Yves here. Prices at the pump in the heavily-subsidized US are sending a loud signal to consumers about rising energy costs. But as this article points out, the crunch here and in the rest of the world is due in significant measure to poor planning and wishful thinking. Officials have been threatening to Do Something about fossil fuel emissions so as to have discouraged Big Oil investment in development and extraction. That ought to be a good thing, but these same folks in charge haven’t been anywhere near as serious about what happens next, as in what combination of conservation and new energy sources (and that means all the necessary infrastructure related to them) needs to be ginned up so as to keep vital services functioning at least adequately.
By Tsvetana Paraskova, a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. Originally published at OilPrice
- While oil and gas companies come under pressure to reduce production, the world’s thirst for new supply is only growing
- Without a significant uptick in investment, demand for oil and gas will surpass supply in the not-so-distant future
- This disconnect between the political desire for less fossil fuels and the global hunger for fossil fuels could drive the price of oil up to $100
Chronic underinvestment in new oil supply since the 2015 crisis and the pressure on oil and gas companies to curb emissions and even “keep it in the ground” will likely lead to peak global oil production earlier than previously expected, analysts say.
This would be a welcome development for green energy advocates, net-zero agendas, and the planet if it weren’t for one simple fact: oil demand is rebounding from the pandemic-driven slump and will set a new average annual record as soon as next year.
The energy transition and the various government plans for net-zero emissions have prompted analysts to forecast that peak oil demand would occur earlier than expected just a few years ago. However, as current investment trends in oil and gas stand, global oil supply could peak sooner than global oil demand, opening a supply gap that would lead to increased volatility on the oil market, with spikes in prices, and, potentially, structurally higher oil prices by the middle of this decade and beyond.
Supply Could Peak Before Demand
“On current trends, global oil supply is likely to peak even earlier than demand,” Morgan Stanley’s research department wrote in a note this week carried by Reuters.
“The planet puts boundaries on the amount of carbon that can safely be emitted. Therefore, oil consumption needs to peak,” analysts at Morgan Stanley said.
The problem with the world is that oil consumption – wishful thinking, investor pressure, and all – is not peaking. Nor will it peak until the end of this decade at the earliest, according to most estimates.
OPEC expects global oil demand to continue to grow into the mid-2030s to 108 million barrels per day (bpd), after which it is set to plateau until 2045, as per the cartel’s latest annual outlook.
Some other analysts expect peak demand at some point in the late 2020s.
Investment in new supply, however, is severely lagging global oil demand growth.
Demand is growing again after the 2020 COVID crisis and, contrary to some expectations from early 2020 that the world’s oil consumption would never return to pre-pandemic levels, demand is currently just a few months away from hitting and exceeding those levels.
Supply Gap Is Looming In Just A Few Years
Supply, on the other hand, looks constrained beyond the OPEC+ deal horizon.
New investment last year slumped to a decade-and-a-half low. Last year, global upstream investment sank to a 15-year low of $350 billion, according to estimates by Wood Mackenzie from earlier this year.
Investment is not expected to materially pick up this year, either, despite $80 oil. That’s because supermajors stick to capital discipline and pledge net-zero emission targets, part of which some of them plan to reach by curbing investment and developments in non-core little-profitable new oil projects.
U.S. shale, for its part, is not rushing this time to “drill themselves into oblivion,” as Harold Hamm said in 2017, as American producers look to finally reward shareholders after years of plowing cash flows into drilling and chasing production growth.
Considering that oil demand will still grow, at least for a few more years, underinvestment in new supply would be a major problem in the medium and long term.
Despite the energy transition, demand will not just vanish, and new supply will be needed for years to come to replace declining production and reserves.
The oil industry will need massive investments over the next 25 years in order to meet demand, according to OPEC. The industry will need cumulative long-term upstream, midstream, and downstream oil-related investments of $11.8 trillion by 2045, OPEC says.
Patrick Pouyanné, chief executive at France’s TotalEnergies, said at the Energy Intelligence Forum this month that oil prices would “rocket to the roof” by 2030 if the industry were to stop investments in new supply, as some scenarios for net-zero by 2050 suggest. “If we stop investing in 2020, we leave all these resources in the ground … and then the price will rocket to the roof. And even in developed countries, it will be a big issue,” Pouyanné said.
