End Of Oil And Gas Era - What Will Happen?

Summary

The video discusses the significant role oil has played in global development, but highlights the inevitable decline of oil reserves and the economic challenges it presents. It explores the impact of decreasing demand, the rise of renewable energy, and the shift towards electric vehicles and autonomous transport. The script predicts a future where fossil fuels are largely replaced by sustainable alternatives, leading to cleaner air and water, and a transformation in how we live and travel.

Takeaways

• 🌏 Oil has been a major driver of global development for the past century, playing a crucial role in various sectors such as heating, transportation, agriculture, and food preservation.
• 📉 The inevitable decline of oil is acknowledged, with reserves becoming harder and more expensive to extract, leading to a gradual increase in cost over time.
• 📈 The price of oil is pivotal; high prices make difficult-to-extract sources viable, as seen in the cost differences between oil-producing countries like Saudi Arabia, Iran, Russia, and the US.
• 🏭 The oil industry requires massive infrastructure and continuous operation, which is not easily scalable or switchable without significant economic impacts.
• 📊 The 2020 demand slump due to global lockdowns led to a significant drop in oil consumption and a collapse in prices, causing severe financial strain on the industry.
• 💸 Major oil corporations like BP, Chevron, and Shell are experiencing significant losses, leading to job cuts and asset write-downs.
• 🛑 Environmental activism and the shift towards renewable energy sources have led to divestment from oil, gas, and coal, impacting the industry's profitability and future.
• 🚗 The transportation sector, which consumes a large portion of oil, is seeing a rapid transition towards electric vehicles, which are becoming more desirable and cost-effective.
• ♻️ Renewable energy technologies, such as solar and wind, have become cheaper and more efficient over time, contrasting with the rising costs of oil.
• 🌿 The future of the oil industry is uncertain, with predictions of a rapid transition to electric transportation and renewable energy sources, potentially making oil a niche and expensive resource.
• 🔮 The script envisions a future where autonomous electric robo-taxis could revolutionize transportation, reducing the need for personal vehicles and significantly impacting oil demand.

Q & A

What role has oil played in the last century's development?

Oil has been a primary fuel source for development over the last century, powering daily life through heating homes, moving transport, improving crop yields, and keeping food fresher.

Why is the decline of oil production a topic of debate?

The decline of oil production is debated because of its potential impact on the world's economy and environment, with the trajectory of decline and its effects being the main points of discussion.

What is peak oil and why is it significant?

Peak oil is the theorized point in time when the maximum rate of extraction is reached, after which a terminal decline in oil production is expected. It is significant because it marks the beginning of the end for oil as a primary energy source.

How does the price of oil affect the viability of different oil sources?

A higher barrel price of oil makes it more economically viable to extract oil from more difficult sources, as it increases the potential profit margins for producers.

Why is the market price critical for oil producers?

The market price is critical because it determines the profitability and survival of oil producers, especially those with the lowest production costs who can maintain supply and flexibility.

What challenges do large oil industry infrastructures face when demand drops?

Large oil industry infrastructures face challenges such as increased unit costs and reduced profits when demand drops, as they cannot be easily turned on and off and require continuous operation at peak efficiency.

How did the 2020 global lockdowns affect the oil industry?

The 2020 global lockdowns led to a slump in oil demand by about 20 percent, causing production to fall below optimum levels, prices to collapse, and the industry to suffer massive losses and job cuts.

What is the current state of the oil industry in terms of profitability and investment?

The oil industry is currently experiencing a downturn with major companies taking significant losses, cutting jobs, and investors looking elsewhere for returns due to low market prices and high debts.

What is the percentage of crude oil used for gasoline and its significance?

About 51.4 percent of crude oil is used for gasoline, which is significant as it indicates the high demand for oil in the transportation sector, particularly for cars.

How are renewable energy sources changing the energy landscape?

Renewable energy sources are becoming more cost-effective and accessible, with solar and wind technologies experiencing significant cost reductions, making them increasingly competitive with fossil fuels.

What is the potential impact of autonomous electric robo taxis on the demand for oil?

Autonomous electric robo taxis could significantly reduce the demand for oil by providing a cheaper and more efficient transportation alternative, potentially leading to a rapid decline in the need for personal vehicles and, consequently, less demand for oil.

