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China Earth Transportation

Will EVs Send OPEC Into a Death Spiral? (telegraph.co.uk) 206

This week the UK's conservative Daily Telegraph newspaper published an interesting perspective from their world economy editor.

"Saudi and OPEC officials self-evidently do not believe their own claim that world oil demand will keep growing briskly for another generation as if electric vehicles had never been invented, and there was no such thing as the Paris Accord." OPEC had to slash output last October in order to shore up prices. It had to cut again in April. The Saudis then stunned traders with a unilateral cut of one million barrels a day (b/d) in June. All told, the OPEC-Russia cartel has had to take 2m b/d of production off the table at a high point in the economic cycle, after China's post-Covid reopening and at a time when the US economy has been running hot with a fiscal expansion roughly equal to Roosevelt's world war budget.

That 2m b/d figure happens to be more or less the amount of crude currently being displaced by EV sales worldwide, according to Bloomberg New Energy Finance.

Yet the mood was all defiance and plucky insouciance at the 24th World Petroleum Congress in Calgary this month... This skips over the awkward detail that EVs are already on track to reach 60pc of total car sales in the world's biggest car market within two years (not a misprint). The cartel is being hit from two sides. Petrol and diesel cars are becoming more efficient, gradually displacing 1.4bn vintage models disappearing into the scrap yard. BP says that alone will cut up to a tenth global oil demand by 2040. With a lag, EVs are now starting to take a material bite, with an S-curve trajectory likely to go parabolic this decade.

China's EVs sales hit 38pc this summer, even though subsidies have mostly been scrapped. This is far ahead of schedule under Beijing's New Energy Vehicle Industry Development Plan. China's Chebai think tank says the emerging consensus is that EV sales will hit 17m or 60pc of total Chinese share by 2025, rising to 90pc by 2030, assuming that the grid can keep up... Vietnam is a few years behind but with similar ambitions. Its EV start-up, VinFast Auto, became the world's third most valuable carmaker after it launched on Nasdaq last month, briefly worth as much as the German car industry before the share price came back down to earth...

OPEC's central premise has long been that the rise of a billion-strong middle class in emerging Asia will more than offset declining oil use in the OECD bloc. That notion is 'withering under scrutiny'... The International Energy Agency (IEA) says global oil demand will peak at 105.5m b/d in 2028 and then flatten for a few years before going into decline... The IEA pulls its punches. The Rocky Mountain Institute argues in its latest report — End of the ICE Age — that half of global car sales could be EVs by 2026, reaching 86pc later this decade.

The article closes by citing "the breathtaking pace of global electrification. The decline of oil in car and bus transport may be closer than almost anybody imagined. OPEC as we know it may be on the cusp of a death spiral."
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Will EVs Send OPEC Into a Death Spiral?

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  • clueless writer (Score:2, Informative)

    by bloodhawk ( 813939 )
    cars make up less than 1/3rd of oil production consumption. EV impact is little more than a rounding error at this point, Oil production both increases and decreases are geopolitical in nature or intended to undermine viability of other businesses oil production. The writer is an idiot.
    • Re:clueless writer (Score:5, Insightful)

      by del_diablo ( 1747634 ) on Saturday September 30, 2023 @05:53PM (#63890553)

      Electricity is still pegged to crude/LNG/coal/diesel in many part of the world as well. Even outside of these regions electricity is pegged proportional to those prices, for simple reasons like backup generators.

      But as long as you can burn something in a larger generator and get significantly more effectivity than burning it in a car, the demand for energy won't budge. And cars isn't boats, railways or tractors. Or petrochemicals. Or heating.
      I simply don't have any faith in the global economy leaving the oil economy until we do.

      • There's a huge headache looming for the whole world, not just OPEC. Diesel costs are largely subsidised by petrol sales. As that subsidy evaporates, the cost of diesel production is going to skyrocket. Long-haul in particular will suffer.

        But maybe that's a good thing, ecologically at least.

        • Re:Diesel (Score:5, Insightful)

          by Firethorn ( 177587 ) on Saturday September 30, 2023 @09:19PM (#63890839) Homepage Journal

          Rei gave 48.6% for road transport (vast majority of gasoline and a good chunk of diesel), I'm seeing ~46% for gasoline. [petroleums...ompany.com] 26% diesel and "other fuels". 9% Jet Fuel. 3% Asphalt, 1% Lubricants, 15% "Other". Just giving that so that so people have an idea.

