Peak Oil -New definition

[SidecarFlip]

I don't conveniently forget anything about the source of power for my electric car - I know it comes from my 15 kW solar array. I know that because I plug it in to charge when it is sunny and producing power. And if I didn't, that solar power output is offsetting other power generation - the power is not being wasted.

20% of US power comes from renewables (hydro, solar, wind). 20% comes from nukes. 20% comes from coal. The balance is largely natural gas. It varies state by state. It's a lot cleaner than that in upstate NY (85% nuclear, hydro or wind.

What was true of the grid 15 years ago (coal supplied 50% of US electricity) is not true today. And that is true of nearly every state, including most historically 90%+ coal-sourced electricity states.

I'm happy for ya and I find you laughable. You bother to consider the useful life of your panels? Bother to take into account the they degrade around 1-2% yearly? Bother to consider what the cost of replacing them or disposing of them is or the fact that they are considered hazardous waste and must be disposed of in an approved landfill at substantial cost (to you)? I bet not. People are short sighted. I guess it you want an array destroying your landscape, have at it. Wonder where the panels were made and where the rare earth minerals came from. Bet it wasn't here either.

Better hang on tour shorts, it will only get rougher and more costly as time goes on. Glad I'm an old fart.

My cousin has Tesla, the fancy AWD SUV one. I've driven it, it's fast. Do I want one, never. Every time he comes to visit, first thing I have to do is plug it into the 220 shop power 'cause no charge stations around here. My philosophy is, what blows your dress up don't blow mine up.

I have solar panels on my RV so I'm guilty as charged as well but I use them to keep the batteries charged, not as a prime source of power.

 

[Easy Livin’ 3000]

I'm happy for ya and I find you laughable. You bother to consider the useful life of your panels? Bother to take into account the they degrade around 1-2% yearly? Bother to consider what the cost of replacing them or disposing of them is or the fact that they are considered hazardous waste and must be disposed of in an approved landfill at substantial cost (to you)? I bet not. People are short sighted. I guess it you want an array destroying your landscape, have at it. Wonder where the panels were made and where the rare earth minerals came from. Bet it wasn't here either.

Better hang on tour shorts, it will only get rougher and more costly as time goes on. Glad I'm an old fart.

My cousin has Tesla, the fancy AWD SUV one. I've driven it, it's fast. Do I want one, never. Every time he comes to visit, first thing I have to do is plug it into the 220 shop power 'cause no charge stations around here. My philosophy is, what blows your dress up don't blow mine up.

I have solar panels on my RV so I'm guilty as charged as well but I use them to keep the batteries charged, not as a prime source of power.

And all the fossil fuel infrastructure doesn't degrade? Interesting.

 

[SidecarFlip]

Is low atmospheric sulphur a good thing or a bad thing for you?

Pretty soon the gummit will tax farmers (me) for cow farts..... Then, I'll sell of my cattle like most farmers will and the cost of your grocery store meat will skyrocket. Cause and effect or action and reaction. I won't be here to enjoy the fruits of the labors of enviromentalists and I'm glad of that. We could very well turn into a Soylent Green society, recycling is everything right?

 

[Easy Livin’ 3000]

Pretty soon the gummit will tax farmers (me) for cow farts..... Then, I'll sell of my cattle like most farmers will and the cost of your grocery store meat will skyrocket. Cause and effect or action and reaction. I won't be here to enjoy the fruits of the labors of enviromentalists and I'm glad of that. We could very well turn into a Soylent Green society, recycling is everything right?

Well, seafood has already become too expensive for many people.

Beef isn't expensive enough to account for it's true costs. Good thing they are making synthetic beef now. And I understand CAFOs are on their way out.

Probably better to sell out while you still can. Those beeves of yours might become a stranded asset like much of the oil that's left in the ground is likely to be.

Those damn environmentalists!

 

[Sawset]

Is low atmospheric sulphur a good thing or a bad thing for you?

I would say neutral regarding agriculture. More of an interesting observation than anything from that end. For other things it may be a substantial benefit. But having a direct impact on daily life, tangible and easily measured, not really requiring much debate, and having an effect no matter how remote the location - interesting observation.

 

[woodgeek]

Pretty soon the gummit will tax farmers (me) for cow farts..... Then, I'll sell of my cattle like most farmers will and the cost of your grocery store meat will skyrocket. Cause and effect or action and reaction. I won't be here to enjoy the fruits of the labors of enviromentalists and I'm glad of that. We could very well turn into a Soylent Green society, recycling is everything right?