What are some possible developments in the oil industry over the next 20 years according to the script?

The script suggests developments such as the arrival of fully autonomous electric cars, a surge in electric vehicle sales, the mainstream adoption of electric ships and planes, and the potential for fusion reactors to become operational, all contributing to a decrease in oil demand and a shift towards more sustainable energy sources.

Outlines

00:00

🛢 The Impact and Future of Oil

This paragraph discusses the integral role oil has played in global development and everyday life, from heating homes to enhancing crop yields. It acknowledges the inevitable decline of oil reserves, becoming more difficult and costly to extract, and the economic and environmental implications of this decline. The script touches on peak oil theory, the fluctuating oil prices, and the high costs of extraction compared to countries like Saudi Arabia and Iran. It also highlights the large-scale infrastructure required for oil production and distribution, and the slow adaptability of such industries to changes in demand, exemplified by the 2020 slump in demand due to global lockdowns.

05:01

📉 The Economic Downturn of the Oil Industry

The second paragraph delves into the financial repercussions of the oil industry's challenges. It outlines the significant losses taken by major oil corporations like BP, Chevron, and Shell, and the job cuts that have resulted. The decline in profitability is attributed to factors such as market values, investor returns, and the high costs of writing off assets. The script also addresses the impact of global activism leading to divestment in oil, gas, and coal, and the increasing competition from renewable energy sources that are becoming more cost-effective and prevalent. The paragraph concludes with a look at the current consumption breakdown of oil, emphasizing its dominance in transportation, heating, and power generation.

10:03

🌞 The Rise of Renewable Energy and Electric Transportation

This section of the script highlights the significant cost reductions in solar, wind, and battery storage technologies since 2010, facilitated by technological advancements and economies of scale. It contrasts this with the declining viability of oil as a finite resource. The script discusses the rapid adoption of renewable energy sources by various countries and the burgeoning electric vehicle market, which is becoming increasingly competitive with traditional internal combustion engine vehicles in terms of performance, user experience, and cost of ownership. The potential for autonomous electric robo-taxis to revolutionize personal transportation and significantly reduce the demand for oil is also explored.

15:04

🚗 Envisioning a Future Beyond Fossil Fuels

The final paragraph speculates on the future of the oil industry and the broader implications for global energy consumption. It predicts the rise of fully autonomous electric vehicles, the mainstream adoption of electric transportation, and the plummeting costs of renewable energy sources, which will outcompete fossil fuels. The script envisions a future where fusion power becomes a reality and all forms of transportation are electric, with decentralized micro-generation becoming the norm. It concludes by reflecting on the environmental and societal benefits of transitioning away from fossil fuels, cleaner air and water, and a greater appreciation for sustainable ecosystems.

Keywords

💡Oil

Oil is a fossil fuel that has been a primary energy source for the past century, driving industrialization and modern life. It is crucial for heating homes, powering transportation, and increasing agricultural productivity. In the video, oil is portrayed as a vital yet finite resource whose decline will have significant impacts on the global economy and environment.

💡Peak Oil

Peak oil refers to the point in time when the maximum rate of oil extraction is reached, after which it is expected to enter a terminal decline. The concept is central to the video's theme, illustrating the inevitable depletion of oil reserves and the need for alternative energy sources.

💡Renewable Energy

Renewable energy sources, such as solar and wind power, are highlighted in the video as the sustainable alternatives to fossil fuels. They are becoming more cost-effective and are expected to play a significant role in reducing dependence on oil.

💡Electric Vehicles (EVs)

Electric vehicles are shown as a key component of the transition away from oil, offering a cleaner and more efficient mode of transportation. The video suggests that the increasing popularity and performance of EVs will significantly reduce the demand for oil.

💡Fossil Fuels

Fossil fuels, including oil, are non-renewable energy sources formed from the remains of ancient organisms. The video discusses the finite nature of these resources and their environmental impact, emphasizing the need for a shift towards renewable alternatives.

💡Demand and Supply

The video discusses the dynamics of oil demand and supply, noting how record production levels and demand in 2019 led to discussions of peak oil. The COVID-19 pandemic's impact on demand is also highlighted, showing how it led to a significant drop in oil prices and industry challenges.

