Don't miss what's happening in Kingwood
People on Kingwood.com are the first to know.
Go to top of page
Close
 
Close
Back

Opinion: $25 oil is coming

Opinion: $25 oil is coming

12»
« Back
This discussion has been locked.
Message Menu
by: ProblemAgain Active Indicator LED Icon 10 OP 
~ 6 years ago   May 24, '17 1:19pm  
Opinion: $25 oil is coming, and along with it, a new world Oriel Morrison12 hrs agoThe world as we know it, will be no longer. The balance of power on a global scale will shift. All in the next decade.Sounds dramatic right? But independent think tank RethinkX believes it to be true, because of rapid advances in technology, and specifically the advent of self-drive or autonomous cars.First and foremost, RethinkX co-founder and Stanford University economist and professor Tony Seba told CNBC's Street Signs that the rise of self-drive cars will see oil demand plummet, the price of oil drop to $25 a barrel, and oil producers left without the political or financial capital they have today."Oil demand will peak 2021-2020 and will go down 100 million barrels, to 70 million barrels within 10 years. And what that means, the new equilibrium price is going to be $25, and if you produce oil and you can't compete at $25, essentially you are holding stranded assets," Seba said."At $25 a barrel, that means deep-water, sands, shell oil, fields, most are going to be stranded, and also all the refineries and pipelines associated with these expensive oils are also going to be stranded. And that is going to reshape worldwide oil, geopolitics and so on."© Provided by CNBCIt's a big call, right? But if you look at what's behind Seba's premise, surprise, surprise, it comes down to money.He says we are not going to stop driving altogether, just switch to self-drive electric vehicles, which will become a much larger part of the sharing economy. And these electric vehicles are going to cost less to both buy and run."The day that autonomous vehicles are approved, the combination of ride hailing, electric and autonomous means that it's going to be ten times cheaper, up to ten times cheaper, to use a robot taxi, transport as a service car, than it is to own a car. Ten times."Investment CaseInterestingly enough, if you believe this thesis, you may want to look at selling out of any exposure you have to car parks. "In fact what is going to happen, in 80 per cent or maybe more, parking spaces are going to be vacant. Because we are going to have, fewer cars on the road" Seba says.And given that $25 forecast for oil, you certainly want to look at selling oil, and expensive oil producers. Oh, and sell the car makers that are slow to adapt too, given there will be no more petrol or diesel cars, buses and trucks sold anywhere in the world within 8 years. Which also means no more car dealers by 2024.And wait, you can sell insurers too, as the cost of car insurance will drop dramatically when you take human error out of the equation, and a much lower direct ownership of vehicles in general.But, according to Seba, it is time to look at buying into anything that will help to produce and manufacture the next generation of cars, which are "computers on wheels."He says to look at companies that make the operating system, the computer platform, the batteries, mapping software, and those that adapt to the new environment."Imagine a Starbucks (SBUX) on wheels. Essentially transportation is going to be so cheap, it's going to be essentially cheaper for Starbucks to run around and take me to work, which is, you know, 60 kilometers away, and give that transportation for free, in exchange for going to buy coffee in that hour of commute."There is some good news for economic growth too. The savings households make on cars, will drive higher consumer spending in the U.S., which in turn will drive business and job growth. Seba forecasts that productivity gains will boost GDP by an additional $1 trillion.But on the other hand, outstanding auto loan debt in the U.S. stands at more than $1 trillion. And there are those who see the U.S. subprime-auto market as a big problem already.Josh Jalinski, president of Jalinski Advisory Group told CNBC's Street Signs that it's a huge risk. "We have a potential auto subprime crisis looming in America, the likes we haven't seen since 2008. … I see the car subprime loan debacle as something that could be the catalyst of upending the Trump train."Oil and CarsSeba is not alone in his predictions, although others believe the shift will take longer, and will not be so dramatic.China and India are accelerating the adoption of electric vehicles. China wants to get electric, plug-in hybrids and fuel cell cars to account for 20 per cent of all auto sales by 2025, while India aims to electrify all vehicles in the country by 2032.But as always with any thesis, there are those who argue for the other side. Oil majors are the obvious ones, with recent reports from both ExxonMobil (XOM) and BP (BP.-GB)'s suggesting electric cars will comprise less than 10 per cent of the global car fleet by 2035.As for the auto industry itself, in the latest moves, Ford (F) announced a new CEO, James Hackett, the head of its self-driving subsidiary Ford Smart Mobility LLC. That moves speaks for itself.Also Monday, Toyota Research Institute ramped up their investment, teaming up with MIT Media lab and five other companies to explore blockchain technology for the development of driverless cars.And of course, there is the market interest in Tesla (TSLA). The Elon Musk-backed electric automaker now has a bigger market cap than both Ford and GM (GM).Trip Chowdhry, managing director and senior analyst at Global Equities Research, points out that while some people think Tesla is an Auto company, it is not."It is a cloud computing company, it's a machine and an artificial intelligence company, it is an app company, it is an energy company, and just an automobile is nothing more than a laptop on four wheels."One point that is agreed, is that the auto industry will look vastly different in the future. The question is, just how long will that change take, and who is going to successfully adapt. 4951
* Reactions disabled on political threads.
What are your thoughts? Log in or sign up to comment
Replies:
Message Menu
Retired_Engineer Active Indicator LED Icon 13
~ 6 years ago   May 24, '17 1:52pm  
A key point is the last sentence.  Overall, I agree with the direction.I also think that there will still be a demand for combustion engine self-driving cars.  Electronic cars are great for short distances, but long rides will either require stopping to recharge or stay with gasoline/diesel engines.  As more restaurants or multi-use centers (think Buc-ees), and hotels put in electrical charging stations, it won't be much of an inconvenience to stop and recharge while you're eating a meal, shopping, or spending the night.We are also a long way from having some of the biggest fuel users (18-wheel trucks) switch to electric, but if the price of fuel lowers, it should mean lower costs on products (but we know most businesses are too greedy to reduce their prices because of fuel costs, but quick to raise them). 4951
* Reactions disabled on political threads.
Message Menu
ProblemAgain Active Indicator LED Icon 10 OP 
~ 6 years ago   May 24, '17 2:19pm  
it does make you think....just a for instance:what if the tops of the trailers for 18 wheelers were solar panels? would there be enough juice to run an electric semi?if oil is becoming a declining commodity, what commodities become more valuable? in point of fact, large agribusiness has been investing millions in water sources and foodgrowing acreage in the expectation of short supplies of water and increasing prices for food as climate change alters growing patterns and population increases the demand for both food and clean safe water 4951
* Reactions disabled on political threads.
Message Menu
bp2018 Active Indicator LED Icon 10
~ 6 years ago   May 24, '17 2:32pm  
it does make you think....just a for instance:what if the tops of the trailers for 18 wheelers were solar panels? would there be enough juice to run an electric semi?if oil is becoming a declining commodity, what commodities become more valuable? in point of fact, large agribusiness has been investing millions in water sources and foodgrowing acreage in the expectation of short supplies of water and increasing prices for food as climate change alters growing patterns and population increases the demand for both food and clean safe water
 
