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Oil Needs to Fall Below $20 to Compete With Green Alternatives

Alternative Energy

For the same investment, new wind and solar energy projects combined with battery-powered electric vehicles will eventually produce as much as seven times more useful energy than gasoline cars with oil priced near current levels, according to BNP Paribas SA.

Oil will have fall to $9-$10 a barrel in the long-term in order for gasoline to remain competitive with clean power for transport, and to $17-$19 a barrel for diesel, Mark Lewis, global head of sustainability research at BNP’s asset management unit, said in a research report. U.S. benchmark crude was trading at about $55 in New York on Monday.

“Our analysis leads to a very stark conclusion for the oil industry: for the same capital outlay today, wind and solar energy will already produce much more useful energy for EVs than will oil purchased on the spot market,” Lewis said. “These are stunning numbers, and they suggest that the economics of renewables in tandem with EVs are set to become irresistible over the next decade.”

Stark Numbers

Energy return on capital invested

Note: Energy return from new renewables projects in tandem with EVs, versus oil used for gasoline vehicles for a $100b outlay — in TWh

Lewis coined the term “energy return on capital invested” to explain the economics of road transport. It’s a measure of the money spent on oil and renewables and the differential in their net energy produced when used to provide mobility, he said.

Still, changes will take time.

“The oil industry today enjoys a massive scale advantage over wind and solar of several orders of magnitude – oil supplied 33% of global energy in 2018 compared with only 3% from wind and solar,” Lewis said.

Crude oil trades above long-term average of $48/barrel
Bloomberg


41 Comments on "Oil Needs to Fall Below $20 to Compete With Green Alternatives"

  1. Robert Inget on Mon, 5th Aug 2019 9:03 am 

    So far, there are no ‘green’ liquid fuel alternatives.
    EV’s represent but 2% of the existing pool.
    We get deeper into our ‘ICE’ Age daily.

    If crude falls $30 Jane and Joe Sixpack will be buying all those abandoned SUV’s and PU’s .

  2. Robert Inget on Mon, 5th Aug 2019 9:32 am 

    We are “Deep Into the Big Muddy” re; currency
    devaluation.

    China is allowing the yuan to fall making Chinese exports far cheaper than US. It’s a passive move
    on China’s part by Not propping up the yuan.

    Markets are relentlessly dropping in reaction.
    The fear, USD losing its position as the best dog at the puppy mill.

  3. ANAL REAPER on Mon, 5th Aug 2019 10:17 am 

    Hokay!

    “Green energy” can’t even be a thing without massive fossil fuel use.

    It is far from green or renewable since it takes massive use of coal and oil just to mine for the minerals for solar panels.

    Fucking idiots.

  4. Robert Inget on Mon, 5th Aug 2019 10:40 am 

    First, let’s understand, most investors know diddly about international oil markets. If asked ‘where does your gasoline come from’? Depending on where a person lives will determine answers.
    Some will say California, Texas, Oklahoma, etc.
    Almost no one thinks of Canada.

    Few individuals devote the time and energy learning aboot this floating target, crude oil.

    Fact: Actual domestic CONSUMPTION is up 1 million barrels p/d worldwide.
    (demand WAS projected to rise 1.5 M B p/d)
    So far, (in 2019) demand is lower year over year by one half percent.

    Fact: SUPPLY is Not keeping up with demand, WW.

    https://www.statista.com/statistics/271823/daily-global-crude-oil-demand-since-2006/

    Fact: Both Venezuela and Mexico are negative
    exporters. (they burn more than export)

    Shale, our great white hope, wells lower by 38% in the first year of production.

    ONLY Canada and Venezuela hold promise, for the West, long term.

    US consumption stands at 21.1 M B p/d.
    Canada, our primary (soon only?) exporter.

  5. Robert Inget on Mon, 5th Aug 2019 10:55 am 

    We see, haters are everywhere.

    Find out who this asshole is and don’t sell him a gun.