💡Economics of Oil

The economic aspects of oil production and consumption are a central theme in the video. It explains how the cost of extraction varies by region and how market prices affect the viability of different oil sources, ultimately impacting the industry's profitability and sustainability.

💡Environmental Impact

The environmental impact of oil use and the benefits of transitioning to renewable energy are discussed. The video suggests that reducing reliance on oil will lead to cleaner air and water and a more sustainable future.

💡Autonomous Electric Robo-Taxis

Autonomous electric robo-taxis are presented as a future transportation solution that could significantly reduce the need for personal vehicles and, consequently, the demand for oil. The video speculates that this technology could revolutionize the transportation sector.

💡Market Prices

Market prices for oil are crucial in determining the profitability of oil production. The video explains how low market prices can impact the industry, leading to job cuts, asset write-downs, and bankruptcies among oil companies.

💡Infrastructure

The video discusses the extensive infrastructure required for oil production and distribution, including oil rigs, pipelines, refineries, and retail outlets. It highlights the challenges of maintaining this infrastructure and the slow transition to new energy systems.

Highlights

Oil has been a key driver of development over the last century, with a wide range of applications from heating to transportation and agriculture.

The eventual decline of oil is acknowledged, with increasing difficulty and cost in extracting reserves.

The trajectory of oil's decline and its global impact is a subject of debate, with various economic and physical factors at play.

In 2008, oil prices reached a record high of $148 a barrel, reflecting peak oil and the high costs of extraction.

The cost of oil production varies greatly by country, affecting the viability of different sources and the market price's critical role.

The oil industry requires massive infrastructure and continuous operation, with high costs and slow adaptability to price changes.

The 2020 demand slump due to lockdowns led to a significant drop in oil consumption and a collapse in prices and profits.

Major oil corporations are experiencing billions in losses, job cuts, and asset write-downs amid the industry downturn.

The oil and gas sector is expected to write down $300 billion in assets in 2020 alone, reflecting the scale of the downturn.

Global activism and commitments to divest from fossil fuels have led to an estimated $11 trillion in divestment pledges.

Renewable energy sources are becoming more competitive, with significant cost reductions in solar, wind, and battery storage since 2010.

Electric vehicles are gaining popularity, offering better performance and lower running costs compared to internal combustion engine cars.

The transportation sector is expected to shift towards electric variants, significantly reducing the demand for oil.

Autonomous electric robo-taxis could revolutionize personal transportation, making owning a car less necessary.

The future of the oil industry is uncertain, with predictions of significant changes and a potential shift towards niche markets.

By 2050, fossil fuel oil may become a niche industry, replaced by sustainable alternatives and novel energy options.

The transition to cleaner energy will have far-reaching environmental benefits, including cleaner air and water.