@ProblemAgain:
 
I can believe in there being a water shortage in the future. I recently read an article about how a river was completely moved from its original banks and then absorbed into a different river up in Canada because of the glacier that it came from melting quicker and changing the water flow. While that isn't much of a problem now, the ramifications for that down the road could be substantial, since that river provided water to the small towns that popped up along its riverbanks, as well as the ecosystems that live there. Rivers have been known to change paths before over many years, but this particular one happened in about 4 days, so too sudden for everything to adapt. If we all switch from oil as our primary energy source, I'm curious as to what affects that will have on an environmental scale. 4951
* Reactions disabled on political threads.
Message Menu
Retired_Engineer Active Indicator LED Icon 13
~ 6 years ago   May 24, '17 2:37pm  
Yes, it does make you think.I seriously doubt that current solar panels on the top (and even sides) of semi-cargo trucks  could pull the load.  But, what about solar panels in the future?The other side of electricity is how it's made.  Right now, the primary methods are nuclear, coal, natural gas, and fuel oil (by making steam that is run through a turbine powered generator).I would like to see more businesses put covers over their parking spaces with solar panels so employees and customers could charge e-cars while parked.  There is an initial capital cost, but then it costs only some maintenance and cleaning.  It would also provide shade in our hot summer months.  If covers with solar panels are not practical, at least put in charging stations to encouage commuters to move towards e-cars. 4951
* Reactions disabled on political threads.
Message Menu
Retired_Engineer Active Indicator LED Icon 13
~ 6 years ago   May 24, '17 2:53pm  