  6. More Davy Fraudulent ID Usage on Mon, 5th Aug 2019 11:43 am 

    Robert Inget on Mon, 5th Aug 2019 10:17 am

    Stupid JuanP sock on Mon, 5th Aug 2019 10:48 am

    Stupid JuanP sock on Mon, 5th Aug 2019 10:51 am

  7. Outcast_Searcher on Mon, 5th Aug 2019 12:12 pm 

    And yet, the primary thing holding electric cars back (whether HEV, PHEV or BEV) is they’re not cost competitive vs. ICE cars.

    Now, if gasoline is consistently more like $5 a gallon that changes.

    Of course, that means oil prices well north of $100, not roughly a tenth of that.

    That may well change in coming decades, but not because of arm waving and green sloganeering. Battery research resulting in useful and cheap green products takes decades to bring to fruition, for example.

    Solar for individuals was too expensive to compete with utility scale electrics in the 70’s. It’s only getting into the same ballpark now, in the most favorable locales.

  8. Michael BERGER on Tue, 6th Aug 2019 10:14 am 

    Re: Outcast_Searcher,
    Depends upon which metric. If you can’t do math then only car out the door matters. If you can, the total cost of ownership matters.

    The things holding EV’s back are: production capacity, and enough models in all market segments. Curently they’re are only models in:
    Economy car, bolt, leaf etc.
    Large luxury class SUV’s X,
    Mid sized luxury SUV’s: IPace, Etron. Large luxury sedan S

    Way too few segments, way too few choices within segments.

  9. Duncan Idaho on Tue, 6th Aug 2019 10:36 am 

    “it’s all but guaranteed that the age is coming when all of the ideologies, the intrigues of whatever political ethos, the distinctions of religious difference, the whatevers of every ist or ism, will reveal themselves to be completely inadequate, and even meaningless, as entire societies are confronted with their urgent and immediate physical survival.”
    Bingo!
    we have a winner

  10. Robert Inget on Tue, 6th Aug 2019 11:16 am 

    Australia is negotiating with Trump administration to buy MILLIONS of barrels of oil – because we only have enough in reserve to power the country for 28 days
    Australia is in talks with the United States to buy millions of barrels of oil
    The Morrison government is negotiating to access America’s own fuel reserve
    Australia has enough petrol and crude oil to last 28 days
    By AUSTRALIAN ASSOCIATED PRESS

    PUBLISHED: 19:28 EDT, 4 August 2019 | UPDATED: 10:24 EDT, 5 August 2019

  11. Robert Inget on Tue, 6th Aug 2019 11:22 am 

    I’m uncertain as to the truth of the above story.
    If a full tanker left Houston TODAY, it would take longer than 28 days to reach Australia.

    Besides, Australia is an oil exporting nation.
    (must be fake)

  12. Robert Inget on Tue, 6th Aug 2019 11:32 am 

    This I know to be true. Puts lie to BS around falling demand.

    U.S. EIA RAISES FORECAST FOR 2020 WORLD OIL DEMAND GROWTH BY 30,000 BPD, NOW SEES 1.43 MLN BPD YR-ON-YR INCREASE
    #OOTT

  13. Robert Inget on Tue, 6th Aug 2019 11:36 am 

    Best place to ‘discover’ oil today would be in the bankruptcy courts.

    More than two dozen E&P’s are seeing new lows
    last week and this.

  14. Robert Inget on Tue, 6th Aug 2019 11:44 am 

    Expanded news on that Australian US SPR buy.

    https://oilprice.com/Latest-Energy-News/World-News/Australia-Seeks-To-Stock-Up-On-US-Oil-Amid-Gulf-Spat.html

    Looks like BOTH the US and Mexico are in need of plugging deep budget holes. (read entire story above)

    If the Mexican govt. robs the oil fund, how will they hope to replace that oil?

    The US SPR was put together for EMERGENCIES.

  15. Robert Inget on Tue, 6th Aug 2019 12:36 pm 

    GOOD NEWS!
    FOR TWELVE HOURS
    Guns were less popular than dreaded fossil fuels.
    Alas, 12 hours past, gun stores are winning again.

  16. Cloggie on Tue, 6th Aug 2019 2:28 pm 

    “Oil Needs to Fall Below $20 to Compete With Green Alternatives”

    Ya-but, renewables are not DENSE enough, and, and, and you need fossil fuel to build them, aaaand….