Transcripts

oil has become a very hot topic in the

last decade or so

it has almost single-handedly fueled our

incredible development over the last

century

it helps our lives run day to day

from heating homes and moving transport

to improving crop yields and keeping our

food

fresher for longer it is involved in a

lot

more of our world than many of you

probably even realize

and we owe it a huge debt of thanks for

the part it played

but we have always known oil

would end one day the reserves are

already

more difficult and more expensive to

obtain

at any time before

it will end eventually and before that

it will get more and more

expensive this is not even a matter for

debate this is just the way it

is it is just physics and economics

what is up for debate however is the

trajectory

of that decline and the impact it will

have

on our world and that's what we will

consider today

let's have a look at the brief history

of oil shall we

even recently oil was at record prices

and record production levels in 2008

the price reached 148

dollars a barrel last year

2019 with record-breaking demand

and supply of close to 100 million

barrels daily with it being openly

declared

that this must be peak oil peak oil is

the theorized point in time when the

maximum rate of extraction

is reached after which it is expected to

enter a terminal decline

so why does price

matter although a high barrel price

does lead to a higher end cost to the

consumer

all things being equal it also opens up

the viability of more difficult

to extract sources look at this chart

saudi arabia and iran are down below ten

dollars a barrel to produce compare that

to russia

at twice as much u.s shale at

three times as much or with brazil and

the uk

coming in at four or five times as

expensive

market price is critical those who

produce it the cheapest will survive the

longest as the profit margins are

greatest

giving the most flexibility to supply

this

much oil at this price requires

very large equipment oil rigs

pipelines refineries oil tankers

lorries distribution hubs

retail outlets it takes a lot of time

and money to keep these running at peak

efficiency

to allow the price we expect to pay

to be achievable and profitable well

enough to make it all worth the effort

now just think for a minute industries

like this

cannot be just turned on and off quickly

and easily

they need to keep running some parts can

be run at lower capacities but the price

of each unit rises

quickly reducing profits to almost

nothing

and they can be switched off if

necessary

some parts cannot even be switched off

well not easily they take a long

time to run down to zero things get

cold and then they take a long time to

warm back up

and get running to anywhere near full

capacity

reduced production capacity increases

the unit cost

and reduces profits remember that

okay a brief history done let's come

back to the present day

in 2020 demand slumped

lockdowns and forced shutdowns in the

world's

richest economies saw the world slow

down

abruptly the skies were clear

the roads were empty the shops and

businesses were shut

have a look at this the previously

insatiable

appetite for oil slowed by

about 20 percent to below 80

million barrels a day what were the

consequences of this

well today the global oil industry is in

a tail spin

demand has not regained the losses it

suffered so production is still below

optimum prices have collapsed to around

40 dollars a barrel profits have been

wiped out the oil majors

giant global corporations including bp

chevron and shell

are taking billions of dollars in losses

whilst cutting tens of thousands of jobs

smaller companies are declaring

bankruptcy

investors are looking elsewhere for

their returns

so is this an end to profitability well

to add further misery and hardship

corporate profits market values and

investor returns have all

seen massive declines between 2012

and 2017 bp's profits dropped 68 percent

chevrons by 65 exxon mobils by 56

percent

shells by 50 percent the u.s fracking

industry

lost 300 billion

dollars in the last decade only a few

companies ever actually made a profit

well some people got very rich how about

writing off the losses and

previous assets and reducing costs well

in total the oil and gas sector are

expected to write down a staggering

300 billion in assets

this year alone that is as much as the

fracking industry

lost in the last decade

shell will reduce its asset value by 22

billion dollars this year

chevron was forced to write off 10

billion in losses and cutting

6 000 workers bp

is selling 15 billion of assets

including its petrochemical business and

eliminating

10 000 jobs exxon mobil

has reduced asset values by 3 billion

dollars and will eliminate 7500 workers

in the us alone 55 oil companies have

announced plans to cut

more than 37 billion from their spending

budgets

it has now got to the stage where they

just do not have the ability to borrow

the sort of money that they need

anymore additional factors global

activism

this has led to an estimated 11 trillion

dollars worth of commitments to sell off

oil

gas and coal holdings by last year the

enormous debts that they carry

their market prices are now too low and

with no

prospect of large future profits new

reserves

are not investment opportunities any

longer

increasing competition from other

sources such as

renewables bacteria biomass

reclamation and others are increasingly

lowering their costs

and increasing capacity at an

exponential rate

consumer awareness the environment has

become

a much larger interest for a great

many purchasers at many levels of the

economy

now the cheap oil is all but gone

and the competition is closing in so

what

uses a hundred million barrels a day

of oil let us have a quick look at a

breakdown

this breakdown of crude oil shows that

about 51.4 percent is used for gasoline

this commonly becomes petrol and is used

mostly in cars

15.3 percent is for distillate

fuel oil which goes to diesel

mostly three point three percent

is residual fuel oil which is the worst

of a bad bunch

it is used in shipping furnaces and

power plants

these three categories account for 70

percent of the supply

or should we say 60 to 70

million barrels a day what about

competitors