          Also figure that battery tech will "improve"* by 1-10% per year. I'd love to give a narrower range, but it isn't an even rate [energy.gov].

          Same deal with solar/wind, but let's have that at 1%. [comparemysolar.co.uk]

          So here's the way I see it playing out(all timelines are very vague, I don't have the industry knowledge to even guess when each step will happen):
          As cars, well, "light vehicles" including SUVs and pickups trend EV, initially the price of gasoline will stabilize and drop. This is why I used to tell EV-phobes that the city people buying EVs is good for them - more gasoline for their use, at a lower price. The lower price will help keep gasoline vehicles around a little longer.

          Eventually, though, you'll see less oil exploration(new wells), and refineries will shift away from producing as much gasoline as reasonable technology can support. This will increase the proportions of other products around that area of the stack.

          But as you say, other parts of the stack are effectively subsidized by gasoline. So diesel goes up, Kerosene (jet fuel) goes up, everything else goes up. Hell, if asphalt prices increase, that means more concrete laid than it.**

          So with lower production, and higher costs, I figure that you'll rapidly see other industries shifting away from it.
          Diesel Trucking - They can shift to being EVs as well, starting with the short haul. For longer haul, BIG EV trucks and a shift to (hopefully fixed) railroads.
          Railroads - fuel costs aren't as big of a deal for them, but they can shift electric as well.
          Planes - we're seeing some short haul planes. They can also maybe shift to natural gas. Very long term, hydrogen.
          Ships - Nuclear power, sails, Ammonia, etc...

          Petrochemicals - Natural gas, green crude oil created by thermal depolymerization, etc...

          All being caused by a gradual price increase eventually making the use not worth it for an industry.

          *Improve meaning higher capacity, cheaper costs, faster charging, longer service life, etc...
          **For driving purposes, concrete averages twice the life expectancy at twice the cost, so it all evens out. If you upset that balance...

          • Concrete roads suck because of what happens when you don't maintain them with exquisite care, and what happens at the end of the lifecycle of the concrete slabs. Resurfacing is replacement. You can't just go over it with a little more concrete, and you can't just attach a thin layer of asphalt to it, you have to put a whole new road layer down.

          • You talk about this as if it's going to be a gradual shift away from fossil fuels, but I don't think it's going to be, because we're dealing with corporations which are invested in making as much profit as possible. And they are giant conglomerates, with truly massive capital investments in places, all interconnected and dependent on consumer spending. Bankruptcies and mergers are going to drive a lot of chaos in the coming decades.

            I've been saying for years now that I expect life to get rocky for ICE vehic

      • Russia invading Ukraine fucked everything up. The entirety of Europe is going to rapidly move towards renewables now. Putin overestimated his importance to those Nations, they were buying the oil not because they desperately needed it to survive but because they were trying to create trade routes and dependencies inside the Russian economy so that Russia wouldn't do something dumb like invade another country and risk sanctions.

        There's other problems they have to worry about like how cars are rapidly be
        • Or they're just going to go for "white hydrogen"

          https://theconversation.com/ho... [theconversation.com]

          Either way, that's less dependence on energy sources from outside the EU.

        • by sonlas ( 10282912 ) on Sunday October 01, 2023 @04:40AM (#63891249)

          This is a really bad geopolitical analysis of what is going on. No idea how this gets modded as "Interesting". Or maybe because people wish it was true?

          The entirety of Europe is going to rapidly move towards renewables now.

          There were moving towards renewables before, and if you look at the actual growth, the acceleration is just natural. There is no "bump" due to Ukraine invasion.

          Putin overestimated his importance to those Nations, they were buying the oil not because they desperately needed it to survive but because they were trying to create trade routes and dependencies inside the Russian economy so that Russia wouldn't do something dumb like invade another country and risk sanctions.

          No, they were buying mainly gas, because gas is slightly cleaner than coal, and from what we see with countries that have a lot of solar/wind in Europe (Germany for instance), is that they need a shitload of gas to make up for solar/wind intermittency (in 2022, ~40% of Germany electricity generation came from gas/coal/lignite).
          They were buying it from Russia because they were the closest ones able to provide them with the quantities needed, at a cheap price. When they couldn't/didn't want to buy from Russia anymore, they just turned to more expensive alternatives (like importing LNG by tankers from the US, which is just even more absurd in terms of efficiency/CO2 emissions).

          There is also some amount of virtue signaling when Europe says they sanction Russia and don't buy their gas. It is just a game of musical chair: if you look at the trade volumes worldwide, you see that the amount of gas bought/used stayed almost the same since the war. The only thing that changed is who is buying from who. Because yes, countries desperatly need that gas to survive.