$100 Oil Is No Longer An Outrageous Prediction
A triple-digit oil price is no longer an outrageous prediction as it would have been in early 2020.
Francisco Blanch, global head of commodities and derivatives research at Bank of America, expects oil to hit $100 by September 2022, or even earlier if this winter is much colder than expected.
Demand is coming back, while we have seen severe underinvestment in supply the last 18 months, Blanch told Bloomberg at the end of September.
“The underinvestment problem cannot be solved easily, and at the same time we have surging demand,” he said.
“We are moving into a straightjacket for energy, we don’t want to use coal, we want to use less and less gas, we want to move away from oil,” Blanch told Bloomberg.
While oil is unlikely to sit at triple digits for a sustained period of time, underinvestment has become “a multi-year problem” for the industry, Blanch noted.
Even if oil doesn’t stay at $100 a barrel, a supply crunch down the road would nevertheless move the floor under oil prices higher and lead to unsustainable price spikes. As much as climate activists want a stop to investment in new supply, the industry and the world cannot afford it because oil demand continues to grow.
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Its a little odd that we are back to talking about Peak Oil again, when the entire thesis was supposedly disproven.
The fundamental problem the oil industry faces is that the amount of capital investment required to get a barrel out of the ground is rising rapidly and has been doing so for years. The world has long ago run out of cheap, easy to access land reserves of a scale that would make a real difference to global prices. There is plenty of oil out there (mostly pre-salt deposits in the Atlantic), but none of it will be cheap to extract and process. It will also be very dirty to process, wheither its fracked tight oil, or heavy crudes from Canada or Venezuela. Its all very nasty stuff.
So we can spend 11.8 trillion dollars, or whatever, to try to keep supplies up, or we can spend that money, and much more, in ensuring that high price spikes (which are absolutely inevitable when a raw material hits supply constraints) don’t hit the real economy. We can only do this by ensuring that the core elements of our economy are not dependent on oil – i.e. transport and manufacturing. And that means mass electrification of the key areas of the economy and a conversion away from oil and gas. That is the only way the fundamentals of the economy can be protected. If someone is stupid enough to buy a giant truck so they can commute to work, thats on them.
The energy to build out this mass electrification and supply the power stations that produce the electricity – where will that come from, without using huge amounts of coal? Do we even have enough readily available uranium or thorium to make nuclear a possibility? Imo we are not going to have a transition – it may have even been too late 40 years ago, I think it is impossible now, even if the politicians and most powerful companies were on board – of which many are not.
In many circumstances (especially with transport), electricity is inherently more efficient, so it does not increase overall energy demand in a linear direction. But of course, an overall dramatic reduction in overall energy use is unavoidable. But you cannot escape the reality that to reduce energy demand, (or to be precise, energy emissions), you must convert many existing uses to electricity. Transport, as an obvious example, simply must be electrified, even if demand can be sensibly reduced. Similarly with domestic heating/cooling.
The cheapest form of electricity these days is renewable energy. Even the nuclear industry (through gritted teeth) admits this. So a massive expansion of renewables is unavoidable, whichever option you choose. There is plenty of uraniun and thorium in the world, thats not a serious limiting factor on nuclear. The limiting factor with nuclear is that its just too expensive, and there seems to be little scope for reducing cost through scale (unlike most of the alternatives). If nuclear is to be an answer, we need reactors that are not yet invented and are unlikely to be available for a decade or more. We don’t have that time to spare.
Coal is a gigantic problem, as for many countries it is simply too cheap to avoid. Even China, with its vast investment resources, is struggling to get away from the need for more coal. But coal itself has huge problems, and not just from pollution. There are major international bottlenecks in supply and, to take one example, China is struggling with the water resources needed for coal production in its arid inland areas. So there are no easy solutions.
The problem we have is that there is no ‘good’ option available. We have a range of problematic and difficult options. If we don’t choose one, then the ‘free’ market will choose it for us. And we know where this leads us.
“China continues to add coal-fired power plants within its borders, bringing forty-one gigawatts of coal power on line in 2020 alone, which accounted for seventy-five percent of the global total.”
