Sooner Than You Think

Mark your calendars, folks. By 2023, the bottom could fall out of the oil market...permanently.

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I loved this Bloomberg animation.

And not just because the concept of a Bloomberg anime is hilarious.

It’s vital information for Venezuelans. Three minutes and forty seconds very well spent.

12 COMMENTS

  1. This was forecast by Pdvsa in the 90’s , Technical advances and enviromental pressures would in some decades make much of Venezuelan oil deposits obsolete ,some time might be gained by keeping oil prices discreet, but inevitably the time would come when oil cosumption would fall to minimal levels in the motorcar field. Venezuelas strategy had to be to keep oil prices low so that most of the faja would have some chance of being exploited before it became obsolete ……its potential wealth lost to the country.

    Remember a friend head of a pdvsa office in Tokyo telling me in the 90’s. Its already happening , there are people in my block who are already driving electric motor cars ……Shell saw the future in gas more than in crude oil (gas is much cheaper , cleaner , and can be used to produce electricity at very low cost) , back in the late 80’s they were planning for the day when oil would only have petrochemical uses !!

    But few people in Venezuela outside the inner management of Pdvsa were aware of this , or saw it so far off that they paid it little attention …….

  2. I have been saying this for some time now.
    In spite of the unpleasant voice and arrogant style of Bloomberg’s spokesmanvideo I agree. with the outlook

  3. FT, excellent video, but makes mention of China and India preferring gasoline to electricity for longer–it’s highly probable that they will be spearheading the change to electricity, as their own governments try to decrease their terrible major city air pollution levels; and, then there’s the necessity for world governments to create incentives to curb carbon emissions to combat the disastrous effects of global warming.

  4. But there more disruptive technological advancement than is talked about here that will drive the adoption:

    -the self driving car
    -the sharing economy (Uber and Lyft).
    -Crowd sourcing traffic information like Waze and Google Maps

    Can you imagine Manhattan without cars parked on the curb and driver-less yellow cabs? You would use your smartphone to program the time and place of the pickup and a pricing algorithm would quote you the cost. Such a service would obviate the need of even owning an auto while the utilization of this electric-driverless car would be immense because it would never be parked idle, it would just go to the next fare. To boot, large scale traffic improvements are obtained by a central dispatching and traffic center routing such autos.

    The current state of affairs of autos seems similar to the pre-dotcom era where all the technologies that make your smartphone existed waiting to be integrated into the smartphone with the cloud.

  5. How the electricity that will power all those electric cars be produced?

    That is the key element , and they overlooked it almost completely…sure I wish that there will just be green energy, but it is not an easy task from the engineering standpoint.

  6. If we tried being practical rather than sentimental , we should replace coal with gas , coal is usually very contaminating , gas much much less so , its also abundant and cheap and the plants that use it require very little upkeep. as a last stage we should see how far we can go with strictly green energy sources ……but getting rid of coal as soon as possible would help a lot in the mid term……

    With fracking in the US this should not be too difficult…

    Oh and in case people dont know oil is hardly used in the generation of energy , only in places like venezuela it is not as contaminating as coal but it is expensive ……and to make it clean requires investment in depolluting equipment …..

  7. The theory behind that video is flawed because it doesn’t take in account the full energy cycle not the oil price cycle. The energy require to build, maintain and eventually dispose electric cars; and the cost of operating fossil fuel transportation.

    It also miss a crucial issue which is that freight, rail,shipping and aviation still account for 60% of the liquid fuels consumption in the transportation sector. That type of transportation has not received the same amount of attention as light vehicles.

    It attempts to factor-in population growth but it misses the point that it is not only cars what India and China are going to get but also consumables and goods that have to be mobilized and that also consume lots of energy on fabrication.

    It does not take in account heavy industry, iron, cement, paper, aluminum, and the required power generation.

    Last but not least, it oversimplifies the fact that a lower oil price will remove expensive oil out of the market until reaching a certain balance point (thus extending oil availability over the years!). Cheap oil slows down green initiatives and foster consumption thus it feeds itself through the price cycle. One example was the coming of the SUV in the 1990: in the US, rather than keep the trend of smaller car with the fuel efficiency evolution of the engine, car builders cashed out the efficiency into building bigger cars.

    Bottom line is that yes, there will be efficiency gains in transportation that will put pressure on the market and certainly the planet (and us) will benefit. But calling that the end of oil or even discuss oil peak, that is a lot of BS.

    The best example was in the 50’s with nuclear energy, “an energy so cheap to generate that it should be free”; well that didn’t happen. Another? coal challenge in the 1920’s by oil, coal demand continued to increase even when shipping (and eventually rail) completely phased out coal. Want another one?, the fiasco of biofuels in the 2000s. Last one?: coal dual unit installation cost $2.9k/kw, variable O&M $4.5/MWh; compare that with natural gas combined cycle at $2.1k/kw and variable O&M at $6.7/MWh (www.iea.org).

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