According to the International Energy Agency, we are soon to be awash in oil. Supply will grow every year for the rest of the decade—led by the US—while demand will slow and finally turn down in 2030.
Their 2024 report is the damnedest thing I've ever seen, with starting points and ending points and hints along the way, but no explicit forecast for annual supply between now and 2030. Here's the best I can do:
If you're the betting type, this is a pretty clear suggestion that oil prices are going to decline over the next few years.
Most of the increase in supply comes from outside of OPEC. Russian supply is projected to be flat while Saudi Arabia is down. The slowing rate of demand comes mainly from the rise of electric cars.
WARNING: I'm not sure the IEA has a great track record for its forecasts, so take this with a grain of salt.
One certainly hopes that demand will peak soon and start declining. At six barrels per ton, world oil consumption is running in excess of 17 million tons PER DAY. Each ton of oil burned equals about 3 tons of CO2.
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Around 2008, I looked at the IAE's predictions over the previous 15 years or so, and they were horrible. The closest to being correct was when they stated in 2006/2007 that "the wheels would come off the global economy" in 2012.
Putting aside anyone's accuracy, I don't believe it because we've seen this game before.
As price declines, use increases[1]. Enterprise-autocorrect (excuse me,"ai") is poised to eat any cheap power that isn't arbitraged into Bitcoin.
[1] My search skills suck today. There's an econ term for this, came from observing price drops for coal in England lead to new markets for burning coal, I believe.
Any "bending of the curve" will be visible sooner than 6 years from now, so we don't even have to wait that long to call this one silly.
"ai is poised to eat any cheap power that isn't arbitraged into Bitcoin"
Oil accounted for less than 1% of the electricity generated in the US. I believe other developed countries are similar. Burning oil is not a good technology fit in the electric power sector.
This is correct. Nobody burns oil for electricity (aside from niche cases like backup generators, a bit of oil burned to heat up a boiler before it switches to some other fuel, and things like remote military bases or island power stations).
Essentially, up until recently, electricity and oil were not competitors. However, as an increasing share of new vehicles are EVs, that picture is starting to change rapidly.
But note that the IEA is predicting that Saudi Arabia and Iraq will reduce oil consumption used to produce electricity by around 1 million barrels per day.
Also, backup generators, in some parts of the world, are not particularly niche.
"Also, backup generators, in some parts of the world, are not particularly niche."
So? It's niche overall, which is the only thing that's important when looking at global trends.
As oil surpluses materialize, what's needed is to impose a carbon tax and increase it regularly to keep the (inflation adjusted) price of petroleum products rising.
This is what a sane society would do. I would only add that the price needs to stay below the threshold required for profitability in tar sands projects.
Google on "Jevon's Paradox"
If true, the bad side is that cheap gas will make gas-powered cars cheaper to operate. (Although we could use lowered prices as an opportunity to raise gas taxes without causing prices at the pump to rise... but that ain't gonna happen)
The good side is that low oil prices will weaken troublesome petrostates like Russia, Iran, Saudi Arabia, and Texas.
As the number of gasoline consumers decreases, so will the political pressure to hold gasoline prices down.
Interesting. The CEO of Occidental thinks there will be an oil shortage starting in 2025 - https://www.reuters.com/business/energy/market-be-short-oil-2025-onwards-occidental-ceo-davos-2024-01-16/
I think the notion is that -- despite what future Democratic presidential candidates might say -- US fracking costs have dropped dramatically, and will likely get significantly lower over time, that it will force OPEC to maintain oil production regardless of their desire to raise prices.
The problem is the OPEC nations have a terrible track record of reinvestment in oil production. All of that worked when their cost to produce was very low, but their cheap, easy oil is limited. OPEC nations state revenue is so dependent on oil exports that they find it difficult to reinvest.
If the IEA forecasts that oil demand will plateau and then fall based on widespread adoption of EVs, they have drunk the Kool Aid. None of the countries that have committed to EV adoption have power grids or generating capacity to support the EVs, nor do they have plans (credible or otherwise) to build that capacity. I don't fault Kevin for not knowing this, but the IEA's whole purpose is to analyze the world energy system - they should be the ones pointing out the weakness in the goal, not dutifully repeating it.
except that is not what either Drum or IEA said
You're not correct about plans. There are lots of electric utilities in the world, and pretty much all of them engage in long-term planning and are preparing to meet substantially increased demand for electricity in the next decade or so. Those plans don't get much publicity because that's just what electric utilities do, and have done for as long as they have existed.
I'm not sure how things work in your part of the country. In New England, where I live, utilities don't build new generating plants. Connecticut's Department of Energy and Environmental Protection has published some PR materials touting their support for renewable projects, but nothing about expanding the grid to accommodate EVs, or electrification of heating, or retirement of any fossil fuel capacity.
So who is responsible for building new generating (and transmitting) capacity in New England? Whatever that organization is, you can bet they have long term plans.
This is completely wrong and just an easily debunked misinformation scare tactic regurgitated by the oil industry and their political talking heads in the media.
The amount of energy infrastructure needed to support widespread ownership of EVs is fairly trivial. The projections above dont show a decrease in actual oil usage and dont require 100% EV usage.