          • There is no "bump" due to Ukraine invasion.

            Development of major projects takes time. The Ukraine war isn't even 2 years in. There definitely is a "bump" due to the Ukraine invasion, but to see that bump you can't look at the energy mix, you need to look at investment and sanctioning of projects. The EU literally poured $300bn in funding into green energy as part of a direct response to the war in Ukraine on top of the already planned funding that was part of the national growth from previous green agendas. Those projects just haven't come online yet

    • Every statistic I've seen puts the percentage of oil used for transportation at about 60%. If that shifts to even 50%, it's going to cause a pretty massive shift in oil prices. Everyone knows this is coming, even in the Saudis, but they, like all the other oil producing jurisdictions, need to keep the illusion of perpetual and infinite growth in demand going as long as possible.

      • by PPH ( 736903 )

        Transportation includes a lot more than cars. Both numbers could be right.

    • by rsilvergun ( 571051 ) on Saturday September 30, 2023 @08:10PM (#63890753)
      And 1/3 of your only source of income goes away that's going to be a problem. The Middle Eastern countries are brutally repressive and constantly at each other's throats. The only reason the entire thing doesn't collapse is because they have a ton of money to buy off their oligarchs while also maintaining huge militaries.

      Ever wonder why oil never seems to go much above $100 a barrel? Because that's the point where people start to seriously look for alternatives and a seriously cut back on usage. When that happens the Saudis among others quickly run out of money to buy the weapons they need and to maintain their military.

      Never mind what having 1/3 or even just a bit less than 1/3 of your product sales go away would do to the price of your product when demand dropped by that much .

      The Sardis know they're on borrowed time. That's why they've been going around buying up things with their oil money while they've still got it.
      • by ghoul ( 157158 ) on Sunday October 01, 2023 @05:18AM (#63891281)
        Oil never goes above 100 because of India. India is the worlds largest importer of crude and most of it is from the Gulf. India also supplies 80% of the labor to run the Gulf countries. if oil stays above 100 for a significant period of time because of OPEC actions, it becomes cost effective for India to simply takeover the middle east. All it really needs to do is insist for a referendum on joining India where all residents get to vote. Indians outnumber the local citizen in Saudi , UAE , Qatar and maybe Bahrain. A vote enforced by a naval taskforce lying offshore and India suddenly has domestic oil production. India has good ties with US, Israel , Iran and Russia. Noone would stop India if they did it. It is of course a PITA to rule over Arabs (Britain learnt the hardway which is why USA rules through the USD and not directly) and as long as oil stays below 100, India cant be bothered.
        • by q_e_t ( 5104099 )
          Indians are 13.22% of the Saudi Arabian population. That's not a majority.
        • by skam240 ( 789197 ) on Sunday October 01, 2023 @09:58AM (#63891663)

          How do things like this get modded up. This is pure fantasy land, no one on your list of countries that would supposedly be fine with India doing this would be happy to see one country dominate oil production like this. Plus, India already has problems with Islamic militancy, can you imagine what their problems would be like if they took over the entire middle east?

          I mean, what are you even basing this middle eastern fear of India on? Let's see some citations by some geopolitical experts.

        • The Sauds would just kick the Indians out, switch to Africa for their cheap labor, kick China some oil to them do it and call it a day. And that's if talk of a referendum even got that far.

          Oil doesn't go over $100 bucks because demand craters when it does. There is a *lot* of discretionary use of oil in the world. Stuff people can live without. Maybe not comfortably, but they'll live.
    • Re: (Score:3, Interesting)

      by Maxo-Texas ( 864189 )

      Oil prices are set by the last barrel pumped.

      If you don't have to pump a barrel at $115, then the price doesn't get that high.

      Oil is also used for lubricants (which EV need less of), fertilizers, and plastics. It's also used for a lot of chemical products.

      But cutting oil production by 33% would absolutely destroy the price of oil while also not helping keep gasoline prices low. As gasoline cars become less common, they lose their network effect.

      You can already see that as gasoline cars have gotten more

      • The price of ICE vehicles isn't really moving that much. You can get base models of cheaper cars from major automakers for around $20-$23k even today. And some of those vehicles are very nice. Plenty of pickup, decent interior space, decent amenities. Some of them even have amazing fuel economy which can save you even more money if you hang on to it for awhile.