From here: https://www.cfr.org/blog/making-sense-chinas-pledge-stop-building-coal-fired-power-plants-abroad
The problem for China is that they are building coal plants, but as they’ve found this year, this does not guarantee a supply of fuel, at least not at a price the plant owners are willing to pay. Even in a very directed economy like China, it can be a struggle to match what electricity plant owners want to build and operate, with what network operators can deal with, and with what the domestic and international market can supply in terms of fuel. Not all Chinese investment decisions are rational either financially, strategically, or economically as we’ve seen very clearly in their current electricity supply crisis.
I agree with you PK & c-heale, especially about the opportunity cost of a “nuclear solution”. Yves’ observation about the inevitability of “radical conservation”, either planned or imposed by nature is spot on. The Jackpot awaits!
i’m so very happy that i heat almost exclusively with wood,lol.
during last Feb’s 2 weeks of the Texas Hill Country being below 25 degrees, I was super proud of myself, too…and just about everyone who had, in the past(even a week before) ,pooh-poohed my luddism and insistence on as much autarky as possible, suddenly discovered that our rinky dink place was better suited to such contingencies than their modern and even futuristic systems.(takes electricty to run a furnace, no matter what it’s fueled by.)
mine was the only house in the county to maintain above freezing indoor temps throughout, according to all my subsequent surveys and eavesdropping.
i reckon that i’ll be less and less of an outlier as things deteriorate….although i also expect the distribution of autarky to be as lopsided as everything else has been…with the more well off being better positioned to “git their preps in”…leading to that neo-feudalism i’m always worrying about.
Indeed, the folks that have been moving out here with piles of money for the last 10-20 years are the ones who query me the most about building independence.
Nothing was done 50 years ago to transition away from fossil fuels during the first oil shock. I don’t have a lot of faith in the current iteration of elites to do anything different this time.
Things were done but then they were undone. Those solar panels came off the White House roof and the huge 70s surge in small car popularity gave way to SUVs and trucks.
Around here I have noticed an increase in freeway traffic and even leisure traffic during a recent trip to the nearby mountains. Clearly Americans are eager to get back out in their expensive (average price 45k) vehicles. It may take a considerable gas price increase or more lockdowns to pry them away.
I would venture to guess that the elites weren’t thinking about thinking…
The Giant Truck commute problem does NOT exist in a vacuum. The mindset of the giant truck owner- I have found nine times out of ten- is the fairly in-your-face, bellicose belligerent Freedom, Don’t tread on Me, my choice mind set. More often than not, fling those very Flags from the pickup bed!
There is a lot of hard-set dogma that will drive that truck owner’s behavior to NOT shift to a smaller car, tele-commuting, or car pooling. She will dig in her heels and rally along with other like minded ‘motorheads’. That truck frequently tows a pair of Jet skis, snowmobiles, or ATV’s to go out and rip up The Commons.
Group B, the folks who turned out in France, the Yellow Vests, who rely (don’t we all) heavily on oil, and cannot readily re-tool, as they do not have the financial capacity.
I’m still driving a ’96, and it is , I swear to Gawd and knock on wood, the last car I will buy and own. That said, I am not in a position to buy a $30K e-V. Perhaps a used golf cart, which actually, for around town, would be perfectly adequate, but I choose my bicycle and converted kids bike-trolley tow cart in town.
And I am a spectacle.
Is the gubmint going to subsidize the life conversions we all elementally need to make, 30 years ago, in the future?
We certainly can do whatever we choose to do, from trillion dollar tax cuts for the wealthiest, to ever increasing budgetary outlays for a Military that still has yet to show where all that money goes…
It is merely a matter of political will and collective agreement.
No problem!
In defense of the US consumer they are constantly brainwashed to see cars and trucks as adventure and lifestyle rather than mere transportation.
And so much of our economy is based on real estate speculation which requires cars to reach ever more far flung housing developments.
A lot of discussion (yet again) about a carbon tax. Carbon taxes are surely superior to emissions trading (the neoliberal solution) in reducing energy consumption. However, like a flat tax, straight carbon taxes are regressive and fall most heavily on the bottom of the income ladder. Maybe thinking about a “horse-power/torque tax” might be helpful.
People say that straight carbon taxes are regressive but I don’t believe it. I do think that there should be a UBI or something to help the poor with a carbon tax, but I suspect that rich people emit a lot more carbon than poor people. Once you add the carbon emissions from the stocks that they own and the nonprofits that they manage and the flights that they take, I bet the average rich person would pay more carbon tax than the average poor person.
at the very minimum, this should end all call for workers to return to the office. Working from home will not fix this, but calling everyone back to the office would be a disaster.
