One for the economists among us: Resource scarcity. Is inflation locked in for the foreseeable future?

[El Presidente]

12 hours ago, joeypots said:

World population, 1958,  the year I was born, 2,925,686,705.

World population today, 7,836,000,000.

That accounts why global energy demand increases by approximately 1.6% annually. 

 

 

[Chas.Alpha]

Renewable energy sources have been available for decades, the problem is the oil execs spend millions trying to quash the idea. The working class just do what they're told...

[Frinkiac7]

Seems like we always ignored the fundamentals. Entire post Cold War western  economy was built on the assumption that “just in time” supply chains and the availability of cheap crap from China would always be a given and would never fail.

[rcarlson]

Jeff Currie, who is Global Head of Commodities Research for Goldman Sachs:

Here’s a stat for you, as of January of this year. At the end of last year, overall, fossil fuels represented 81 percent of overall energy consumption. Ten years ago, they were at 82. So though, all of that investment in renewables, you’re talking about $3.8 trillion, let me repeat that $3.8 trillion of investment in renewables moved fossil fuel consumption from 82 to 81 percent, of the overall energy consumption. But you know, given the recent events and what’s happened with the loss of gas and replacing it with coal, that number is likely above 82.

So, in other words, $3.8 trillion in dead economic loss.

As for record profits, why would big oil invest billions and billions in exploration, drilling and refining (that takes decades to realize) when the regulatory objective is to kill the industry?  The shareholders would plunge their heads on pikes.  Energy execs have clearly told Granholm they're not going to reopen shuttered refineries because they're not going to commit seppuku.   And of course big energy is taking profits after years of losses and no appetite to reinvest in this political environment. 

Predictable.  Idealist expectations of anything different than what we got, incredibly naïve. 

[Bijan]

6 minutes ago, rcarlson said:

Here’s a stat for you, as of January of this year. At the end of last year, overall, fossil fuels represented 81 percent of overall energy consumption. Ten years ago, they were at 82.

Fair point, but I think it makes more sense to look at electricity production/generation.

https://ourworldindata.org/grapher/nuclear-renewables-electricity

From 1985 until now:

Nuclear has gone down from 15% to 10%. Renewables have gone up from about 21% to 28%. Keep in mind we didn't get back to 1985 levels until 2013 for renewables. And we didn't get back to 1985 levels for nuclear + renewables until 2018.

By that logic all those trillions invested in fossil fuels were pointless because they  didn't move that needle in terms of percentage. Should have just spend $0 on exploration and drilling and just stayed at 81%... 🤦‍♂️

[rcarlson]

5 minutes ago, Bijan said:

Fair point, but I think it makes more sense to look at electricity production/generation.

https://ourworldindata.org/grapher/nuclear-renewables-electricity

From 1985 until now:

Nuclear has gone down from 15% to 10%. Renewables have gone up from about 21% to 28%. Keep in mind we didn't get back to 1985 levels until 2013 for renewables. And we didn't get back to 1985 levels for nuclear + renewables until 2018.

By that logic all those trillions invested in fossil fuels were pointless because they  didn't move that needle in terms of percentage. Should have just spend $0 on exploration and drilling and just stayed at 81%... 🤦‍♂️

Lost me.  Where's the pull for nuclear in the US?  And, Trillions to unusable energy sources.  Talk about corporate profit without net societal benefit.  

I'd like to see nuclear in every town and village, and a derrick on every street corner. 

Gross subsidies on electric (of course fossil created) forever?  

Lunacy.  And we're paying the price.  

[El Presidente]

3 minutes ago, rcarlson said:

 

I'd like to see nuclear in every town and village, and a derrick on every street corner. 

Derrick on every corner? 

 

I am rooting for you Rob, bur let's stick to the topic 

[Bijan]

14 minutes ago, rcarlson said:

Lost me.

Flights have gone up. 0% of that is renewables. International overseas shipping of goods has gone up, 0% of that is renewables. So yeah even if renewables go up in electricity, they're going to be offset by that.

Second nuclear is getting really expensive, due to labour and regulatory costs. Last nuclear plant here in Ontario, Canada, cost $30 billion when it was supposed to cost a tenth or a fifth of that. And that's not a one time cost. You basically have to put in that much money or more every 30-40 years.