        People see rising averages on ICE prices in the US at least due to consumer behavior. We Americans spend $50k on average for ICE vehicles becaus

  • In many countries, electricity is produced by burning fossil fuels.
    • by whoever57 ( 658626 ) on Saturday September 30, 2023 @05:57PM (#63890557) Journal

      In many countries, electricity is produced by burning fossil fuels.

      True, but less fossil fuel is used if the electricity is used to power an EV than burned in an ICE vehicle.

    • by psycho12345 ( 1134609 ) on Saturday September 30, 2023 @07:15PM (#63890677)
      While true, power plants are vastly more efficient then cars, it's just basic physics. The transmissions losses of an electrical grid are nothing compared to the losses of burning fuel to get it to the gas, the fuel you burn to get to the gas station, and finally the straight up losses of burning fuel period.
      • by romiz ( 757548 )

        While true, power plants are vastly more efficient then cars, it's just basic physics. The transmissions losses of an electrical grid are nothing compared to the losses of burning fuel to get it to the gas, the fuel you burn to get to the gas station, and finally the straight up losses of burning fuel period.

        Moreover, cars cannot run on hydropower, wind, biomass, nuclear, or even coal it we go that way. Electricity generation can, and there is a lot of more coal in the ground than oil.

    • Most of the New Power generation is in the form of wind and solar. Has the old plants wear out and need to be replaced they're going to be replaced by renewables. The king of saud doesn't just think about the next quarter
  • Not gonna happen.

    Yes, fuel is a considerable part of the petrochem industry, but it's only a part. Look around you, count the plastic items that litter your room and realize that whether you fuel your car with gas instead of electricity doesn't make or break OPEC.

  • by Fly Swatter ( 30498 ) on Saturday September 30, 2023 @06:40PM (#63890621) Homepage
    So they cut supply to keep the price up, business as usual. What they do has almost nothing to do with EVs at this point.

    Until it is time to replace my AC, upgrading to a heat pump to drastically reduce the use of my oil furnace will have to wait. My hybrid car now uses about 1/4 of my personal oil consumption, that furnace in winter is the other 3/4.

    Only 10 years ago I was using at least twice that oil because the car was a 70s era v8 which used 3x the gas and the house used twice the oil before being remodeled up to modern insulation/fenestration codes, new windows, and a new furnace. The new furnace had little to do with the reduction, it was the old poorly insulated home itself.
    • by lsllll ( 830002 )
      I was always for keeping the price of oil up because I believe the people of oil producing countries are losing their national wealth, but I have mostly changed my mind, because most of the money made from oil production in most of the oil-producing countries goes into the pocket of government officials.

      Having said that, I think OPEC is doing it wrong. There is another option for a large portion of their customers: electric. Maybe not for ships and aircrafts yet, as well as plastics, but those may come
  • Many of the comments here think that fossil fuel demand is an all-or-nothing proposition But seems to me that a reduction in transportation fuels would significantly impact OPEC's -influence-. Supply from non-OPEC sources would be more likely to meet the reduced demand.

    US fracking among others can surge when the price is right to fill decreased OPEC supply, particularly if the OPEC -control- starts to fracture.

    • OPEC have a strangehold on oil pricing not because of demand but because they are an order or magnitude cheaper in production than any other country (especially those that use fracking) and have the ability to drive any competitor out of business if they so choose. While that remains it doesn't that you can produce enough, it only matters whether you can produce enough cheaper than OPEC, which currently you can't.
  • by djp2204 ( 713741 )

    Because renewables require immense amounts of petrochemicals as inputs. Not to mention the fuel required to mine and transport the minerals for making batteries etc.

    • "We have taken into account all possible criteria such as the amount of CO2 emitted when electricity is produced or fuel is burnt, as well as the carbon impact of resource extraction for batteries or of building a power plant.

      "We find out that electric cars in Europe emit, on average, more than 3 times less CO2 than equivalent petrol cars. In the worst case scenario, an electric car with a battery produced in China and driven in Poland still emits 37% less CO2 than petrol. And in the best case scenario, an

      • In other news:
        - with as many ICE as there are today on the road, we are sure to hit catastrophic levels of climate change.
        - with as many EVs as there are ICE today (if you could magically replace all of them overnight), we are also sure to hit catastrophic levels of climate change

        People don't get that, which is really simple math.

        3 times less CO2 emissions for EV compared to ICE is nothing. This is not even an order of magnitude. Plus EVs put strain on other resources (lithium, rare earths, cobalt...). Ther

        • I don't disagree with you. You make some excellent points. I was simply correcting some obvious BS from the commenter above, and nuance didn't seem to be called for.