“Working from home will not fix this…” Traffic engineers work their little black box when determining future traffic volumes and resultant levels of service on local roads. There is no room in their black box for the concept of “induced demand.” Although it’s something we all experience. They finish a new lane or a new road and we go, oh that’s great…I think I’ll take a convenience trip or drive to work, since I can actually get someplace at speed. And shortly, not so much. Everything being equal, there is only one way to reduce traffic…reduce laneage.
Turn some of that laneage into trackage and right-or-wayage for trains, trolleys and streetcars.
Now is the time for the nuclear power industry to come forward and say that they can fill the shortfall. That instead of building huge nuclear power stations, that they will use smaller nuclear power plants that are portable and that are probably modeled after what nuke subs use. What could possible go wrong with have several hundred of these scattered around the world?
The problem, if you want to call it a problem, with the smaller nuclear plants is the generating capacity. For instance, the largest shipboard reactor in the US Navy (A1B) produces 700 MW. Operating at full capacity one of those could supply electricity to 700,000 homes (average US home used 893kw per month in 2020) per year. The US uses just under 4 billion mwh per year So, you would need about 457,000 of these to supply all of the US needs. You could lop 20% of that number off because that’s how much electricity is generated by nuclear power right now in the US. These reactors would cost about 200-300 million each with a service life of 50 years. Just for comparison sake the largest US nuclear power plant, the Palo Verde in AZ has a rated output of 3,971 MWH. Smaller is the way to go. Its safer and quicker. You could even build floating power plants. That is actually quite common. This is a current interesting article on nuclear shipboard power plants, with a section on floating power plants for shore use. https://world-nuclear.org/information-library/non-power-nuclear-applications/transport/nuclear-powered-ships.aspx
Yikes! I average 115kWh per month. No doubt I’m a special case (and not American) but to base your calculations on a continuation of that kind of profligacy is to ignore the elephant in the room.
Energy use will have to be reduced. Period.
Um, you’ve messed up your units. Peak electrical demand in the US is about 1 TW (or 1000000 MW). So if you supply this with 700 MW nuclear reactors, you’ll need 1000000/700 = 1430 of them. Not 457000. You’ve divided annual energy consumption by instantaneous power (a units mismatch) and overestimated the need for reactors by a factor of 320.
The idea of tons of small reactors makes me queasy, since back in the late 80s my uncle got a lifetime+ dose of radiation and an honorable discharge from the Navy after he had to go shut down a hot reactor on the sub where he was the nuclear engineer. I know the narrative is that there has never been a nuclear sub disaster, but I bet there have been more near disasters like my uncle’s.
Santa Susana Mtn. range, ~ 40 years ago. Rocketdyne, etc. had a ‘venting’ or some such euphemism. We all got dosed.
I could bring up Fukushima, et al. But clearly ‘accidents’ don’t figure into futurism where things always look promising. I won’t even get started with sea level rise and where a lot of reactors are built to take advantage of ocean cooling setups.
Stephen King has written some of the most eloquent passages that address the horrors of fission’s waste management, meltdowns, etc.
This kinda reminds me of ’07/08: oil spiking, RE spiking, ka-kraaassshhh…
Shouldn’t be long before some nutter comes along and starts to sputter about abiotic oil and how peak oil is just a conspiracy (although I am hard-pressed to recall rhe reasons behind the ’07 gas price spike which seemed to drain money from the poors before everything else went to hell).
Halliburton and BlackRock must be wringing their hands in delighted anticipation…
And if some nutter did sputter about abiotic oil then one would still have to ask that nutter about what happens when we burn all the abiotic oil and fill the sky and the sea with all that abiotic carbon?
Petroleum’s three major uses are motor fuels, HVAC, and petrochem (e.g. plastics, paint, etc).
Oil producers are aware that most major auto manufacturers have committed to transitioning their products to EV over the next decade or so. Therefore, the oil companies expect demand to peak and then fall, possibly precipitously. That’s a good thing, right?
Oil companies are acting rationally. Why make major investments in a dying technology?