No worries. I switched to Impossible Burger in 2019. People I serve it to can't believe its not beef. Yum.

As for predictability, um, people talking about global warming have been predicting the exact current scenario for more than a decade. Thanks Obama! Renewables get stupid cheap, grows exponentially, everything electrifies in stages. This has been the official policy plan since around 2012. All y'all are not reading the right sources.

EIA predictions aren't bad, they are legally REQUIRED to be bad. As a govt agency, they are not allowed to predict future energy policy. So their predictions are required to assume that current energy regs and renewable incentives (that all have sunsets, and need to get renewed) all sunset in 1-3 years. And that fossil subsidies (which don't have sunsets) will continue forever. And there will be no future laws or incentives for renewable power building on the existing ones. THAT is why they are bad. By law.

Independent analysts (like at Bloomberg) have been predicting global Peak Oil Demand in the 2025-2030 for close to a decade now. Yup, that's global, as in including the developing world, India and China. (China has way more electric cars than the US BTW).

The oil majors took a few more years to adjust their forecasts, and all of them now ALSO predict global peak oil demand around 2030 plus or minus. Except one, Exxon. They are fudging their projections at this point, and hiding behind the EIA, saying their projections predict less fossil use than the EIA does, so there! Garbage in, Garbage out.

2019 models by some predict peak oil demand before 2025. The covid oil demand blip might have pulled the peak back to 2019, but I think it more likely that oil demand will rebound, and limp slightly higher than 2019 in a few years, before starting its slow decline.

And I expect the market cap of the oil majors will be basically zero well before that. XOM is already down 50% from their 2010s average price, has a lower market cap than 'Zoom' and was delisted from the SP500. Following in the tracks of the coal companies 10 years ago. The Market likes a growth business, and hates a shrinking one.

 

[semipro]

We get a formal report every year from the farmer renting land for growing crops. It's been about 12yrs now that the report includes the micro nutrient sulpher being added to balance requirements from soil tests. Prior to that, tests showed neutral to an abundance of sulpher. Hmm, low atmospheric sulphur?, wonder how that happened.

I'm guessing that the primary contributors to atmospheric sulfur have been coal and petroleum fuel burning, and volcanism.
We're burning less coal (at least in the US) and have been working to remove sulfur from petroleum fuels so I'd expect a decrease. There's not much we can do about volcanism.
While some sulfur deposition in soils may be good for crops, sulfur in the air results in the formation of sulfuric acid, generally not a good thing.

 

[semipro]

20% of US power comes from renewables (hydro, solar, wind). 20% comes from nukes. 20% comes from coal. The balance is largely natural gas. It varies state by state. It's a lot cleaner than that in upstate NY (85% nuclear, hydro or wind.

What was true of the grid 15 years ago (coal supplied 50% of US electricity) is not true today. And that is true of nearly every state, including most historically 90%+ coal-sourced electricity states.

And there's lots of potential for improvement with increased grid efficiency and more renewables coming online.
Not so for fossil fuels and the infernal combustion engines that burn them.

 

[peakbagger]

You bother to consider the useful life of your panels? Bother to take into account the they degrade around 1-2% yearly? Bother to consider what the cost of replacing them or disposing of them is or the fact that they are considered hazardous waste and must be disposed of in an approved landfill at substantial cost (to you)? I bet not. People are short sighted. I guess it you want an array destroying your landscape, have at it. Wonder where the panels were made and where the rare earth minerals came from. Bet it wasn't here either.

I guess you have some misconceptions. I covered them awhile back but since they are common I will do it again. Yup they degrade, everything does, actual experience is the degradation factor stated by manufacturers are worst case, actual field measurements on installed arrays generally are far less. Worse case is add a few panels to the string. The currently type of panels used are not very hazardous, far less than a car battery and systems are in place to deal with car batteries as well as scrap cars. The frames are typically aluminum, there is a pretty good existing recycling network in place all ready. The front panel is tempered glass. Glass is readily recyclable. bonded to the glass are the silicon chips, silicon is basically refined beach sand. The wire traces are basically conductive metal tabs with solder and there may be some copper bus in the junction box. Realistically a typical household appliance has about the same level of toxics. There are recycling techniques in place but currently most panels are recycled for reuse as there are many that are still putting out viable power 25 to 30 years since they were made. I agree if you want to dispose of it in a landfill you will pay the going rate to dispose of an appliance. My local landfill charges $65 a ton and ton of panels is lot of panels once you knock off the frames. Ideally the frames get knocked off, the junction boxes get removed as a typical HDPE waste stream, then the silicon with the wafers are broken up and the metallic traces are seperated from the chunk glass.