        • Plus EVs put strain on other resources (lithium, rare earths, cobalt...).

          Strains on these resources are not consequential drivers of climate change, however, and so should not be a significant consideration when working to decrease that threat. Alternatives are also beginning to be developed for all of those; some may reach widespread enough implementation to become significant factors.

          For those posts that say, in essence, "OPEC can just increase prices as power production (including transport there) demand

          • Strains on these resources are not consequential drivers of climate change, however, and so should not be a significant consideration when working to decrease that threat

            On the contrary. They should be significant consideration on those strains when working to decrease the threat of climate change, because that means if the "strain" becomes a "roadbloack" (either not enough, or not enough fast enough, or requiring too much energy to extract/refine...) to fight climate change, then it becomes an issue.

            Same as how we so far demonstrated that we could produce and install a lot of solar/wind by using a lot of fossil fuels (solar panels from China, wind turbines mainly from Chin

  • Comment removed based on user account deletion
  • I don't give a rat's ass about the fate of the oil-dependent Arabs or for that matter the non-Arab Iranians. They are all a bunch of seriously repressive regimes who deserve to die a hideous death. What happens to the people who live under those regimes is a different matter, however. But I'm not going to lose too much sleep weeping over their fate because the prediction that OPEC is doomed is wrong.

    How many countries in the developing world actually, or will ever have, the electrical infrastructure to s

  • by MacMann ( 7518492 ) on Saturday September 30, 2023 @11:19PM (#63890985)

    If there is a shortage for petroleum in the USA then we can expect a number fo changes to keep the national economy moving.

    First thing is to make up for the demand. That would mean opening up the strategics petroleum reserves. Any known spot on Earth capable of producing crude will be opened. It might take 5 years for these wells to produce any crude but if this crisis tlasts that long then the opening of new production should bring it to an end.

    Then is supply. The US federal government has a large number of ships under construction now tat can be fitted with nuclear propulsion. Each ship can be equpped with the ability to produce jet fuel at sea for fueling up the aircraft it carries, and or smaller rescue and scout boats. The traditiona; "oiler" supply ship could be optimized for fuel synthesis on the move while also bringing mail, ammunition, food, and other consumable items onboard.

    The US Coast Guard would act similarly with the large nuclear powered ice breakers being in the center of a flotilla where the smaller ships would be a mix of conventional and nuclear powered. Those needing fuel from the ice beaker or an oiler can take on such fuel at sea.

    Air Force, Space Force, Army, Navy land forces, and Marines will have access to fuel available on land but if there's any shortages then exect them to use the same fuel syntheses as that used at sea. The power comes from nuclear fission power plants and the raw material comes from the sea.

    What it comes down to is the military is capable of seeing to is own on short notice. Most everything in the inventory will move. What they do is a lot of guess work. If the matter is a bunch of oil wells set ablaze then this looks like something we've seen before. We put out the fire. We patrol for EIDs. We build pipelines to get the fuel to where it is needed for refining. One refined then maybe we can get some peasce.

    We are seeing Saudis Arabia and UAE trying to distance themselves from the volatilize energy fossilize fuel bring by building nuclear power plants. With more electricity from nuclear fission domesticaly that means more money coming tin from exports. It make perfect sense.

    I believe every nation should follow this lead. use income from fossil fuel exports to fund domestic nuclear fission. With Nuclear fission i place that opens up the possibility to synthesizes hydrocarbons, desalinate water, develope directed energy weapons, and more.

    If the world wants to create some kind of petrolueum death priral then I suggest leaving the USA out of it. The USA has plenty of options to avoid the worst of it.

  • ...with David Hasselhoff. It's not good and full of bad stereotypes.
    https://www.youtube.com/watch?... [youtube.com]

    In it, an inventor (played by Hasselhoff) invents a special pill that turns water into petrol. A sheik wants to investigate into that in order to buy that invention of the market. A woman from the Shell company also wants to look into it.

  • We can only hope so!

  • No. Dream on.

  • OK, we stop burning petroleum and just use it for the billions of other industrial uses it has from plastic to lubricants to food additives. Yes, it will be painful to rework refineries, but I am skeptical with all the money on the line for these other uses people will just "death spiral." Painful transition? Absolutely...to me, it's more akin TV makers adapting to CRTs being replaced by LCD, plasma, OLED, etc.

    Also, this argument assumes 100% electrification. You can electrify every car on the plane

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