    ROFL.

    Home-run article by Bloomberg.

    The EU has a 90-100% renewable energy policy.
    Europe, that’s the science and engineering original:

    https://documents1940.wordpress.com/2017/09/26/origin-scientific-accomplishments/

    They know what they are doing.

  17. Cloggie on Wed, 7th Aug 2019 1:39 am 

    Scientists in the UK develop a gold layer of 2 atoms thick:

    https://www.spiegel.de/wissenschaft/technik/goldenes-nano-seegras-forscher-erzeugen-das-duennste-gold-der-welt-a-1280735.html

    This is import since a surface like this keeps its macroscopic properties as catalyst. There are many important applications where expensive catalysts play an crucial role. Now price of material hardly matters anymore.

    English original:

    https://onlinelibrary.wiley.com/doi/full/10.1002/advs.201900911

  18. Davy on Wed, 7th Aug 2019 4:23 am 

    “Now price of material hardly matters anymore.”

    You need to read that again cloggo. It is hilarious coming from someone who you would think knows better.

  19. Robert Inget on Wed, 7th Aug 2019 6:51 am 

    ALASKAN HEATWAVE

    All Alaskan sea-ice, GONE. (150 miles offshore)
    Alaskan temps raised four degrees last 50 years.
    (global raised two degrees)

    https://www.nbcnews.com/news/weather/record-heat-alaska-melts-glaciers-hints-bigger-problems-may-be-n1034766

    One ‘problem’ we won’t be able to ignore, The Alaskan Pipeline. Built on permafrost that’s no longer ‘perma’.

  20. majece majece on Wed, 7th Aug 2019 6:57 am 

    By the way, on https://topspyingapps.com/read-someones-text-messages-without-installing-software/ you can get useful info about reading someones text messages. It’s quite important to know

  21. Robert Inget on Wed, 7th Aug 2019 7:10 am 

    Important EIA Repore due out 10:30 Eastern.

    Trump’s ‘War on Trade’ has morphed into a currency war. As I’ve predicted here for months,
    it appears USD may be set to devalue along with
    another interest rate cut. If devaluation comes, in the face of a cut, that’s so backwards, financial panic ensues.

    Trump is acting on his own. He no longer takes advice from financial advisors. At some point,
    to save what we can of this highly over leveraged economy, Trump MUST be forced to resign.

  22. Antius on Wed, 7th Aug 2019 7:28 am 

    Interesting analysis of liquid-air energy storage. The concept involves using a refrigeration plant to liquefy air, which is then stored within an insulated tank at atmospheric pressure. During power recovery, ambient heat is used to boil the air, extracting energy by passing it through an engine or turbine.

    http://eprints.brighton.ac.uk/14982/1/ener1400038.pdf

    The study concludes that a full scale20 MW/800MWh production units will store electrical energy at a cost of ~£100/MWh. This makes it cheaper than any other storage technology other than CAES. Round trip efficiency is about 50%, though more could be achieved if the expansion phase were augmented by waste heat or solar heat.

    The great advantage of this technology as a grid energy store is that energy can be stored as a relatively stable liquid in underground tanks at atmospheric pressure. The storage is also relatively energy-dense – about 300MJ/m3. This means that doubling the volume of energy stored requires doubling the volume of the underground tank, which should be relatively cheap. Whereas CAES, pumped hydro, hydrogen and battery are economically useful as short term storage solutions; the low energy density or high cost of storage, make them impractical for long-term energy storage. Pumped hydro and CAES are also dependent upon suitable geography. But an atmospheric tank with soil insulation can be built anywhere and might be cheap enough to store energy interseasonally. To store a week’s worth of power for a country like Britain, with an average electric power demand of about 30GW; would require sixty tanks of 100m diameter, or a single tank some 400m in diameter. We have plenty of disused quarries in that size range.

    Like hydrogen, liquid air could provide a portable transport fuel. It would not need to be stored within a pressure vessel and would not suffer any flammability issues. The downside is that a litre of liquid air carries only about 3.5% the energy of a litre of gasoline. A 200km range for typical family car would require a 350 litre storage tank. On the plus side, refilling would take place at a pump very similar to a diesel / petrol pump, with similar refilling times.