As the transition to EVs accelerates, we’ll need more electricity. A lot more. We’ll also need lots of additional transmission, storage and load-leveling capacity.
This is well-discussed, and nothing new.
If nukes can do the job, now’s the time to demonstrate that in the form of new plant construction. Where is it? Put up or shut up.
Where’s our vaunted finance industry? Where are the massive capital inflows to solar, wind, storage and transmission facilities? Or even into new nuke plants, if that’s the quietly selected “answer”.
I’m not seeing this @ Financial Times or Wall Street Journal nor Bloomberg. It seems to be conspicuously absent. Did I somehow miss it?
There seems to be a major disconnect between what the petroleum and auto industry is doing, and what the rest of the economy is doing, e.g. power generation and distribution, manufacturing, materials (steel, aluminum, concrete, plastics) and the housing industries.
Another major use of petroleum is for building heat and cooling. Yesterday there was an article here @ NC about how the UK’s building plant is not designed for HVAC efficiency. Most U.S. buildings are not that much better.
So, when I say, as I frequently do, that major portions of our economy are now obsolete – the infrastructure’s design is not appropriate for current and future conditions – do you still think I’m exaggerating?
I think this explains a lot of the dithering. We’re looking at a major overhaul of a good bit of our installed physical plant, and it might need to happen sooner than later. Is “industry” the deer in the headlights? It seems like it, doesn’t it?
I also frequently say “change isn’t going to happen top-down”.
My response to this situation is to continue to revise my household operations, and install physical plant to position my family to cope with what _seems_ to be coming. What changes did I institute? Insulation. Efficient HVAC. No commute. Greenhouse. Next up: solar capacity.
Bottom up is possible. Not easy, but possible. Every one of those changes I mentioned cost effort, money, took time, involved risk, and required new learning. There were, surprisingly, some fairly short-term economic returns, decade or less. It sorta worked.
Top-down, by contrast, isn’t looking nearly so good. It is important to note, however, that the auto and petroleum industries are indeed in motion. There is some good news.
Lots of private investors have been getting rid of energy stocks (at least coal) out of ESG concerns.
And oil is a global market, in case you missed it, and the EU has also been moving towards cleaner energy sources.
And the major have cut back on development big time. You can pooh pooh it all you want but the data is indisputable.
Yves, if your comment is in response to mine directly above…..here’s some rejoinder.
“Lots of private investors have been getting rid of energy stocks (at least coal) out of ESG concerns.”
Tom: All good. I advised my friends to dump coal stocks…what, 8 years ago, when nat gas prices gutted the coal-fired plant economics. My comment, tho, was to the effect that we’re not seeing major (e.g. like what fracking got) investment in renewables / nukes, storage, etc.
I assert that there’s a major mis-match between what petroleum/auto industry is doing (investment allocation) and what the rest of the economy is doing.
“And oil is a global market, in case you missed it, and the EU has also been moving towards cleaner energy sources.”
Tom: I’m aware of the EU’s investments in the hydrogen economy and in solar/wind. I’ve commented on those topics several times here @ NC and elsewhere. However, the scale of investment in the U.S. or even the EU isn’t comparable to what, for ex., was spent here in the U.S. on fracking. The auto industry has clearly telegraphed what it’s doing, and the auto industry accounts for much of petroleum consumption. Moving to EVs implies a major increase in electricity demand. Where’s the response from the rest of the sectors, incl. and especially the financial sector?
“And the major have cut back on development big time. You can pooh pooh it all you want but the data is indisputable.”
Tom: I didn’t pooh-pooh it; quite the contrary. I noted it and celebrated it. Oil and auto are responding to reality; the rest of the sectors, like defense, ag, housing and materials are lagging.
I’m skeptical that the reason major oil is cutting back on exploration and development of new oil fields is because they’re worried that those reserves will turn into “stranded assets” due to the world suddenly taking global warming seriously. As PK pointed out above, the easy-to-get oil is gone. Fracking never made economic sense (probably not Energy-Return-On-Investment sense, either). With material and labor costs rising, trying to develop the remaining oil reserves make even less sense. Why sink $$ into developing a small pool of oil that won’t ever pay for itself?
Note that I didn’t say “exploration is slowing because of concern over GW”.
As you surely know by now, I am not expecting serious top-down action on GW.
