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Believe it or not, but $170 a ton is not that much. 37 cents a liter in tax will barely boost gasoline prices above 2014 highs, and that is in 2030. I have seen some estimates that $600 a ton is required, or $1.30 more per liter in gasoline tax, which will bring gasoline to $2.25 to $2.50 a liter. There is a lot of time between now and 2030 for the issue to change of course. But Canadians will have to vote for it.

Also, given Canada exports 70-80% of its crude oil, it's hardly the death of the industry. Developed countries as a group may have reached peak crude oil consumption as as much as 4-5 years ago which didn't stop oil from moving to $60-70 a barrel.
 

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Discussion Starter #42
Oil is moving up, up, up. I wasn't expecting that. It was in the 40s only two months ago and now it's in the 50s.
 

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Oil is moving up, up, up. I wasn't expecting that. It was in the 40s only two months ago and now it's in the 50s.
Yes indeed. I would not be surprised if April 2020 +- in oil and gas will in hindsight in a few years be the opportunity of a lifetime.
 

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Oil has just, very very quietly, hit a new post-pandemic high again. Oil prices in Alberta are nearly at 2 year highs, higher than pre-pandemic already. Goldman Sachs just estimated oil consumption could be back at 100 million boe/d by August, and that $65 Brent is forecast but >$70 is a strong possibility. Oil futures curve are pointing to a dramatic draining of surplus supplies.

$70 oil? Brent is already pushing $60 and demand season is just starting. $70 is a real possibility this year.

All the hype about carbon emissions, but it seems like everyone forgot how capital intensive it is to actually maintain our energy sources. And that capital has been hacked and slashed everywhere in the world at the same time and has not returned and probably never will.

What is going to happen when everyone gets back in their cars this summer and there isn't enough oil for everyone? Prices will rise, of course. How much? Did anyone see the LNG price spikes this winter in Asia and Europe? Turns out, you have to heat and you will pay anything - even 20 times higher prices (+2000%). Expect more of this in the near future for oil once the surplus disappears, and it is disappearing quickly.
 

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IMO, far too optimistic on oil demand returning to 100 million barrels per day any time soon, potentially never, but the trend towards firming of oil price is well underway and that is good news for everyone, including the consumer who will need a healthy oil industry for decades to come. Too much momentum is underway to move to 'greener' solutions in Europe, and now the USA, to default back to ICE revival. A second Biden (Democrat) administration in 2024 would cement an irreversible trend. If I had my way, I'd want all our civil (government/municipal) transport and waste management collection to be EV by 2030, with replacement vehicles being EV starting right now.

The pandemic will not be slayed enough globally until at least the end of 2021 to create that kind of rebound in demand. There is also still plenty of idle oil supply around in the Middle East and Russia to pick up the slack but that is a good thing. Oil prices above ~$65-70 do not bode well for anyone.
 

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I'd like to know more about this momentum that's occurring in ICE being phased out? All the newest, best, most popular vehicles are mid-large SUVs with turbo charged engines that suck gas and drive fast. Driving tech has improved a lot in 5 years to push people to upgrade their not-too-old-yet vehicle early, but PHEV SUVs are not really even out yet, and just regular hybrids are still not being bought much. Everyone is buying brand new gas powered, high horsepower SUVs with lanekeep assist features. The few Hybrids that sell well aren't even that good on gas compared to the honda civic they're replacing in all of the sensible low-budget people's / environmentally conscious people's car-to-SUV upgrade.
 

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Many jurisdictions have dictated when new vehicle registrations have to reach zero emissions. Vehicle manufacturers are thus making commitments as to when their fleets will transition. If an ICE cannot be purchase at a dealership and/or supplies are constrained by regulatory action, there will be no choice but to buy an EV. Initially it will be a mandated transition but momentum and scale and charging stations will make purchasing EVs a no-brainer. EVs have a highly efficient torque curve and there is no issue getting 500HP or 1000HP out of electric drive trains. Way more easily than from ICEs.

Today, that is not the case but remember ALL of Tesla's current profit comes from EV credits purchased by other auto manufacturers until they can catch up. Tesla even said in their latest earnings release that they know that revenue stream will disappear, even as early as sometime in 2021, but likely not until 2022.

Most of those gas guzzlers will be retiring from the roads by 2030.
 

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Oh, well I could see why you would think that then if that's how you suspect an "EV revolution" will unfold.

Looking at the numbers though...

There are 1.2 Billion vehicles on the road now, 10M of which are EV or PHEV.

Between 2030 and 2035 there will be 2-2.5 Billion vehicles, with 100-300M of them being EV or PHEV. New vehicles EV/PHEV will be ~30% of all new vehicle sales at that time as well.