  23. Robert Inget on Wed, 7th Aug 2019 8:08 am 

    Ten Year Bond yield at eleven year lows.
    Could zero yield be next?
    Gold and Bitcoins are higher.

    Speaking of digital currencies.
    North Korea has been stealing billions from cyber markets. FACT.

    Now, in order to stimulate cyber coin demand, price, N. Korea is busy launching mid range missiles to upset S. Korea and Japan but not the US at present.

    https://www.bing.com/videos/search?q=North+Korea+stealing+billions+cyber+coin&qpvt=North+Korea+stealing+billions+cyber+coin&FORM=VDRE

    Currencies around the world lowering interest rates. IOW’s, devaluation.

    Deflation is the worst course of events, making debt service impossible.

  24. Robert Inget on Wed, 7th Aug 2019 9:32 am 

    EIA Shows an Increase. NOT a draw as expected.

    Summary of Weekly Petroleum Data for the week ending August 2, 2019
    U.S. crude oil refinery inputs averaged 17.8 million barrels per day during the week
    ending August 2, 2019, which was 786,000 barrels per day more than the previous
    week’s average. Refineries operated at 96.4% of their operable capacity last week.
    Gasoline production increased last week, averaging 10.4 million barrels per day.
    Distillate fuel production increased last week, averaging 5.3 million barrels per day.

    U.S. crude oil imports averaged 7.1 million barrels per day last week, up by 485,000
    barrels per day from the previous week. Over the past four weeks, crude oil imports
    averaged about 6.9 million barrels per day, 14.9% less than the same four-week period
    last year. Total motor gasoline imports (including both finished gasoline and gasoline
    blending components) last week averaged 1,217,000 barrels per day, and distillate fuel
    imports averaged 253,000 barrels per day.
    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum
    Reserve) increased by 2.4 million barrels from the previous week. At 438.9 million
    barrels, U.S. crude oil inventories are about 2% above the five year average for this time
    of year. Total motor gasoline inventories increased by 4.4 million barrels last week and
    are about 4% above the five year average for this time of year. Finished gasoline and
    blending components inventories both increased last week. Distillate fuel inventories
    increased by 1.5 million barrels last week and are about 1% below the five year average
    for this time of year. Propane/propylene inventories increased by 2.9 million barrels last
    week and are about 8% above the five year average for this time of year. Total
    commercial petroleum inventories increased last week by 10.4 million barrels last week.

    Total products supplied over the last four-week period averaged 21.2 million barrels per
    day, up by 0.2% from the same period last year. Over the past four weeks, motor gasoline
    product supplied averaged 9.5 million barrels per day, down by 1.8% from the same
    period last year. Distillate fuel product supplied averaged 3.9 million barrels per day over
    the past four weeks, down by 2.0% from the same period last year. Jet fuel product
    supplied was up 2.2% compared with the same four-week period last year.

  25. Robert Inget on Wed, 7th Aug 2019 9:38 am 

    WTI will doubtless go to a $50 handle today.

    Many many small oil companies, public and private will fold. (they simply cannot service loans)

    Natural order. Next, we see shortages,
    punishing high prices and bank failures.
    Mass unemployment.

  26. Robert Inget on Wed, 7th Aug 2019 9:52 am 

    One more observation.
    (One million barrels P/D)
    The so called ‘adjustments’ (crude from ‘unknown’
    sources,) will go away. It’s my belief crude is being trans-shipped from Venezuela. There are dozens of SAT pictures of tankers bellied up swapping cargo at sea.
    Keep in mind, like so many other Govt. agencies EIA does what it needs to do to keep funding.

    Trump called for this practice to end. (mainly because it was uncovered)

  27. Davy on Wed, 7th Aug 2019 11:20 am 

    WTI will doubtless go to a $50 handle today.

    remember this bob?

    1.Robert Inget on Sat, 6th Apr 2019 3:00 pm
    “No one can predict how this situation resolves.
    ONLY one thing certain. $100+ oil gets printed
    by July 4th.”