Tons of money has gone into fossil fuels too. Fracking didn't invent itself. I'm not an eco terrorist, so I'm happy we're not running out of necessary fuel, but at the same time all that investment in fossil fuels didn't move the world share of fossil fuels. According to your quote, apparently you don't invest in energy sources to produce energy but to win some contest between coal, oil and renewables. If you don't change your percentage share, it doesn't matter how much useful energy you produce for some reason.

Edit: just to note total energy production/consumption has gone up from 1980 until now. So treading water percentage wise is still producing more power. And even if it wasn't increasing if we didn't invest a single dollar in either fossil fuels or renewables from 1980 until now that energy source's share would be 0 by now.

[rcarlson]

 

22 minutes ago, Bijan said:

Flights have gone up. 0% of that is renewables. International overseas shipping of goods has gone up, 0% of that is renewables. So yeah even if renewables go up in electricity, they're going to be offset by that.

Agreed.

24 minutes ago, Bijan said:

According to your quote, apparently you don't invest in energy sources to produce energy but to win some contest between coal, oil and renewables. If you don't change your percentage share, it doesn't matter how much useful energy you produce for some reason.

You misapprehend.  $3.8 Trillion.  With a staggering "T."  And "net societal benefit."  Doesn't matter how you measure. 

 

[Bijan]

5 minutes ago, rcarlson said:

You misapprehend.  $3.8 Trillion.  With a staggering "T."  And "net societal benefit."  Doesn't matter how you measure. 

So it looks like roughly 3.8 trillion is invested in fossil fuels roughly every 5 to 6 years (0.3 upstream, 0.2 mid-downstream, 0.1 on coal, 0.1 on fossil fuel power, annually).

Source: https://iea.blob.core.windows.net/assets/5e6b3821-bb8f-4df4-a88b-e891cd8251e3/WorldEnergyInvestment2021.pdf

[rcarlson]

2 hours ago, Bijan said:

So it looks like roughly 3.8 trillion is invested in fossil fuels roughly every 5-6 years.

Source: https://iea.blob.core.windows.net/assets/5e6b3821-bb8f-4df4-a88b-e891cd8251e3/WorldEnergyInvestment2021.pdf

We're talking past each other.

Inflation.  

Predictable results.  

 

And street corner Derricks.

[Kaptain Karl]

On 10/27/2022 at 6:06 PM, Chas.Alpha said:

Renewable energy sources have been available for decades, the problem is the oil execs spend millions trying to quash the idea. The working class just do what they're told...

It’s actually been the oil companies that paid off green groups like the Sierra Club  to ostracize nuclear power. If we went heavily nuclear we’d be in such a better place now. (Looking at you Germany) 

[NSXCIGAR]

On 10/27/2022 at 6:18 PM, Frinkiac7 said:

Seems like we always ignored the fundamentals. Entire post Cold War western  economy was built on the assumption that “just in time” supply chains and the availability of cheap crap from China would always be a given and would never fail.

Supply chains are exceedingly complex and the "just in time" approach is unavoidable in most cases to maximize efficiency. When left alone they typically run fine...but often they are not left alone.

The cheap goods from China was based on the ill-advised belief that turning China into the west's factory would transform them into some kind of Jeffersonian democracy. It was clear by the late 90s that this wasn't going to happen and relying on the CCP to stock Walmarts is a sub-optimal scenario for many reasons. 

[GoodStix]

Obviously the world’s an economic mess, and will worsen.  We’ve only just started to feel the pain.  Fiscal irresponsibility, and now the bell tolls.  Be thankful if you’re in America.  Despite the debt lunacy there too, it is the one country best positioned to get thru this.  Capital is and will flow massively to the US, seeking relative safety and return.  It’s going to be a rougher time most elsewhere.  Good luck to all.

[BEVOSREVENGE]

On 10/25/2022 at 8:22 PM, Chas.Alpha said:

I can certainly reply without breaking forum rules: American oil companies are reaping RECORD Profits during this mess... The capitalist model that the rich get richer seems to be in full swing.

The same oil companies that were on their knees a few years ago?  Those oil companies?  

Remember when oil futures went negative?  I do, it wasn't that long ago.

[Nevrknow]

45 minutes ago, BEVOSREVENGE said:

The same oil companies that were on their knees a few years ago?  Those oil companies?  

Remember when oil futures went negative?  I do, it wasn't that long ago.

