End Of Oil And Gas Era - What Will Happen?
Summary
TLDRThe 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
🛢 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.
📉 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.
🌞 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.
🚗 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.
Mindmap
Keywords
💡Oil
💡Peak Oil
💡Renewable Energy
💡Electric Vehicles (EVs)
💡Fossil Fuels
💡Demand and Supply
💡Economics of Oil
💡Environmental Impact
💡Autonomous Electric Robo-Taxis
💡Market Prices
💡Infrastructure
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
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