Where were the panels made? Just like almost every product out there its made where its cheapest to make them, no different than any other product. Set trade policy to make them in the US and they will be made in the US. There really are no rare earth materials used in the current composition solar panels so I really cant answer where they come from.

As for ruining the landscape, that is a public policy decision. A typical house roof will pretty well cover the needs of a typical house. Put in place public policy to put arrays on all buildings and degraded areas and the need for large solar farms goes away.

 

[semipro]

I guess it you want an array destroying your landscape, have at it.

Here's how I protect my vehicles and destroy my landscape with solar PV

 

[Easy Livin’ 3000]

Here's how I protect my vehicles and destroy my landscape with solar PV
View attachment 268572

Horrific! Well, at least you don't have one of those cancer causing windmills destroying the view, too!

 

[ABMax24]

And I expect the market cap of the oil majors will be basically zero well before that. XOM is already down 50% from their 2010s average price, has a lower market cap than 'Zoom' and was delisted from the SP500. Following in the tracks of the coal companies 10 years ago. The Market likes a growth business, and hates a shrinking one.

Zero market cap won't happen as long as these oil companies continue to make a profit and pay dividends. Although the market is sometimes irrational and often narrowminded, Tesla being a prime example of this as it's valuation makes absolutely no logical sense. Fund managers won't simply ignore dividend paying oil stocks.

 

[woodgeek]

Zero market cap won't happen as long as these oil companies continue to make a profit and pay dividends. Although the market is sometimes irrational and often narrowminded, Tesla being a prime example of this as it's valuation makes absolutely no logical sense. Fund managers won't simply ignore dividend paying oil stocks.

Sure. XOM has been losing money for three quarters, and borrowing money to pay that fat dividend. Of course, even IF oil prices rise above $60/bbl and they start making a profit again, that dividend will be an albatross around their necks. Pay it, or watch people dump the stock.

Exxon lost a mint in Alberta in the 80s and 90s. And was late to the fracking party. And bought in just as the real big money ended. And has higher production costs than the sovereigns. And was busted by the SEC for their fishy bookkeeping, amortizing their fields over much longer periods than the other majors, and just took a huge writedown over that. Without their BS projections of ever growing global demand lifting all boats, they look weak as chit. Why do YOU think SP500 delisted them? Do you think they will be relisted?

The coal majors used to be behemoths. Their business model unassailable, they kept the lights on in the US. SP500 royalty. Fat dividends. Then $300B in market cap went poof in a few years, when the coal demand projections went poof, and thus their future implied value. Some are still in business, shadows of their former selves, the rest are bankrupt and gone.

 

[semipro]

Horrific! Well, at least you don't have one of those cancer causing windmills destroying the view, too!

Not yet, but it's in the plans.

 

[Easy Livin’ 3000]

Sure. XOM has been losing money for three quarters, and borrowing money to pay that fat dividend. Of course, even IF oil prices rise above $60/bbl and they start making a profit again, that dividend will be an albatross around their necks. Pay it, or watch people dump the stock.

Exxon lost a mint in Alberta in the 80s and 90s. And was late to the fracking party. And bought in just as the real big money ended. And has higher production costs than the sovereigns. And was busted by the SEC for their fishy bookkeeping, amortizing their fields over much longer periods than the other majors, and just took a huge writedown over that. Without their BS projections of ever growing global demand lifting all boats, they look weak as chit. Why do YOU think SP500 delisted them? Do you think they will be relisted?

The coal majors used to be behemoths. Their business model unassailable, they kept the lights on in the US. SP500 royalty. Fat dividends. Then $300B in market cap went poof in a few years, when the coal demand projections went poof, and thus their future implied value. Some are still in business, shadows of their former selves, the rest are bankrupt and gone.

I think your analysis is sound.

There will be some people clinging to the past, as they always do. What I don't understand is the loyalty to oil from people who aren't investors, executives, royalty recipients, etc. More lately, farmers who sell corn for ethanol are stakeholders, too.

