest have used this recent glut in the familiar fashion to snap up a few bankrupt small fry and now that they have them higher prices will greatly aid the bottom line, and boost their stock prices as well.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby AdamB » Tue 19 Sep 2017, 22:26:36

Tanada wrote:
AdamB wrote:
Tanada wrote:Anyone have a handy list of the top ten world oil producers that is current?

Anyone but me notice that the glut seems to be winding down pretty fast and we might find ourselves back to the races by next spring?


Races? Do you mean yet more peak oils? It is fascinating that the sine wave model of oil production hasn't been picked up by the talking heads of the world by now.


I mean six months from now, around March 2018, the world oil demand will be very close to world oil production and price will start inching up to whatever level is necessary for tight oil fracked in the USA/Argentina/world wide production to maintain supply.


Well, depends on how much extra capacity you allow for I imagine. Production cuts stop being cuts, Libya straightens out its act, the US production obviously reacts to price, so if any constraint shows up in market signals, you've got less than a 6 month fuse before rigs are reallocated in the US to a heavier oil mix, from here to March 2018 just doesn't seem long enough for any structural changes to reorient.

Tanada wrote:So far the USA has been drilling at about half the 2013 rate for around a year now and so long as no major interruption in a large producer takes place the USA could oddly find itself in the position as producer of last resort.


Most folks would call it "producer of the marginal barrel" and the US has been that for a couple years now. The newest round of cost reductions might have changed that equation however, and the best bet for next owner of the marginal barrel would be Canada.

Tanada wrote:If I turn out to be correct for a change (laughing at myself) then world oil prices in 2018 will be doing the same as they were in 2005, creeping upward in fits and starts as people once again get conditioned to higher oil prices. It wasn't actually all that long ago that WTI was in the $80/$105 band and it stayed there for half a decade. Rather like your sign wave theory I believe that having spent the last two years on the down side of the wave we are going to start heading back in the other direction.


This idea fits another 100% applicable function as well, that I've mentioned before, and people avoid even arguing with me about it because...well...it has worked every time since the beginning of the oil industry. The cure for low oil prices is...low oil prices. Same with high prices. You are describing it with far more words.

Tanada wrote: I don't know when we will get back to $80/bbl but I am pretty sure all the big producers find the prospect a cheerful outcome. The biggest have used this recent glut in the familiar fashion to snap up a few bankrupt small fry and now that they have them higher prices will greatly aid the bottom line, and boost their stock prices as well.


During the downturn in the 80's, I made quite a nice living supervising the collection of bankrupt small fry. Becomes quite profitable when my 100% accurate rule for prices kicks in...admittedly, this business model isn't much more than a rearrangement of the Rothschild anecdote, specific to oil and gas.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby ROCKMAN » Tue 19 Sep 2017, 23:22:17

P - " In any case ROCKMAN's statements about USA refined fuels powering South America is rather beside the point. The USA is still a multiple million barrel a day importing country and that is highly likely to remain the case so long as world oil markets continue to function." And almost 5 million bbls per day of that imported oil is refined and then exported overseas. "Even if Fracking takes off like crazy between now and 2020 we have a mighty big gap between production and consumption in this country." You didn't ask about consumption or imports: you asked what countries were oil producers. And the US is...#2. Which, given our domestic consumption, is a rather important stat IMHO.

Just as we are the #1 exporter of refined products is very important since it takes a good bit of the sting out of our trade imbalance of petroleum. It also gives US consumers first call on 1.8 BILLION BBLS of refinery products per year if we're willing to outbid foreign buyers.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby tita » Wed 20 Sep 2017, 07:33:52

ROCKMAN wrote:But given the top 3 (the KSA, USA and Russia) are all within about 10% of each other the ranking doesn't seem too important IMHO. For instance while the KSA produces more oil then the US we supply the world with more consumable fossil fuel products then any other country. No one in Europe or S. America burns KSA oil in their cars. But they burn a lot of motor fuel produced by US refineries.

Also, US produce currently 9.2 mb/d of crude oil... KSA 10mb/d, and russia 10.32 mb/d

But when you add biofuels, NGLs and other liquids (all accounted in the world oil supply figure), you end up with 14.256 mb/d. Which put US in the first place, followed by KSA and russia.

When you take out NGLs (and still include biofuels and other liquids), it's 10.54mb/d, which is probably the figure used in the ranking provided in your second link.

So, I also don't think that these rankings are much important. What is impressive is the growth of FF supply in the US between 2008 and 2015, while KSA and russia output was quite stable.