  28. driving directions on Wed, 7th Aug 2019 9:09 pm 

    I still have questions about this, the article is very good, it helps me now

  29. Robert Inget on Thu, 8th Aug 2019 8:53 am 

    Russia Gains Stranglehold Over Persian Gulf

    This will change the equation big time:

    In a potentially catastrophic escalation of tensions in the Persian Gulf, Russia plans to use Iran’s ports in Bandar-e-Bushehr and Chabahar as forward military bases for warships and nuclear submarines, guarded by hundreds of Special Forces troops under the guise of ‘military advisers’, and an airbase near Bandar-e-Bushehr as a hub for 35 Sukhoi Su-57 fighter planes OilPrice.com has exclusively been told by senior sources close to the Iranian regime. Link:
    https://www.zerohedge.com/news/2019-08-07/russia-gains-stranglehold-over-persian-gulf

    OKAY, So what! China and Russia have chokehold
    on US oil supplies. We have SHALE.
    WE may not have ANY control of Venezuelan exports, but we have shale.
    We also have a President who stands to make billions as USD sinks into ignominy.

    I’ve warned about this all year. If we lose USD, we lose everything.

    It’s all about oil. Once a person understands this,
    the faster one gains financial enlightenment.

  30. Robert Inget on Thu, 8th Aug 2019 8:59 am 

    (Davy’s predictions are no better than mine)

    “WTI will doubtless go to a $50 handle today”.

    remember this bob?

    1.Robert Inget on Sat, 6th Apr 2019 3:00 pm
    “No one can predict how this situation resolves.
    ONLY one thing certain. $100+ oil gets printed
    by July 4th.”

  31. Davy on Thu, 8th Aug 2019 9:23 am 

    (Davy’s predictions are no better than mine)

    Bob, you prediction are made wildly and excessively. Big difference iOW you talk too much

  32. Antius on Thu, 8th Aug 2019 10:29 am 

    There is an interesting discussion taking place on Tim Morgan’s Surplus Energy Economics website. Frankly, it sends chills down my spine. Tim has been tracking the ‘Energy Cost of Energy’ of fossil fuels for some time. It is his belief that very little oil will be profitable ten years from now, as ECoE is now rising exponentially. He promises to elaborate in his next article, which will no doubt be well worth a read.

    Interestingly, this might not lead to particularly high prices relative to today, because the energy intensity of GDP places limits on the affordability of oil as an energy source and wages for consumers are not growing fast enough to keep up with real inflation. More likely, it will lead to bankruptcy of producers, falling production and economic depression. We have seen the beginnings of this in Venezuela . The crisis, when it arrives, is likely to unfold very quickly and take most people by surprise – central banks have been propping up economic output for the past ten years with quantitative easing and huge additions to government, consumer and corporate debt, whilst simultaneously dropping interest rates beneath inflation. At some point, the world will reach a Minsky moment and we will be staring into another 1929 economic dislocation.

    During the 2009 recession, the insolvency problem was largely confined to banks, which suddenly found themselves overloaded with bad debt. Unfortunately, the scale of money printing over the past decade is likely to result in a threat to the purchasing power of fiat currencies, leading to failure of central governments.

    The speed at which the crisis unfolds, will make practical solutions difficult. We seem to be stuck in a situation in which people deny the existence of a crisis, piling up more debt, until it literally bankrupts entire nations; whereupon they no longer have the resources to practically manage it.

  33. Robert Inget on Thu, 8th Aug 2019 12:17 pm 

    Antius,

    Thank you for your (albeit) bleak contribution.

    After reading yet another Davy post I vowed to
    go back to Twitter. After all, there is just so much time remaining.

    There are so many ‘threats’ to human survival.
    Most here, I assume, would list world warming as our greatest concerns.
    Our current administration believes political concerns (campaign contributions) forbid dialog.

    Life is so strange.

  34. Robert Inget on Thu, 8th Aug 2019 12:44 pm 

    I’ve investing in the oil and gas space for over 30 years and have seen values like these maybe three times.