I've worked on ice engines for over 30 years, they are horrible, complicated, dirty things. And they require transmissions, also horrible, complicated, dirty things. And oil enriches our mortal enemies. Just doesn't make sense to me.

 

[semipro]

I've worked on ice engines for over 30 years, they are horrible, complicated, dirty things.

I worked as an auto mechanic for 10+ years and totally agree. I also am a big DIYer and don't like to depend on others to get things done.
Having an electric vehicle has been damn near nirvana. It's fun and cheap to drive, runs on sunlight, starts every time, and requires little maintenance.
It's honestly hard to convey how good it feels to own and drive an EV.
Everyone should try it. We'd all be better off.

 

[semipro]

There will be some people clinging to the past, as they always do.

This I just don't get.
We will move forward. We will evolve. It's a natural progression. Any movement backwards is soon overtaken by advancement.
Embracing innovation and looking to a better future is so much more practical, rewarding,...and fun.

 

[ABMax24]

Sure. XOM has been losing money for three quarters, and borrowing money to pay that fat dividend. Of course, even IF oil prices rise above $60/bbl and they start making a profit again, that dividend will be an albatross around their necks. Pay it, or watch people dump the stock.

Exxon lost a mint in Alberta in the 80s and 90s. And was late to the fracking party. And bought in just as the real big money ended. And has higher production costs than the sovereigns. And was busted by the SEC for their fishy bookkeeping, amortizing their fields over much longer periods than the other majors, and just took a huge writedown over that. Without their BS projections of ever growing global demand lifting all boats, they look weak as chit. Why do YOU think SP500 delisted them? Do you think they will be relisted?

The coal majors used to be behemoths. Their business model unassailable, they kept the lights on in the US. SP500 royalty. Fat dividends. Then $300B in market cap went poof in a few years, when the coal demand projections went poof, and thus their future implied value. Some are still in business, shadows of their former selves, the rest are bankrupt and gone.

The problem with your analysis is you're making generalizations based on the example of one company. Most companies don't operate as Exxon does. Of course there will be companies that fail, but also those that succeed, this has been how the oil industry has operated since it's inception, this is nothing new or shocking. If Exxon fails another company will takeover its assets and likely operate them at a profit. There are companies that specialize in this sector of the oil and gas industry, CNRL being a prime example in Canada as they buy "unprofitable assets" at an extreme discount, reduce costs of production and return those production areas books to the black.

There's an issue with trying to compare oil and gas to coal in it's versatility of use, the vast majority of coal was consumed by industry, primarily in power generation and steel making. Oil and gas is far more widespread, it covers every sector of transportation, electricity generation, and heating in some form or another, lubrication, and all the modern materials that use petroleum as a feedstock for their production. Shutting down a 100 coal powerplants makes a massive difference on coal demand, you'd have to replace hundreds of millions of petroleum powered vehicles to have anywhere near the same effect.

 

[semipro]

No worries. I switched to Impossible Burger in 2019. People I serve it to can't believe its not beef. Yum.

Same here.
In fact, it tastes so much like beef that I'm never quite sure what we're getting when we order it at a restaurant.
They could easily serve us beef and we'd never know - maybe our cholesterol numbers or chances of getting colon cancer would elevate.

 

[woodgeek]

The problem with your analysis is you're making generalizations based on the example of one company. Most companies don't operate as Exxon does. Of course there will be companies that fail, but also those that succeed, this has been how the oil industry has operated since it's inception, this is nothing new or shocking. If Exxon fails another company will takeover its assets and likely operate them at a profit. There are companies that specialize in this sector of the oil and gas industry, CNRL being a prime example in Canada as they buy "unprofitable assets" at an extreme discount, reduce costs of production and return those production areas books to the black.

There's an issue with trying to compare oil and gas to coal in it's versatility of use, the vast majority of coal was consumed by industry, primarily in power generation and steel making. Oil and gas is far more widespread, it covers every sector of transportation, electricity generation, and heating in some form or another, lubrication, and all the modern materials that use petroleum as a feedstock for their production. Shutting down a 100 coal powerplants makes a massive difference on coal demand, you'd have to replace hundreds of millions of petroleum powered vehicles to have anywhere near the same effect.

Meh. Oil is versatile? Its used as a transportation fuel and some chemicals, many of latter can be made from biomass feedstocks at marginally higher cost. Coal is used for process heat/power, and in steelmaking, and a few other things. Looks the same to me.