Projecting your own drinking of the kool-aid onto others was a bit funny.
Piece of info i should have added-
- New car sales account for just under 5% of active cars on the road. Meaning it takes roughly 20-25 yrs to turn over the fleet.
- EV requirements of 50% of new car sales in 2027 means it will take a lifetime to turn over the US fleet and it may never get far above 60% of the total US car fleet if most of the new EV buyers are replacing their old EVs.
It seems unlikely that there will be essentially no improvement in EVs over 20 to 25 years.
Eventually, we will simply essentially ban sales of ICEs.
As we approach nearly 100% EVs on the road, it seems likely that a cash-for-clunkers program will be used to rapidly pull off the remaining old ICEs.
The sale of ICEs is scheduled to be effectively banned as of 2035. As the number of gas burners declines, so will the number of refineries producing gasoline, and the number of gas stations. The last ICEs will likely stop being used when the last gas station closes.
Ban ICEs at your own political peril, it will be a good way to lose elections.
Except that basically only China has committed to EV adoption, is currently at 50% of new car sales are EVs, and has been rapidly building out their transmission and distribution capability.
IEA points out that EVs are still relatively niche products in the USA and EU.
Money in the bank, --if Biden is elected this year, the next president, after 2028, is all but certain to be not a Democrat and will get all kinds of credit for lower gas prices; and if Biden is not elected this year, 2028 will be the next year people can vote for a Republican, who will get all the credit for lower gas prices.
Clever!
if Biden is elected this year, the next president, after 2028, is all but certain to be not a Democrat
All but certain? The fact is we have no idea what national conditions will be like in 2028. Nor can we predict with confidence the developments in politics over the next four years. While it is true that political parties haven't regularly won more than two presidential election in a row in the modern era, this is hardly unheard of, and last happened as recently as 1988. And it used to the rule rather than the exception prior to World War 2. Maybe if Biden wins in November, the electorate will indeed want a change of pace in 2028. Could be! Perhaps after losing their 4th presidential election in five tries, the GOP will finally (at long last!) figure out a way to purge itself of its crank elements—so that we'll see a return to a saner GOP that is highly competitive. But there are no guarantees. I think a plausible, alternative scenario goes something like this: recession finally arrives in 2025 after Biden wins reelection; Biden resigns in the spring of 2027, citing health reasons; President Harris presides over a sharp recovery in 2027 and 2028; and she easily secures the nomination and then prevails (pretty decisively, for a change) over Republican nominee Matt Gaetz to win a third consecutive term over the still unreformed, thoroughly MAGAfied GOP.
Has any super brain come up with a plan for decarbonizing the world and its cost and timeline?????
People are up in arms over the possibility of taking away their guns. Just think how pissed they will be when you take away their cars. Most of us would rather burn in hell.
Nobody's car is being taken away. Instead, people will increasingly be able to drive quiet, low maintenance cars that you can "fuel" by plugging into wall at your house rather than driving to a gas station.
My wife drives a Tesla. I was going buy a Ford EV pickup but the wait list was too long and then I read that it had a very short range towing a horse trailer.
don't forget: high performance.
No, there is not one plan for decarbonizing the world; there are a large number of plans for decarbonizing regions, under the overarching goals of the Paris Accords. Add them all together and they address the great bulk of the world's CO2 emissions.
I don't think anyone has anything that could be called a "plan". A "plan" would need to have specifics on investment and timing, coupled with a credible (or at least plausible) commitment by some responsible authority to implement it.
I know of 2 reasonably comprehensive "concepts" for decarbonizing the US energy system:
Princeton Net Zero America (report published October 2021, https://netzeroamerica.princeton.edu/the-report) addresses decarbonizing all US energy. Their conclusion is that "more than" $12T of new investment would be required by 2050, including significant new nuclear generation. It also relies on several assumptions of dubious plausibility: that large scale direct air capture can be developed and deployed (cost of this system not estimated), that interest rates will continue at the very low levels seen from 2009-2020, that natural gas equivalent can be produced by an as-yet undemonstrated policy to turn electricity and carbon dioxide to hydrocarbons. You'll need to read through the full report to find these details - they tend to get glossed over in the summary report.
Berkeley 2035 report (published June 2020), which addresses only electricity generation, and projects that we can decarbonize 90% by 2035 (https://www.2035report.com/electricity/). Their Summary for Congress highlights that existing subsidy programs for renewable energy will need to be maintained and expanded, that the federal government will have to subsidize the retirement of fossil fuel plants and new transmission systems, and provide state and local governments with funding to replace property taxes on coal-fired facilities. They don't address capital costs required to implement their concept.
They don't go into much detail on costs, but conclude that nominal electricity costs won't be higher than current costs, but remember that this requires maintaining and expanding renewable subsidies. They also note that "clean energy may bid negative prices in certain hours in order to get dispatched and meet the 90% constraint." (p. 20) This is an interesting note, and I wish they'd gone into the implications in more detail. They hypothesize that negative prices would incentive flexible demand to use clean energy that would otherwise be wasted, thus meeting the 90% target. As far as I can tell, they give no attention to technical feasibility of running a grid with very high renewable generation, or to storage requirements beyond intra-day needs. Curiously, they say that increased electrification would decrease, rather than increase, the requirement for storage (p. 19). As far as I can tell, they don't address long-term (month to month) storage.