The global supply will have to increase in 2018, unlike last 3 years when it stagnated... And quite a lot of this increase is expected to come from the US (0.84 mb/d according to OPEC). Which raise the question about the actual capacity of the US to increase output with current prices. Despite much talk about LTO back on drilling, the production hasn't grew yet as much as expected. Probably because rig count is still half of what it was in 2014...

Of course, OPEC may have the spare capacity if the price goes up... But why use it? Most of his members will be happy getting higher revenue with the same output.

Anyway, if price change in 2018, this will support the LTO and restrain demand, which will end up in some balance somewhere....
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby vtsnowedin » Wed 20 Sep 2017, 08:03:48

WTI hit $50.00 /barrel today. A commentator on Fox business said that part of the reason beyond OPEC production cuts was that the EIA had over estimated USA production by some 500,000 barrels a day.
The story in the link does not have his comments but it might come up later today.
http://www.foxbusiness.com/markets/2017 ... -2004.html
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby tita » Wed 20 Sep 2017, 08:54:42

vtsnowedin wrote:WTI hit $50.00 /barrel today. A commentator on Fox business said that part of the reason beyond OPEC production cuts was that the EIA had over estimated USA production by some 500,000 barrels a day.
The story in the link does not have his comments but it might come up later today.
http://www.foxbusiness.com/markets/2017 ... -2004.html

In june, EIA weekly estimations were overestimated by 230kb/d. We don't have exact production figures for july or august. So, this kind of "breaking news" is subject to a lot of uncertainties. Especially two weeks after Harvey, as production has maybe not entirely resumed. Anyway, the 500kb/d is probably excessive. But we won't know it before 2 months.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby vtsnowedin » Wed 20 Sep 2017, 10:44:35

tita wrote:
vtsnowedin wrote:WTI hit $50.00 /barrel today. A commentator on Fox business said that part of the reason beyond OPEC production cuts was that the EIA had over estimated USA production by some 500,000 barrels a day.
The story in the link does not have his comments but it might come up later today.
http://www.foxbusiness.com/markets/2017 ... -2004.html

In june, EIA weekly estimations were overestimated by 230kb/d. We don't have exact production figures for july or august. So, this kind of "breaking news" is subject to a lot of uncertainties. Especially two weeks after Harvey, as production has maybe not entirely resumed. Anyway, the 500kb/d is probably excessive. But we won't know it before 2 months.

I don't suppose the exact figures are all that important. The point was that all producers had reduced CAPEX to balance budgets under low oil prices and therefore production was declining. Once that turns the surplus into a shortage prices will rise and CAPEX at higher levels will resume and production will hopefully pick back up.
People seem to have a blind eye to the time lag between a price change and the resultant change in supply.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby onlooker » Fri 29 Sep 2017, 16:20:56

in response to what Vts is saying I think the situation is not so rosy as that. First off, one must wonder if consumers can bear higher oil prices but more important see think link for how the depletion rates are increasing in the top shale unconventional sites in the US
https://srsroccoreport.com/u-s-second-l ... ates-rise/
"While the Eagle Ford is suffering a significant monthly decline rate, it pales in comparison to what is taking place in the Permian Region.  The EIA forecasts that the Permian Region will experience a stunning 160,000 bd decline in October:"
“"If you think the economy is more important than the environment, try holding your breath while counting your money"”
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby kublikhan » Fri 29 Sep 2017, 17:24:06

Tanada wrote:Anyone but me notice that the glut seems to be winding down pretty fast and we might find ourselves back to the races by next spring?
It might appear that way if you only look at US stocks and only at crude oil. Unable to make a measurable dent in global oversupply, Saudi Arabia choose a new tactic: Limit supplies to the market that is most visible with the best data: the US. By limiting oil exports to the US, the US crude oil stockpile is drawing down faster than it normally would. However this doesn't mean global stockpiles are falling as fast. Further, much of the decline in crude oil stockpiles was replaced with a build in refined fuel stockpiles. If you look at OECD commercial inventory the situation is not quite so rosy:

OECD Commercial Inventory (end-of-year)
2015 2016 2017 2018
2970 2967 2995 3066
SHORT-TERM ENERGY OUTLOOK