    At each bottom almost everyone hated oil and gas stocks. Those who bought each time, after a wait of a couple of years had multi baggers.

    As I look around the world, producing areas are in outright decline. It is peak oil for them.

    Masked by increased output from the shale plays. We now see a rig count cut of around 100 rigs and dropping.

    Eagle Ford in decline, and the Bakken in the process of reaching peak. With lower rig count and a higher base production rate requires increasing output from new wells to keep up, combined with lower rig counts. The production increase from
    shales will have lower growth rates than forecasted.

    One thing about oil markets, lows and highs have limited duration, and this decline is getting long in the tooth.

    Have we seen the bottom yet? No one knows but we are very close. (edited for space)

    Post by rdesroch… Not myself. However, if i didn’t agree, I wouldn’t have reposted here.

    Could be wishful thinking. My thinking remains;
    ‘We are at the beginning of the end of the ‘ICE AGE’, not the end of the beginning.

    Screen name ‘rdesroch’ is like most retired oil men an arch reactionary. No matter, he’s experienced, I’m not either.

  35. Robert Inget on Thu, 8th Aug 2019 1:03 pm 

    (it’s my firm contention, world consumption come up short w/o Venezuelan heavy crude).

    Scuttlebutt

    PDVSA expects to ship in August ~680,000 bo/d.
    Consider the problem for PDVSA:

    They are shipping to China 290,000 bo/d and 126,000 bo/d to Russia for debt payments. This is ~416,000 bo/d for debt. This leaves PDVSA about 264,000 bo/d to pay for everything else including other debt that PDVSA and Venezuela have. PDVSA is shipping a few thousand bo/d off the books – for corrupt payments to government officials and etc. Probably less than 40,000 bo/d.

    Given that so much of PDVSA’s oil is paying debts, I doubt they will have difficulty selling the remaining 264,000 bo/d ….

    China and Russia will make what arrangements that they need to do to get around US embargoes.

  36. Robert Inget on Thu, 8th Aug 2019 1:26 pm 

    Just in: NE will be short HO for winter heating.

    Order now, it ain’t getting cheaper.
    Reason; Venezuela under tight embargo.

  37. JuanP on Thu, 8th Aug 2019 1:47 pm 

    Robert, I thought you were going to twitter where the other liberals go for safety?

  38. Dooma on Fri, 9th Aug 2019 4:40 am 

    Robert, here is an article you might like to have a look at as it paints a bleak picture for our country and fuel security.

    Morrison has the difficult task of pleasing the Americans in the hope that they would defend us if China or India decided to take us over. This is very risky as, unlike the ME, we do not have any oil.

    Plus the PM must keep on China’s good side when it comes to trade and ignore embargoes. That is only going to slow down the inevitable, when China defeats our token military during the up & coming resource wars.

    https://theconversation.com/australias-fuel-stockpile-is-perilously-low-and-it-may-be-too-late-for-a-refill-96271

  39. Davy on Tue, 13th Aug 2019 7:34 am 

    From cloggo a few days ago:
    https://browserspy.dk/webserver.php
    and fill in peakoil.com, you get that the server is hosted by Cloudflare:
    https://en.wikipedia.org/wiki/Cloudflare
    Cloudflare is one of the last bastions of free speech, under lefties also known as “hate speech”.
    It is very sad that the admin of this site doesn’t seem to want to take the trouble to log in to his server dashboard and active a few presets, enforcing posters to post under a unique username/password combination. That doesn’t eliminate (JUANPEE) to post garbage under fake identities, but at least it stops identity theft and that would make a hell of a difference.
    If possible, you could also enforce that one IP-address can only post under a single identity.
    Please admin, invest an hour of your time to get this right. The international situation is getting more “interesting” (like in famous the Chinese proverb) by the day.

  40. Truth Buster on Tue, 13th Aug 2019 7:35 am 

    amen

  41. Mario Mangone on Sat, 7th Sep 2019 4:32 am 

    The use of alternative sources of energy is the only answer to mitigate global warming. Hope its not too late, we can not continue to burn oil at this rate. A coordinate global effort to reduce emission of co2 can save the eco-system and life on earth as we know.

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