I did say “EVs will have a major impact on oil demand, so why invest in the face of significant potential for demand destruction”.
Sorry for the misunderstanding, but mine was just a general post, and not a specific response to you. I suppose I’m cynical in my old age, but I suspect it’s much better for their stock price for Exxon to say, “Out of concern for climate change, we have dramatically cut back on our exploration and development efforts.” than to say, after denying Peak Oil since Hubbert made his prediction, “We’re not spending any more on exploration and development cause there just isn’t much oil left out there, and what’s left is going to be too hard to get to.”
Making Shit Up is a violation of written site Policies. I suggest you use a search engine rather than your uninformed imagination. It took me 30 seconds to find this, punching in the name of the first major that came to mind + “stranded assets”:
https://www.reuters.com/article/us-bp-assets-transition-exclusive/exclusive-bp-poised-to-sell-stranded-assets-even-if-oil-prices-rally-idUSKCN2530GY
It has also been discussed for YEARS in the financial press (and I am not wasting my time searching to prove it) that the majors are cutting back on development not for cost reasons but the time horizon for exploration and development v. the shift away from oil use due to the deployment of EVs, aka “stranded assets”.
This just seens like an add for more money to drill. Wells are being abandoned all over oil field country and being left to the local governments to legally take over and then cap, he doesn’t seem to worry or care about these communities or the responsibilities of the industry. Unfortunatly it will take a crisis to change behaviors.
And with Ford and GM abandoning passenger cars for fuel hungry trucks, they are cruising for a 1970s style cluster**familyblog**.
Short supply raises price. Inelastic demand/lack of substitutes means price could go very high.
This is recessionary, more so if fed over-reacts again as Volcker did and raises rates… granted, recession cuts demand and eventually lowers price.
Record is us 180/bbl. no reason it can’t go higher. 300? I’m paying 5/g with oil at 80…
Since we aren’t capable of the changes that must be made, what’s left is ‘market forces’. Recent prices are too low given the risks to fund new supply, corps won’t go full bore until they see high prices for longer. 2024?
No fundamental change until some time after we really have to do it.
Would it have been smarter to raise oil tax over time such that people want non fossil cars? Maybe so.
Moving to EV’s isn’t really optional for the trucking industry. A huge chunk of operating expenses comes from maintenance, engine parts, repairs and fuel. This obviously eats profits. EV’s have potential to eliminate that overhead. The transportation sector accounts for 26% of energy use in the US, most of that diesel. While we’re still some ways away from EV trucks dominating, the transition will likely be very swift once it comes – logistics carriers WILL make the move. Purely from a profit/efficiency perspective, not even considering peak oil, oil prices, or climate. The ICE is just high maintenance and prone to breakage, whereas the EV is not. So it’s a very safe bet to assume that 26% of diesel use is going to be translated to electric soonish. The oil glut will grow.
Global populations have exploded. Mass production of consumer goods has exploded. Homes and motor vehicles of all kinds have increased significantly in size. All of this is due to a cheap and reliable supply of energy. That energy has been almost entirely fossil fuel. To think that humankind can undo what has been done on a global scale in 30, 50, or even 100 years is preposterous. There will be hell to pay. It is too late to avoid.
On the one hand, at 8 billion people and rising, nothing is sustainable.
On the other hand, ” I don’t have to outrun the bear. I just have to outrun you.”
If you personally can create you own bare and miserable but survival-viable no-oil-lifestyle for the no-oil-future, perhaps you won’t have to pay hell as much as your unbelieving and therefor unpreparing neighbors will have to pay hell.
If so, don’t let your neighbors see you surviving, or at least surviving well. If they see you doing better than them, they will kill you and eat you as their last act on earth. ” Well, at least he won’t survive anymore, either”.
Learning how to look poor in plain sight will be a valuable survival skill in the approaching future.
If oil goes to $100 a barrel, some current users will be priced out and use less or none. Maybe so many people will be forced into no-oil poverty lifestyles that oil use will go down enough to force the price back down. This could lower oil company investment still more in new hard-to-get oil so that it won’t take as much a return in demand to force the price back up to $100. Which would force yet more people into no-more-oil-for-you poverty lifestyles.
And so conservation will be enforced the hard way, because the oil industry thinks they can make more money off legacy oil the hard way than pre-enforcing conservation the easy way would have let them make.