When coal demand dropped only slightly, the overly leveraged coal companies, who had shady valuations based upon assets in the ground went poof. All that was required was the realization that the coal in the ground would never be extracted. Similarly, the oil cos are valued relative to their underground assets. Climate science says those assets mustn't be removed, therefore, they are actually worthless. Another company comes in and buys those assets at a discount?...they are still staying in the ground and worthless.

Its called the Carbon Bubble.

In reality, oil will be used for a long time. Just less and less. And the total amount remaining to be extracted can prob be handled by existing very low cost, conventional onshore production, from fields held by sovereigns, not the majors. The sovereigns know this and will keep the price low enough to drive any competitors out of production all the way down the post peak curve. The majors know this too, and this is why their exploration efforts are rapidly trending towards zero. They are going to make what money they can from existing fields, until the music stops playing.

 

[ABMax24]

Climate science says those assets mustn't be removed, therefore, they are actually worthless. Another company comes in and buys those assets at a discount?...they are still staying in the ground and worthless.

Worthless to whom?

Something I can extract from the ground, and sell to someone else for a profit is not the definition of worthless.

Even if 2019 was the peak year for oil demand, which almost every source says won't happen for at least another 10 years, there is still an absolutely massive amount of oil left to be extracted for the next fifty or so years. Somewhere around 100 million bpd will have to come from somewhere over the next decade and then start its slow decline. In the next decade many known reserves will be depleted, and we will use more oil in those 10 years than the 20 years between 1960 and 1980.

Don't get me wrong I'm not advocating for the further use of oil and gas, but I don't see the magical answer or indication that has seen us past the point of peak oil which is the topic of this thread.

 

[woodgeek]

@ABMax24, I think we agree a lot of oil will still be extracted, for a lot of money.

The only source I see calling a peak after 2030 are the more conservative of the oil majors. Many other independent analysts are putting it closer to 2025.

And given the time required to extract a conventional field, that means new conventional fields TODAY are risky or losers to develop.

And high multiples enjoyed by oil companies in the past are harder to justify TODAY.

 

[SpaceBus]

Horrific! Well, at least you don't have one of those cancer causing windmills destroying the view, too!

Do people hate them that much? I saw a bunch up close (I touched the base) a few years ago and found them to be quite mesmerizing. We sat underneath the blades and watched them turn for a while, I think there's a video on my smartphone somewhere. Didn't seem like a big deal to me, but I also don't have to see or hear them.

 

[SpaceBus]

The problem with your analysis is you're making generalizations based on the example of one company. Most companies don't operate as Exxon does. Of course there will be companies that fail, but also those that succeed, this has been how the oil industry has operated since it's inception, this is nothing new or shocking. If Exxon fails another company will takeover its assets and likely operate them at a profit. There are companies that specialize in this sector of the oil and gas industry, CNRL being a prime example in Canada as they buy "unprofitable assets" at an extreme discount, reduce costs of production and return those production areas books to the black.

There's an issue with trying to compare oil and gas to coal in it's versatility of use, the vast majority of coal was consumed by industry, primarily in power generation and steel making. Oil and gas is far more widespread, it covers every sector of transportation, electricity generation, and heating in some form or another, lubrication, and all the modern materials that use petroleum as a feedstock for their production. Shutting down a 100 coal powerplants makes a massive difference on coal demand, you'd have to replace hundreds of millions of petroleum powered vehicles to have anywhere near the same effect.

Sounds like CNRL is a dirtbag company. The assets they bought were unprofitable to start with and if they reduce the cost of production that usually means less pay for employees. I don't actually know if they are dirtbags, but...

 

[SpaceBus]

Worthless to whom?

Something I can extract from the ground, and sell to someone else for a profit is not the definition of worthless.

Even if 2019 was the peak year for oil demand, which almost every source says won't happen for at least another 10 years, there is still an absolutely massive amount of oil left to be extracted for the next fifty or so years. Somewhere around 100 million bpd will have to come from somewhere over the next decade and then start its slow decline. In the next decade many known reserves will be depleted, and we will use more oil in those 10 years than the 20 years between 1960 and 1980.

Don't get me wrong I'm not advocating for the further use of oil and gas, but I don't see the magical answer or indication that has seen us past the point of peak oil which is the topic of this thread.

Major lending institutions have already spoken on oil and natural gas. No more loans for fracking and that's just the start. The oil in the ground is a net loss if it costs more to extract, if it is extracted at all, than it is actually valued at.