so transport heating and power

generation

are the biggest users we are always

going to need

new energy sources for our ever

increasing demands

well at least for the foreseeable future

anyway fossil fuels

were only ever a finite source

destined to get increasingly expensive

as the cheap options come to an end

so who are the challengers charting a

cleaner and more sustainable future for

us to follow

renewable energy sources well

these will only get better and

cheaper as time progresses which

contrasts with

oil have a look at this since 2010

solar technology costs are down by 85

wind is down by 49

battery storage is down by 85 percent

this has been brought about due to

technology

improvements and economies of scale in

both material production

and implementation something the fossil

fuel industry

has had the benefit of for decades and

decades now which is why they are so

cheap on the unit scale and we can see

countries

switching their supplies over as well

look at this

in 2014 only denmark germany and uruguay

had renewable energy sources that were

cheaper than coal or gas

by 2019 that had changed

significantly wind and solar

surged in just five years to being the

cheapest for over

60 percent of those listed but okay

although

these are great it is really

transportation where the bulk of oil

goes

electric transportation and this pace of

change

has not left the transportation sector

behind either

electric vehicles are now far more

desirable than their internal combustion

engine variants being both superior in

performance

and user experience almost a parity with

sticker price

and massively cheaper and easier

to own in both running and servicing

costs indeed we may well

have already seen the peak of global car

sales in 2018

2019 was lower maybe because

people are putting off buying a new car

as they are waiting to have

more choice with the electric variants

coming out over the next few years

2020 has seen new car sales massively

down

will this bounce back only time will

tell but i do not think it will return

to the same high levels

i am sure you can see the relationship

as transport networks are superseded by

electric variants the demand for oil

will

drop massively remember over 65 percent

of crude oil is used for petrol and

diesel

now this would not happen immediately

obviously

but once the precedent has been set

the ball could start rolling very

quickly and this would reduce the need

for oil on an almost exponential

drop the more these cash cows are

removed from the equation

the higher the unit cost for all other

derivatives will be

plastics especially which have benefited

from such a low cost for raw materials

for many years now

the higher their cost spirals the more

opportunity for disruptive technologies

and companies to come along

and pull out the carpet from under the

old guard

until a critical mass is reached and i

believe this could happen

a lot quicker than many analysts are

currently predicting

recycled plastic is already approaching

cost parity

with virgin plastic made straight from

oil and new processes

are coming along constantly now i am

sure

some of you are thinking that this will

be a slow process

but let me offer a single thought

experiment for one strand

of a possible future that could

change everything autonomous

electric robo taxis

imagine this the ride sharing taxi of

the future

no driver electric charged by solar

no need for tea breaks dinner breaks

toilet breaks available to work every

hour

that it is not charging these would

probably drop the cost of transport

to such a point that it would be cheaper

to get a taxi

than to own your own vehicle it will

just sit on your driveway gathering

dust so you see once this becomes the

norm

you could see quite a rapid uptake it

may only be limited

by how fast the vehicles can

be produced and anyway we will not need

to replace

every car it has been estimated that

even

with covering rush hour requirements

the number of vehicles required to

completely cover

everyone would be just 20 percent

of the number of vehicles that we

currently have on the road

so how will this play out into the

future what changes will we see

without a doubt significant changes to

the whole oil

industry are on the way how much

of it will be left in the future who

will be left in the future

what form will it take will it even

survive

as we know it today only time will

truly tell but here are a few of my

own thoughts for some possible

developments

over the next 20 years or so 2021

we will see the arrival of level 5

fully autonomous electric cars

2022 the choice of electrical variants

in the marketplace

will explode consumers will increasingly

put off buying a new vehicle for longer

now

because even if the variant they want is

not available

they would rather wait an extra year or

two with their old vehicle

and not have to buy another ice

vehicle 2025 fully autonomous

robo taxis will start becoming more

available

in certain locations depending on the

legal frameworks and how it rolls out in

each country

electric car sales will be limited only

by their production capacity

ice car sales will be in free fall

nobody but a very small minority

will want anything to do with an ice

vehicle

2030 electric ships and planes

will start becoming mainstream and the

cost of wind

and solar will be so cheap that they are

destroying

all the remaining fossil fuel markets

we will see the first working examples

of fusion

reactors coming online 2040

all transport is electric except for

vintage pieces at shows

and outlying regions with slower uptakes

and turnover of vehicles

micro generation for businesses and at

home for the consumer

has become a new standard now and

centralized generation

is starting to take a back seat by 2050

fossil fuel oil will be a niche industry

and very expensive replaced by

alternatives

either grown from plants or bacteria or

some novel

new option and how will this impact

the world we will have cleaner

air cleaner water

more sustainable options

more appreciation of the complexity

of the interlinking ecosystems and how

degrading one

can lead to a chain reaction autonomous

vehicles

are going to change the world

in ways you cannot even conceive

and that topic is next so be sure to

check back and i will see you

next week