- - - - - - - -
>> it does make you think....just a for instance:what if the tops of the trailers for 18 wheelers were solar panels? would there be enough juice to run an electric semi?if oil is becoming a declining commodity, what commodities become more valuable? in point of fact, large agribusiness has been investing millions in water sources and foodgrowing acreage in the expectation of short supplies of water and increasing prices for food as climate change alters growing patterns and population increases the demand for both food and clean safe water
 
@ProblemAgain:
 
I can believe in there being a water shortage in the future. I recently read an article about how a river was completely moved from its original banks and then absorbed into a different river up in Canada because of the glacier that it came from melting quicker and changing the water flow. While that isn't much of a problem now, the ramifications for that down the road could be substantial, since that river provided water to the small towns that popped up along its riverbanks, as well as the ecosystems that live there. Rivers have been known to change paths before over many years, but this particular one happened in about 4 days, so too sudden for everything to adapt. If we all switch from oil as our primary energy source, I'm curious as to what affects that will have on an environmental scale.

@bp2018:  I am also concerned about our fresh water supply.  We are already drying up our rivers, AND farming and ranching are lowering the aquifers (particularly the Ogallala Aquifer) to levels that may restrict all future use for consumption by people.  Then, goodbye to farmers and ranchers in those regions.
 
 
4951
* Reactions disabled on political threads.
Message Menu
ProblemAgain Active Indicator LED Icon 10 OP 
~ 6 years ago   May 24, '17 2:55pm  
the funny thing is that cities are investing in mass transit systems as tho they were new but they have been around forever. the advent of the auto caused some cities to stop investing in the systems because they also had to invest in roads to handle the auto traffic 4951
* Reactions disabled on political threads.
Message Menu
Haybugg Active Indicator LED Icon 4
~ 6 years ago   May 24, '17 2:58pm  
I believe it. 4951
* Reactions disabled on political threads.
Message Menu
buffaloglenn Active Indicator LED Icon 11
~ 6 years ago   May 24, '17 3:09pm  
Yes, it does make you think.I seriously doubt that current solar panels on the top (and even sides) of semi-cargo trucks  could pull the load.  But, what about solar panels in the future?The other side of electricity is how it's made.  Right now, the primary methods are nuclear, coal, natural gas, and fuel oil (by making steam that is run through a turbine powered generator).I would like to see more businesses put covers over their parking spaces with solar panels so employees and customers could charge e-cars while parked.  There is an initial capital cost, but then it costs only some maintenance and cleaning.  It would also provide shade in our hot summer months.  If covers with solar panels are not practical, at least put in charging stations to encouage commuters to move towards e-cars.

@Retired_Engineer: It would take a lot of batteries to store enough energy to move a loaded big rig.  It basically takes a 220 volt (not sure of amperage draw) overnight recharge to move a chevy volt for 100 miles, or all day parked somewhere.  Imagine what it would take for a loaded, 75,000 pound semi to move down the road.  As technology continues to develop, it will probably happen, but probably not in my lifetime. 
 
 
4951
* Reactions disabled on political threads.
Message Menu
ProblemAgain Active Indicator LED Icon 10 OP 
~ 6 years ago   May 24, '17 3:18pm  

- - - - - - - -
>> Yes, it does make you think.I seriously doubt that current solar panels on the top (and even sides) of semi-cargo trucks  could pull the load.  But, what about solar panels in the future?The other side of electricity is how it's made.  Right now, the primary methods are nuclear, coal, natural gas, and fuel oil (by making steam that is run through a turbine powered generator).I would like to see more businesses put covers over their parking spaces with solar panels so employees and customers could charge e-cars while parked.  There is an initial capital cost, but then it costs only some maintenance and cleaning.  It would also provide shade in our hot summer months.  If covers with solar panels are not practical, at least put in charging stations to encouage commuters to move towards e-cars.
 