Exactly. Glad they had/have reserves to get thru BS times. Someone correct me if I'm wrong but doesn't every business ( mine included ) have a set "nut" to cover every month? If I can't cover that "nut" month to month it goes under. All they are making now is to help weather all this ev movement stuff. Granted EV is not a bad thing, but everything is tied to fossil fuels. And what I mean by that is it CAN all go EV. Just not in a few years like the dingbats hope.

see CA: all ev by 2025. Oh by the way, having a heat wave so don't charge your mandated EV car. 😂

[Chas.Alpha]

1 hour ago, BEVOSREVENGE said:

The same oil companies that were on their knees a few years ago?  Those oil companies?  

Remember when oil futures went negative?  I do, it wasn't that long ago.

Odd, I don't seem to remember free gasoline when the prices dropped...

[BEVOSREVENGE]

16 hours ago, Chas.Alpha said:

Odd, I don't seem to remember free gasoline when the prices dropped...

I get it, it is easy to point the finger at the evil oil and gas companies.  You know, the ones that make modern life possible.  The ones that provide stock for fertilizers that feed the world.  The ones that provide stock to create plastics.  The ones that provide stock to power electrical plants when the sun doesn't shine or the wind doesn't blow.  The ones that provide stock to make most components inside EVs.  The ones that provide stock to run the mining equipment to make lithium batteries.  Etc.etc.etc.

Regarding gasoline - upstream (producers) and downstream (refiners) energy are usually two different companies, although some play in both.  Did you know that less than 5% of the gas retailing locations in your country are owned by downstream (refiners) energy companies.   That means 95% are independently owned.  Sounds like your beef is with them or maybe it should be with the person that started a war on your country's domestic oil and gas producers.  That same person recently begged OPEC+ to increase production and OPEC+ told that person to go pound sand and then voted to CUT production.

As to free gasoline, for the record, you paid very low gas prices during that time but I am unaware of free anything in a capitalist economy and don't forget what the national, state and local taxmen add to each gallon of gas you purchase.  If it were me, I'd just be glad to live some place that doesn't charge upwards of $3/gallon in taxes.  It could be worse, right?

[MrBirdman]

On 10/28/2022 at 12:54 PM, rcarlson said:

So, in other words, $3.8 trillion in dead economic loss.

That's a complete mischaracterization because a) in many countries renewables are taking up an ever greater share of energy (fossil fuel growth is being driven primarily by developing countries uninterested in serious climate action); and b) the investment in renewables is necessarily producing delayed returns - but is also, well, necessary - because of climate change. Yes, it's expensive, but the whole point isn't that it's cheaper, it's that it's the only way to save the planet from a catastrophe. Oh and the world doesn't have an infinite supply of oil - so even people who don't trust the science of thermometers should probably acknowledge that we need to prepare for a fossil free future. (You also seem to presume all that spending was public - it wasn't.)

It also seems pretty unlikely to be a major source of inflation - if anything, without renewable energy investment, fossil fuel prices (and thus inflation) would be worse right now.  

Whether the money has been spent efficiently within renewables is another matter, but to say it's all been wasted is just rubbish. There's a reason Tesla is backordered. The US military has spent that sum many times over developing equipment that it never used or, in some cases, doesn't even want.

 

On 10/30/2022 at 3:24 AM, Kaptain Karl said:

It’s actually been the oil companies that paid off green groups like the Sierra Club  to ostracize nuclear power. If we went heavily nuclear we’d be in such a better place now. (Looking at you Germany) 

Exactly. Natural gas industry lobbying in my home state is what led to Three Mile Island shutting down. 

I’ve exhausted enough energy elsewhere on the forum criticizing countries for moving away from nuclear power - suffice it to say I agree, and that in Europe’s case it was doubly stupid to do so when the substitute is being supplied by a geopolitical adversary. 

[PuroDiario]

Have no horse in this race but figured I would share a simple high level thought. A cynical one maybe too pessimistic.
 

Last estimaste I saw for Phasing out global fossil fuels is estimated at 130tn usd through 2030. That only accounts for direct costs (for example does not include the remodeling, repricing, etc of insurance and mechanical changes to otc markets, or net impact to labor and government income in full) and is an estimate developed by an internal government agency that eats through promoting and developing plans for this initiative. This estimate is a revision of previous ~90tn estimate. 
 

global GDP is ~85tn per year. 
 

countries pushing this agenda are levered above yearly GDP with aged populations depending on growingly underfunded pensions in general. Big fossil fuels net exporters are not levered to gdp. Most big fossil fuels burners are densely populated, young, developing, non-western like democracies. Common people in western democracies still want their pension, their jobs and 100mb broadband connection with Netflix at 14/month and Amazon prime 24 hour delivery upon arrival from a deep discounted coach flight from a long weekend in Cancun, and the comfort of a guaranteed pension and the ability to run the washing machine, tv, charge 5 devices , cook on 3 stoves while heating up the microwave and so on demand). Carbon credit markets are opaque, non liquid, and not deep enough as to incentivize institutional money and corporates to allocate capital there other than min to benefit from tax effects.
 