Both studies assume that most renewable energy will come from wind. As far as I can tell, the Berkeley study doesn't address whether enough sites would be available, but the Princeton report says they think there are enough sites to meet their requirements.
You can assess, if you want, the feasibility of the assumptions in these concepts, but I think the key indication is that no one is doing any of the things that would be required to make significant progress on either, or on anything else.
Thanks for the link to the studies. I won't be around to help pay for the changes nor to enjoy. a cooler earth, but my grand children will.
Since the Berkely report did not mention that without something like the 1996 telecommunications act to stop NIMBYism regarding transmission lines, this is all worthless.
The reality of decarbonization is so much harder than the fiction of it. Wind projects are on hold in many locations because the wind farms cannot pay for additional transmission capacity. Even if it could, I doubt they could pay for the public comment period delays.
THIS.
"Wind projects are on hold in many locations because the wind farms cannot pay for additional transmission capacity."
No, it's because ISOs have lengthy interconnection queues and there is a glut of new projects that want to come online; it has nothing to do with "paying for capacity." ISOs need to get better on speeding up interconnection, that's all. Which they are.
You're both right, but aldous, you know (or should know) as well as I that permitting and building new transmission lines is a major issue. There's a _lot_ of material out there on this very subject and on the coordination problem in general, but I'll start you off on a low-level exposition by the Hasenpfefer Lady:
https://www.youtube.com/watch?v=UNBLhGsjHQI&t=732s
Nice little nuggets in there. Also, if you don't already, keep track of the various related news stories on ars technica.
Wind projects are on hold because the wind farms cannot pay for additional transmission capacity? I thought wind farms were on hold because higher cost of capital is making wind projects unviable.
https://www.cnn.com/2023/11/01/us/orsted-wind-energy-canceled-climate/index.html
Of course, rising construction costs are also a factor. https://www.wired.com/story/why-us-offshore-wind-power-is-struggling/
Or maybe the technology isn't meeting requirements/expectations.https://www.politico.com/news/2024/04/19/new-york-offshore-wind-canceled-00153319
There's also permitting delays and NIMBYism, as you mentioned. Where are the delays being caused by transmission capacity?
From the Hasenpfefer Lady: https://www.patreon.com/sabine/posts
From the Hasenpfefer Lady: https://www.patreon.com/sabine/posts
Don't get me started on how hard it will be to secure right-of-way permitting for which I'm sure even you will admit is a rather large footprint. TL;DR: Why yes, as it turns out they're stalling out for a number of different reasons. As anyone who pretends to follow this topic should know.
I have no idea what happened with this double post, my apologies.
Some said the same about taking away their manual transmissions and seatbelt-less cars. But nobody actually cared very much.
We can also see that improvements in engine parts the frequency of oil changes has also been met with literally no revolt.
While its useful for some people to pretend that others will revolt if you give them a better car that is cheaper and easier to operate....thats obviously not likely to be true.
Peak oil supply, due to not enough oil to drill for, was supposed to have already occurred, but fracking pushed it out. So 2029 sounds reasonable. But the chart says the limit is due to "supply capacity", which is not necessarily the same thing as running out of oil. But either way, supply becomes constrained.
If demand continued to climb while supply is constrained this would have driven gas prices way up. But if demand is really flattening out, that is great news in terms of gas prices.
Another benefit for flattening demand is that, in terms of global warming, that is better than growing demand. However, you really want rapidly declining demand. Seems that just won't be happening. So geo-engineering here we come.
We were probably always going to need geo-engineering and carbon sequestration because even with zero emissions, we are cooked. While I suspect you know that, I am not sure how many folks in general know this will be necessary. So there likely won't be enough support to more than half ass this effort. Which means bad things, especially for the poor. Raise your children to be rich!
I've posted repeatedly that net zero is just an interim goal. Net negative, and quite substantially negative with it, is where we need to get to.
Raising your children to "be rich" probably means raising your children to be heartless reactionary assholes, so don't do that.
Peak Oil takes me back to 1959 when my girlfriend, later wife, was a freshman at UC Biserkeley. When I visited her I read one of her assigned readings. It was about Peak Oil. https://en.wikipedia.org/wiki/Hubbert_peak_theory
Indeed! The Peak Oilers will be wrong every single time except for the last time.
Fracking alone did not save us. Fracking did help keep prices in check, but more than half of the increase in oil production over the last 18 years has nothing to do with fracking. Matthew Simmons was a complete moron.
Supply capacity is a direct response to expected flattened demand.
at least for solar, IEA's forecasts have been inexplicably and wildly wrong, year in and year out. for like 15 years.
This would suggest that they are under-predicting the rate of EV adoption, and the amount of surplus oil capacity.
Hmm, didn't you pick peak oil would hit 20 years ago?
The reason everyone thought peak oil would have already happened but didn't is fracking.
Anyway, finally, Peak Oil, yay.