@Retired_Engineer: It would take a lot of batteries to store enough energy to move a loaded big rig.  It basically takes a 220 volt (not sure of amperage draw) overnight recharge to move a chevy volt for 100 miles, or all day parked somewhere.  Imagine what it would take for a loaded, 75,000 pound semi to move down the road.  As technology continues to develop, it will probably happen, but probably not in my lifetime. 
 
 

@buffaloglenn:
 
 
there will be changes in how power is generated...improvements in solar panels etc  and you can even foresee a certain amount of power being generated by that 75,000 pound mass in motion to offset to a certain extent  the energy required to keep it in motion. life is going to change  4951
* Reactions disabled on political threads.
Message Menu
buffaloglenn Active Indicator LED Icon 11
~ 6 years ago   May 24, '17 3:22pm  

- - - - - - - -
>>
- - - - - - - -
>> Yes, it does make you think.I seriously doubt that current solar panels on the top (and even sides) of semi-cargo trucks  could pull the load.  But, what about solar panels in the future?The other side of electricity is how it's made.  Right now, the primary methods are nuclear, coal, natural gas, and fuel oil (by making steam that is run through a turbine powered generator).I would like to see more businesses put covers over their parking spaces with solar panels so employees and customers could charge e-cars while parked.  There is an initial capital cost, but then it costs only some maintenance and cleaning.  It would also provide shade in our hot summer months.  If covers with solar panels are not practical, at least put in charging stations to encouage commuters to move towards e-cars.
 
@Retired_Engineer: It would take a lot of batteries to store enough energy to move a loaded big rig.  It basically takes a 220 volt (not sure of amperage draw) overnight recharge to move a chevy volt for 100 miles, or all day parked somewhere.  Imagine what it would take for a loaded, 75,000 pound semi to move down the road.  As technology continues to develop, it will probably happen, but probably not in my lifetime. 
 
 

@buffaloglenn:
 
 
there will be changes in how power is generated...improvements in solar panels etc  and you can even foresee a certain amount of power being generated by that 75,000 pound mass in motion to offset to a certain extent  the energy required to keep it in motion. life is going to change 

@ProblemAgain: I agree with you that life will change, but don't think I will live long enough to see electric big rigs, as that is a giant leap, technology-wise, from where we are today.  Unless I live to be 150 or so though. 
 
 
4951
* Reactions disabled on political threads.
Message Menu
Retired_Engineer Active Indicator LED Icon 13
~ 6 years ago   May 24, '17 3:24pm  

- - - - - - - -
>>
- - - - - - - -
>> Yes, it does make you think.I seriously doubt that current solar panels on the top (and even sides) of semi-cargo trucks  could pull the load.  But, what about solar panels in the future?The other side of electricity is how it's made.  Right now, the primary methods are nuclear, coal, natural gas, and fuel oil (by making steam that is run through a turbine powered generator).I would like to see more businesses put covers over their parking spaces with solar panels so employees and customers could charge e-cars while parked.  There is an initial capital cost, but then it costs only some maintenance and cleaning.  It would also provide shade in our hot summer months.  If covers with solar panels are not practical, at least put in charging stations to encouage commuters to move towards e-cars.
 
@Retired_Engineer: It would take a lot of batteries to store enough energy to move a loaded big rig.  It basically takes a 220 volt (not sure of amperage draw) overnight recharge to move a chevy volt for 100 miles, or all day parked somewhere.  Imagine what it would take for a loaded, 75,000 pound semi to move down the road.  As technology continues to develop, it will probably happen, but probably not in my lifetime. 
 
 

@buffaloglenn:
 
 
there will be changes in how power is generated...improvements in solar panels etc  and you can even foresee a certain amount of power being generated by that 75,000 pound mass in motion to offset to a certain extent  the energy required to keep it in motion. life is going to change 

@ProblemAgain:  The only current way to recover energy from a moving vehicle is to use the braking force to generate electricity instead of just friction/heat.  That is used in the Formula E race cars I mentioned in a different thread.
 