Being retired, and with 0% interest rates on Treasury Bills or short term bank CDs, I decided to take some of my retirement savings ($60K) and invest in converting the majority of my fossil fuel consumption to electricity. Living on California’s Central Coast affords me the luxury of a mild climate and abundant sunshine. $20K went to a Tesla Model 3 with a trade in, another $20K went to conversion of my gas furnace to a heat pump and a 240 Volt 50amp line for an electric charger. The final $20K went to 15 410 Watt Sunpower solar panels for my roof. I am expecting to cut my fossil fuel use by $4,000 per year at current prices, virtually all of which will be covered by solar panel output. This amounts to a 6.67% return on the $60K investment, or alternatively will pay off the solar panel investment in 5 years. Today, a very sunny late October day, I shipped 24 KWH back to PG&E (what to do with it is their problem). It seems to me that a move to electric is obvious for most living in SFR on the West Coast, Southwest, and Southeast provided they have the investment funds. Apartments and Condos could even do it with solar panels on their flat roofs. It is now a pleasure to drive by $5/gal gas stations in my Model 3, which cost me close to 0 to charge for its 300 mile range (PG & E has some grid charges). Its difficult to resist the temptation to wave and gloat.
If PG & E itself rolls over and dies, and kills the grid with it, will you be able to power your own heat pump with your own photo-electric system? If yes, then you are all set for some very bad futures.
This article appears to be talking about medium-long ish range forecast. The time frame isn’t really made clear, but reading through it, the impression I get is they’re not looking year to year but more like 2030.
So the $100 prediction doesn’t seem that extreme, relative to the $65 level of Brent prior to the pandemic (eyeballing the chart in year 2019). $65 to $100 is 50% growth. That in 8 years is around +5% compound-annualized. And the projected level is one we already had 2012-2014.
So I wouldn’t describe that prediction as characteristic of a “shortage”. That said, nothing wrong with the qualitative reasoning here.
After the end of the Korean war Ireland was able to import all the oil it needed. This was after we were cut off due to wars from 1938 to 1953. Farmwork was done with horses, as a child I drove a horse and cart between our family store and supply warehouses. Now we had a tractor and truck back in use it was like dying and waking up in heaven. My parents owned many parcels of land one of which I found very interesting, it was 2 acres about 1 1/4 miles from the centre of town. All around it there were fields with 2 to 3 feet of topsoil but this parcel had only 6 to 7 inches of topsoil over 2″ of light coloured solid continuous flagstone created by a moving ice field grinding stones into powder mixed with water and it then solidifying under pressure. My Hydrogeologist daughter in law explained to me that the whole area had been covered by bog to a depth of 20 feet + or – .The bog had been cut out and used for fuel but nothing was left that could be used for cultivation. She estimated this had occurred when all wood had been consumed about 400- 500 years ago. I do not hold up much hope for coal, oil, gas being left in the ground unless there is a labour saving, comfort giving and affordable alternative readily available. In Toronto the coldest night of the year occurs during the last week of January minus 23 C is quite common. The hottest day occurs the last week of July 32 C is quite common. In very cold weather we are usually under the influence of a High with low to no wind particularly at night. The sun is low on the horizon and the day is short. Much as I love renewable energy there is a need for a base load system that has the capacity to meet the demand when required and as long as required. I do not see the slightest sign of a plan by any level of government that they intend to ensure that a reliable base system is being contemplated. The private sector has no obligation to provide such a system if renewables cut into their business to the extent that it becomes unprofitable. We who live in Canada know what the problems of long power outages entail.
In Ontario, as of 2016, 58.3% of energy was Nuclear and 33.4% was renewables. The renewables percentage is probably higher now.
I live in Southeast Michigan which is very near to the Canadian “tropics” if such a concept may be humorously entertained. ( I have heard that there are Kentucky Coffee Trees growing on a couple of Canadian Islands in Lake Erie).
If Canada has a reliable short solar season and a reliable wind season, then perhaps Canadians could partway live on renewable energy sun season and wind season. And during Winter Season, they would need reliable baseline.
How much would Canadians need to pay for gas and electric through the Winter Season to entice Private Utilities to stay in the baseload business?
( https://en.wikipedia.org/wiki/Kentucky_coffeetree )