Road fuel makes 50% of oil consumption. The rest in petro chemical, industry, shipping and aviation. Only 2% of oil goes towards electricity generation. All of these industries will likely grow and their use of oil will expand.

So how do we get from 1.2B gas vehicles now, 1.8-2.2B gas vehicles in 10 years, and increasing use in the other 50% of oil consumption to - "never going surpass the 100M BBL/day peak of 2019 ever again" ??
 

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I don't know where you get the math on vehicle numbers, but I believe there will be under 1B ICE vehicles by 2030 and what ICE vehicles remain will have higher CAFE requirements. Vehicle production has not really been increasing much overall per International Vehicle Sales and where there is growth, it will mostly be in China and South Asia per Automotive Outlook. It is more likely than not that more than 50% of all new production will be EV by 2030.

Ultimately, spend some time on BP's energy outlook - Oil Segment for some plausible scenarios on oil demand. Peak demand is likely only going to 'flirt' with 100 million barrels per day for the next 3-5 years.

Now I agree outlooks are simply forecasts and scenarios but road vehicle fuel demand will roll over and go into decline globally, probably before 2030. I doubt one will see increasing usage in aviation and shipping. They are all looking for increased fuel efficiency and means to do it. It is a whole bunch of things including electrified shipping (short haul, ferry, etc).
 

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So how do we get from 1.2B gas vehicles now, 1.8-2.2B gas vehicles in 10 years, and increasing use in the other 50% of oil consumption to - "never going surpass the 100M BBL/day peak of 2019 ever again" ??
Goldman has 100 M bbl/day as early as August, although that is optimistic. I believe they also have 102M in 2022. I could easily see 102M or more by 2023.

The world is not investing for 102M oil consumption. It's investing for 90-92B within 5 years. It's really crazy the disconnect. There is going to be massive price spikes unless capital investment doubles now, and it may already be too late.
 

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We will have to see how it plays out. Clearly you are more bullish than I am and it will be interesting to see where we land come 2022-2023.
 

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Discussion Starter #52
I was certainly not expecting oil to be +11% higher than 1 year ago and +2% higher than 2 years ago.

I'm definitely not sure what to expect next. I have one of my oil-correlated stock that has recovered from 1 year ago and I'm not sure if I should let it run or sell it. I'll give it another 3 months. My other oil-correlated stock still has room to move up.

(I'm talking of OVV and SCL)
 

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What’s the cost to recharge a car at say $0.15 kw/hr? Will there be a time that you will pay for a charge in the parking lot while out shopping?

I have no insight at all into EV. Will there be a dramatic increase in the need for electricity production in the future if we’re all EV? We have occasional brown-outs and outages now.....whats the growth in electricity needs look like 10-20, 30 years out?
 

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What’s the cost to recharge a car at say $0.15 kw/hr? Will there be a time that you will pay for a charge in the parking lot while out shopping? I have no insight at all into EV. Will there be a dramatic increase in the need for electricity production in the future if we’re all EV? We have occasional brown-outs and outages now.....whats the growth in electricity needs look like 10-20, 30 years out?
Do you think people actually have answers to those questions? Even those that attempt to answer them usually belong to one side or the other of the argument - and develop their own answers accordingly. Did Henry Ford have such estimates? Did JFK require cost info before committing to the moon shot? Did strategic planners a century ago include the cost of fertilizer production to replace horse manure?

At this stage political motivation will decide the speed of any change - speed will determine the cost.

The extent of the changes needed is enormous. Far more than say the Interstate highway program and look how much longer and more expensive that was than the original estimates.
 

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What’s the cost to recharge a car at say $0.15 kw/hr? Will there be a time that you will pay for a charge in the parking lot while out shopping?
Yeah, I don't think the end game will result in charge stations being located in shopping parking lots. But there's lots of discussion that needs to occur on these charging issues for sure.

There's not a lot of debate about the lack of infrastructure capacity to allow every household to charge an EV overnight. It just isn't there. We can slowly charge at home overnight or fast charge at a high current facility.

For fast charging (unlike your home), existing gas stations will install high current EV chargers that will facilitate under 15 minute charges as required. I suppose the hope is that you'll avail yourself of their high margin junk food facilities while you wait.

ltr
 

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Some study work can be googled. It just hasn't been part of the public conversation yet. Here is a 2014 National Study focused primarily on 'point of end use' infrastructure but some sections have conversation on the bigger transmission and distribution issues. Also BC Hydro estimated that an estimated 350k EVs on the road in 2030 will require an additional 1050 gigawatt hours of incremental electricity per year. So it is being talked about, both on a utility level and no doubt an industry level.