Image

Tanada wrote:If I turn out to be correct for a change (laughing at myself) then world oil prices in 2018 will be doing the same as they were in 2005, creeping upward in fits and starts as people once again get conditioned to higher oil prices. It wasn't actually all that long ago that WTI was in the $80/$105 band and it stayed there for half a decade. Rather like your sign wave theory I believe that having spent the last two years on the down side of the wave we are going to start heading back in the other direction. I don't know when we will get back to $80/bbl but I am pretty sure all the big producers find the prospect a cheerful outcome. The biggest have used this recent glut in the familiar fashion to snap up a few bankrupt small fry and now that they have them higher prices will greatly aid the bottom line, and boost their stock prices as well.
Even if the oil market comes into balance in 2018, to bring down oil & refined oil stocks to average values will take demand overshooting supply for a good amount of time. That is why the IEA has a longer time horizon for an oil spike than 2018: IEA predicts oil supply shortage and price spike within three years
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby Tanada » Sat 30 Sep 2017, 08:17:09

kublikhan wrote:
Tanada wrote:Anyone but me notice that the glut seems to be winding down pretty fast and we might find ourselves back to the races by next spring?
It might appear that way if you only look at US stocks and only at crude oil. Unable to make a measurable dent in global oversupply, Saudi Arabia choose a new tactic: Limit supplies to the market that is most visible with the best data: the US. By limiting oil exports to the US, the US crude oil stockpile is drawing down faster than it normally would. However this doesn't mean global stockpiles are falling as fast. Further, much of the decline in crude oil stockpiles was replaced with a build in refined fuel stockpiles. If you look at OECD commercial inventory the situation is not quite so rosy:

OECD Commercial Inventory (end-of-year)
2015 2016 2017 2018
2970 2967 2995 3066
SHORT-TERM ENERGY OUTLOOK

Image

Tanada wrote:If I turn out to be correct for a change (laughing at myself) then world oil prices in 2018 will be doing the same as they were in 2005, creeping upward in fits and starts as people once again get conditioned to higher oil prices. It wasn't actually all that long ago that WTI was in the $80/$105 band and it stayed there for half a decade. Rather like your sign wave theory I believe that having spent the last two years on the down side of the wave we are going to start heading back in the other direction. I don't know when we will get back to $80/bbl but I am pretty sure all the big producers find the prospect a cheerful outcome. The biggest have used this recent glut in the familiar fashion to snap up a few bankrupt small fry and now that they have them higher prices will greatly aid the bottom line, and boost their stock prices as well.
Even if the oil market comes into balance in 2018, to bring down oil & refined oil stocks to average values will take demand overshooting supply for a good amount of time. That is why the IEA has a longer time horizon for an oil spike than 2018: IEA predicts oil supply shortage and price spike within three years


First, I am not predicting a price spike per se, what I see in my own future is the same kind of creeping price rise that we experienced in 2004-2006. That seems to fit well with the 3 year range you are talking about when you take into account I said starting six months from now in March 2018.

Second look closely at your graph of OECD stockpiles. The bottom of the normal range is 55 days consumption and the top where they are now is 65 days. This is not some huge overhanging buffer we are talking about a variation in supply of 18% and up until this point it has been staying within that range. In point of fact until prices crashed in January 2015 when OPEC decided to produce for market share instead of price stability the stockpiles were hanging in the low edge of the 'normal' range. For that 10 MM/bbl range to be the average the period before the graph timeline starts must have been much closer to the middle of the range and have stayed there for a considerable time. That would make 'average' stockpile 60 MM/bbl and the current small surplus of 5 MM/bbl pretty innocuous, not a serious concern in its ability to hold prices down.

Third if you look at the portion of the graph giving actual data instead of projections into the future it is clear that at the start of 2017 that 5 MM/bbl above center was cut in half to about 2.5 MM/bbl. IOW we OECD nations are now pretty darn close to the 60 MM/bbl average stockpile level the graph indicates. Everything for 4Q2017 onward is a projection and shows stockpiles mysteriously rising back up to the top of the range and holding there instead of the more expected ranging up and down as happens in the real world. IOW the EIA/IEA is doing what they normally do, projecting the future in the most optimistic terms they can get away with.

Fourth Petroleum is in current condition infinitely frangible. It is an open moderately constrained market where the highest bidder still wins the supply so KSA 'limiting exports to the USA' is a pretty meaningless standard unless that means KSA is limiting all exports by whatever amount you are referring to. If not then as soon as they sell that oil which would have been sold to the USA to someone else the person who was selling that volume to the other buyer shifts their sale to the USA to maintain their own income.

If KSA is actually cutting exports to the world market there are any number of reasons this may be taking place. They may just want to rest their fields by producing at a slightly slower rate, which is better for ultimate recovery. They might want to try and drive world prices up a modest amount in the continuing build up towards sale of stock in ARAMACO. They might be consuming more domestically than projected because the heat wave made them run their petroleum fired electric grid at higher capacity. They might have peaked out and actually have a slight decline rate in their total capacity. Any of those reasons or any combination could be the cause of their decline in sales to the USA.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby asg70 » Sat 30 Sep 2017, 09:38:06

Tanada wrote:the same kind of creeping price rise that we experienced in 2004-2006.