Moore law applies to software. Most of innovation in this industry is not really a fit for Moore law. Meaning improvements are marginal and cumulative but not exponential hence more innovations are sub scale in essence even at max scale. Also most innovations are cap intensive and gov dependent (you see power grid globally essentially has not changed meaningfully for 100 years?), environmentally polluting (noise, visual, natural life impacts, industrially mining rare earth components…all those are also pollution) and fiscally suboptimal.

 

good luck…either you get into a major fiscal policy disaster next generation will pay for or you forever disrupt the productive tissue of western world and hand over the keys to the other guys for good. Right now patching is what is happening paired with macro-sovereign game theory plays to see who calls out the bluff first.
US oil emergency reserve is down to historical lows, Germany already said f EU and went for the Russian oil, China building out coal and owning global rare earths, oil settled in other than USD, etc.

[NSXCIGAR]

On 11/8/2022 at 4:52 PM, Chas.Alpha said:

Odd, I don't seem to remember free gasoline when the prices dropped...

There hasn't been a new refinery opened in the US since 1977. 50% more population, virtually the same refining capacity. The price of $2.41 in Feb 21 is about as close to bottom as can be reached with current refining capacity. And in 2021 and for many years before that big oil was losing money.

The only reason big oil is making money now is because they're not reinvesting their revenue. There aren't any profitable investments right now as the industry is under immense pressure from the current administration. They're forced to take the revenue as profit instead of reinvesting it, which I guarantee you is not what they would prefer to do. The investment opportunities are so bad right now they're choosing to pay 28% tax on their money rather than invest it. 

[MrBirdman]

6 hours ago, NSXCIGAR said:

There hasn't been a new refinery opened in the US since 1977. 50% more population, virtually the same refining capacity. The price of $2.41 in Feb 21 is about as close to bottom as can be reached with current refining capacity. And in 2021 and for many years before that big oil was losing money.

The only reason big oil is making money now is because they're not reinvesting their revenue. There aren't any profitable investments right now as the industry is under immense pressure from the current administration. They're forced to take the revenue as profit instead of reinvesting it, which I guarantee you is not what they would prefer to do. The investment opportunities are so bad right now they're choosing to pay 28% tax on their money rather than invest it. 

Pretty much all nonsense. There has been an explosion (no pun) of natural gas an oil production in the US over the past 30 years. We weren’t net exporters in the 70’s.  

[PuroDiario]

7 hours ago, MrBirdman said:

Pretty much all nonsense. There has been an explosion (no pun) of natural gas an oil production in the US over the past 30 years. We weren’t net exporters in the 70’s.  

Agree here. Suggest folks interested read The Frackers by Gregory Zuckerman which apart of a classic story of American ingenuity and entrepreneurialism in modern days outlines the story of the wildcats that developed the industry forward. 

[NSXCIGAR]

17 hours ago, MrBirdman said:

Pretty much all nonsense. There has been an explosion (no pun) of natural gas an oil production in the US over the past 30 years. We weren’t net exporters in the 70’s.  

I'm not sure where you're getting your data but oil and natural gas production was nowhere near where it was in the 1970s until around 2015 (2010 for natural gas). I wouldn't call it an explosion to simply go back to 1970s levels...

Also, I can only find data going back to 1985 but there were around 300 active refineries in 1985. Today there are 130. 

[MrBirdman]

6 hours ago, NSXCIGAR said:

I'm not sure where you're getting your data but oil and natural gas production was nowhere near where it was in the 1970s until around 2015 (2010 for natural gas). I wouldn't call it an explosion to simply go back to 1970s levels...

Also, I can only find data going back to 1985 but there were around 300 active refineries in 1985. Today there are 130. 

Oh, jeez, I should’ve said 15-20 years not 30. You’re graph pretty clearly demonstrates that I’m right though. 

Number of refineries doesn’t mean a whole lot, most of those shut were marginal anyway. 

And your claim that “the current administration” is holding up production is nonsense too. They are trying to investigate them for violating antitrust laws by keeping production too LOW. That’s pressure just not the kind that’s gonna hold up gas production.