I suspect there is more if one makes the effort to access industry wide reports/studies. The bigger question is what will this cost and how will those costs be amortized.
 

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I wonder "which side of the equation" those reports are on. They are pretty old in a fast changing (political) situation.
Even those that attempt to answer them usually belong to one side or the other of the argument - and develop their own answers accordingly.
The bigger question is what will this cost and how will those costs be amortized.
I certainly agree with that - but let's face it we really don't know.
But then , maybe Joe Biden does.
 

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I don't know where you get the math on vehicle numbers, but I believe there will be under 1B ICE vehicles by 2030 and what ICE vehicles remain will have higher CAFE requirements.
I don't know either, the internet. IEA website and some green site talking in-depth about electric car and total car growth. Doubling of cars on the road by 2030 to 2035 sounded high to me too, but who knows? maybe. It seemed like all the high estimates had maximum 300M electric cars by 2035, 100-200M more likely. Tons of unknowns for production growth ability in the coming years. What's desire and what's reality?

My interest is on the demand side, and maybe it's Canada biased, Alberta biased especially, but I don't see the demand for EVs if gas works just fine and not only that but gas has improved a lot in 10 years, and will keep improving.

Turbo engines are more efficient and faster than ever so that people buying new will already be impressed with the improvements over their old vehicle. The EV improvement over that is incremental and even "too much" for people. Going from a big engine car to a turbo 4-cylinder SUV is one step, from a turbo 4 to a hybrid, then a hybrid to an EV. Most consumers will want to take these steps and they each take 10 years.

Genuine environment enthusiasts and climate change worriers are not in the car market. All cars are bad for the environment. Those people walk and ride bikes, and if they really need a car it's a 15 year old Honda Civic. I don't see a bigger societal desire for environmental consideration being associated with increased EV and car use. They're only loosely related for the headlines and government talking points during elections.

I think your main point though is that the demand side doesn't matter so much because either way EVs are going to be crammed down our throats by governments hostile to the will of the consumer and the taxpayer? Maybe. But there's no reason that governments can't go about throwing away trillions of dollars on EV infrastructure and subsidies and making grand proclamations to manufactures that end up having no teeth, while simultaneously having the regular car industry keep ticking away as usual while all the EV programs expand but remain unprofitable as ever, and continue-on being underutilized boondoggles, especially the government power generation side, for decades to come.

Why not? We can definitely have both things occur. Tons and tons of ineffective EV related investment of tax-payer dollars that completely goes to waste but is celebrated as a huge success, and regular gas vehicle transportation carrying on.
 

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@ OneSeat: I just grabbed a couple of links so don't go by that. I was just demonstrating there is work being done.

To me, the industry players and the provincial utility commissions need to be the ones doing the legwork, research et al, and then presenting various costed options for the policy makers (civil servants, corporate boards and politicians). Some of the power utilities (generation and/or transmission) are crown corporations and some are publicly traded.

If I was on the CU/EMA/FTS boards, I'd be wanting to see a range of options pretty quick so as to have input to strategic direction over the next 5-10 years. It is naive to think a lot of hard work is not being done for these reasons alone.
 

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Turbo engines are more efficient and faster than ever so that people buying new will already be impressed with the improvements over their old vehicle. The EV improvement over that is incremental and even "too much" for people. Going from a big engine car to a turbo 4-cylinder SUV is one step, from a turbo 4 to a hybrid, then a hybrid to an EV. Most consumers will want to take these steps and they each take 10 years.

Genuine environment enthusiasts and climate change worriers are not in the car market. All cars are bad for the environment. Those people walk and ride bikes, and if they really need a car it's a 15 year old Honda Civic. I don't see a bigger societal desire for environmental consideration being associated with increased EV and car use. They're only loosely related for the headlines and government talking points during elections.
We recently bought a Mazda CX-5 turbo and it is an exceptionally lively machine. Hopefully in our garage for the next 10 years. That doesn't change the fact that around our area, there are now a lot of hybrids and EVs as well. By ordinary people too. Not just tree huggers. I think you underestimate the willingness of folks to be progressive. AB may be in a time warp but Albertans will come around...because they will have too. There won't be enough ICEs in the dealerships. Regardless, there is determination by enough governments now that the momentum towards PHEV/EV won't be stopped. Time to get those ridiculous quad cab gas guzzling pick ups off the road. Go EV instead. There is a ton of room for a lot of battery pack in those things.

The transition will be messy and inefficient at times but any major change will be that way. It's a 20+ year transition and lots of time for things to adjust and go right during that period.
 
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