And yet the world is a far different place now. There are now a total of three benign market forces that can combine to limit oil prices.

1) fracking picks up again
2) middle-east production caps ease
3) EV sales take off

So the likelihood of oil prices spiking to a crisis point are low.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby kublikhan » Sat 30 Sep 2017, 14:08:45

That graph has not been seasonally adjusted Tanada. It is common to increase supplies every year prior to the driving season. Then decrease those inventories during driving season throughout. Is is not mysterious why IEA shows this same pattern repeating in 2018. Inventories will spike up for that year's driving season just as it has for the prior years in that graph. So much of what you are pointing to as proof of the glut abating is just the normal seasonal purge of the pre driving season build up. One way to erase this as a factor is to look at the year end inventory levels. As you can see, 2017 ends up higher than 2016. And 2018, higher than 2017.

OECD Commercial Inventory (end-of-year)
2015 2016 2017 2018
2970 2967 2995 3066
SHORT-TERM ENERGY OUTLOOK

The driving season is traditionally a period of peak demand for crude oil and refined products. The period between the Fourth of July and Labor Day, a.k.a. the driving season, is traditionally a period of de-stocking for both crude oil and refined products in the U.S. as refineries increase their runs and consumers jump into their cars for trips to the beach. A drawdown of inventories during the driving season is essential to prevent imbalances in supply and demand for crude oil during the shoulder months. [During peak driving season, a drawddown of 25-30 million barrels of inventory is the average US drawdown.] Since there is seasonality in crude oil utilization, de-stocking of inventories during the summer is important to prevent a glut of oil from forming during the shoulder season (fall) when refineries take some of their capacity offline for maintenance.
Crude Oil: A Ten-Year Look At Inventories Through The Driving Season
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby vtsnowedin » Sat 30 Sep 2017, 14:19:29

Is there also a seasonal increase in diesel use as farmers harvest and transport the bulk grain crops and a buildup of heating oil stocks at least in the north east in preparation for the winter heating season.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby kublikhan » Sat 30 Sep 2017, 14:45:28

OPEC won’t clear the global oil glut any time soon since any increase in price continues to bolster rival production from U.S. shale, according to the International Energy Agency.

“If they wish to achieve the reduction of oil stocks down to the five-year average, they’re going to have to dig in for the long haul. Rebalancing is a stubborn process. The resilience of the U.S. shale producers and the flexibility, the ability to bring on more oil at relatively low cost and short notice, means any signs of life -- as far as the price is concerned -- encourages more U.S. shale. The price is self-capped.”
OPEC Faces ‘Long Haul’ to Deplete Swollen Oil Stocks, IEA Says
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby Outcast_Searcher » Sat 30 Sep 2017, 22:21:04

asg70 wrote:
Tanada wrote:the same kind of creeping price rise that we experienced in 2004-2006.


And yet the world is a far different place now. There are now a total of three benign market forces that can combine to limit oil prices.

1) fracking picks up again
2) middle-east production caps ease
3) EV sales take off

So the likelihood of oil prices spiking to a crisis point are low.

EV sales "taking off" and hitting gasoline consumption to a meaningful extent over the next decade is an increasingly realistic scenario. However, not so much in 2018. Even if Tesla sells half a million model 3's in 2018, that's not much of an impact on an expected number of something like 95 million global car sales.

For 2018, the first two options you list are the most likely. A big change in the global economy is more likely than a meaningful hit from EV sales. By 2025 or so, with many mainstream makers in the fray, hopefully EV sales will be in the many million range.
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Re: Saudi America Will Overtake Saudi Arabia As Top producer

Unread postby ROCKMAN » Sun 01 Oct 2017, 01:49:57

"By 2025 or so, with many mainstream makers in the fray, hopefully EV sales will be in the many million range." Millions...not tens of millions then? Let's make a. Completely absurd prediction: half the new vehicles sold in 2025 will be EV's (which will be powered by electricity produced by burning fossil fuels more then any other source) and the rest ICE's. So in 8 years there will be about 50 million new ICE's rolling down the road emitting GHG into the atmosphere. And 50 million EV's the majority of which will be powered by ff sourced electricity based on the current projrction of renewable energy growth. So where exactly is the good news? Yes, better then 100 million new ICE's. But still not good news by any measure for the sake of the climate.

And that's based upon an impossible projection.
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