 
4951
* Reactions disabled on political threads.
Message Menu
Retired_Engineer Active Indicator LED Icon 13
~ 6 years ago   May 24, '17 3:30pm  

- - - - - - - -
>> Yes, it does make you think.I seriously doubt that current solar panels on the top (and even sides) of semi-cargo trucks  could pull the load.  But, what about solar panels in the future?The other side of electricity is how it's made.  Right now, the primary methods are nuclear, coal, natural gas, and fuel oil (by making steam that is run through a turbine powered generator).I would like to see more businesses put covers over their parking spaces with solar panels so employees and customers could charge e-cars while parked.  There is an initial capital cost, but then it costs only some maintenance and cleaning.  It would also provide shade in our hot summer months.  If covers with solar panels are not practical, at least put in charging stations to encouage commuters to move towards e-cars.
 
@Retired_Engineer: It would take a lot of batteries to store enough energy to move a loaded big rig.  It basically takes a 220 volt (not sure of amperage draw) overnight recharge to move a chevy volt for 100 miles, or all day parked somewhere.  Imagine what it would take for a loaded, 75,000 pound semi to move down the road.  As technology continues to develop, it will probably happen, but probably not in my lifetime. 
 
 

@buffaloglenn:  The amount of heavy battery packs would also reduce the load a semi could haul.  Maybe they had it right in the "Back To The Future" movies with a small nuclear engine.
 
 
4951
* Reactions disabled on political threads.
Message Menu
podunk Active Indicator LED Icon 8
~ 6 years ago   May 24, '17 5:18pm  
It's great in theory, but fuel is seen as more of a waste product. The completions and development of the shale plays will contribute more to lower prices than anything automobile related. 4951
* Reactions disabled on political threads.
Message Menu
ProblemAgain Active Indicator LED Icon 10 OP 
~ 6 years ago   May 24, '17 5:57pm  
when the cost of extracting a barrel of oil from whatever environment is more than the price per barrel, the oil companies shut that venue down. witness the last time oil dropped and the resulting layoffs among oil company workers in the houston area. that means that if oil drops because of supply to below the cost of extraction, the shale play might just be extinct or mothballed for later use of the price returns to the range of the profitable. oil companies are not in business to sell oil  below their costs anymore than mcd's wants to sell you fast food below cost 4951
* Reactions disabled on political threads.
Message Menu
podunk Active Indicator LED Icon 8
~ 6 years ago   May 24, '17 7:02pm  
when the cost of extracting a barrel of oil from whatever environment is more than the price per barrel, the oil companies shut that venue down. witness the last time oil dropped and the resulting layoffs among oil company workers in the houston area. that means that if oil drops because of supply to below the cost of extraction, the shale play might just be extinct or mothballed for later use of the price returns to the range of the profitable. oil companies are not in business to sell oil  below their costs anymore than mcd's wants to sell you fast food below cost
 
@ProblemAgain:
 
They can't shut it down, the leaseholds cost more than the wells in most cases and show as assets. Layoffs happen when the asset value drops and the banks significantly drop revolving credit lines and they've gone in over their heads on investments that are now valued much lower.... Time to cut the heck out of overhead.
The service companies are dependent on the operators and get hammered when the go away from performing completions....Yet during the middle of the downturn, dang near every refinery around here was in expansion mode.
4951
* Reactions disabled on political threads.
12»
This discussion has been locked.
« Back to Main Page
Views: 63
# Replies: 17

Orion's Rain




Kosmin Media Group Logo Primrose School of Atascocita Logo Texas Auctioneers & Estate Sales Logo European Wax Center Kingwood Logo Dale P. Guidry - State Farm Insurance Logo Trademark Kitchen, Bath, & Remodeling Inc. Logo Town Center Park Association Logo Fire Craft BBQ Logo Mammoth Cleaning Services Logo Kingwood Service Center Logo Primrose School of Eagle Springs Logo The Atrium Center Logo Flowers of Kingwood Logo Prestige Cleaning Professionals Logo Di Maria Mexican Cuisine Logo Modern Heart and Vascular Institute  Logo Maid Zen Cleaning Service Logo Bahama Mama Smoke Shop Green Oak Logo
Sponsor an ad Sponsor an Ad »