Oil Needs to Fall Below $20 to Compete With Green Alternatives • Hacker News Board

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#31

Post by navigatesol » Mon, Aug 05, 2019, 11:52 AM UTC

AlanSE wrote: post #10

marble-drink wrote: post #7

Earlier quoted context omitted.

Not quite. Oil and its derivatives are also subject to heavy subsidies and taxation. These "corrections" are supposed to take into account external costs and benefits that wouldn't be otherwise in the price but, unfortunately, it is also susceptible to corruption. In the case of oil the external costs are so large that taxation can completely take its competitive edge.

Claiming that oil is subsidized is a tired trope. Yes you can argue that the Iraq War was done for oil, it's just not a strong argument. Many oil producing nations use oil revenue to subsidize everything else they (the government) wants, so the subsidy argument stands on weak footing for both consuming and producing nations. Oil has unpaid for economic externalities, specifically climate change. This is not the same…

>Claiming that oil is subsidized is a tired trope.

Precisely. Energy of all types receive subsidies, and oil receives fewer subsidies per unit of energy produced than other types of energy. And, in most advanced nations, it's taxed at extremely high levels on the consumer side.

We need to reduce our fossil fuel use, we get it. But this idea that we only burn oil because it's subsidized is bunk. Oil (and coal) is cheap, regardless.

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#32

Post by gingabriska » Mon, Aug 05, 2019, 11:53 AM UTC

thiago_fm wrote: post #27

What people need to have in mind is that oil, when compared with solar/wind power, acts both as a storage for energy(battery) and also the power/energy itself. So that means, you need a battery. The price of the battery, its decay and so on, has to be taken into account in that price. Does that aforementioned price for the barrel of oil includes that? I think not. If everybody would go electric Today, the price of a…

While that's true but not every application of green energy required a battery to operate.

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#33

Post by jillesvangurp » Mon, Aug 05, 2019, 11:53 AM UTC

carlmr wrote: post #2

Oil will be priced according to supply and demand. There may still be use cases which require oil. And however cheap the competition can produce oil it will be priced. This is non-news.

There's going to be a minimum cost though and it's higher than 20$ per barrel. At best, producing oil at those price levels is going to be not very lucrative. A lot of the remaining oil out there is getting quite hard to produce meaning the cost is high. E.g. Shale oil becomes a loss leading venture when the prices drop that low. This wikipedia article suggests that 25$ is sort of the lower boundary here: https://en.wikipedia.org/wiki/Oil_shale_economics. I have no idea if those numbers are correct but they are probably much higher than 20$ per barrel.

There is of course plenty of oil left but it is not the same cheap oil that we were used to last century where you basically stuck a pipe in a ground in a place like Texas and cheap oil would come out. Most of that oil is gone. Also, not all oil is created equally and some oil is a lot nicer to work with than other oil when it comes to refining it. Which is why the US still imports oil from the middle east. Refining is not free either obviously and actually uses lots of energy. Ironically, a lot of wind/solar is being used for that.

This is indeed not news. Oil investors have known this for some time and have been voting with their feet. Also, most EV owners are well familiar with the fact that the cost of recharging is peanuts compared to filling up a car with petrol/diesel. I'd say that 20$ is going to come down by 2-4x over the next 20 years.

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#34

Post by gnode » Mon, Aug 05, 2019, 11:54 AM UTC

romaaeterna wrote: post #22

> new wind and solar energy projects combined with battery-powered electric vehicles Less than 0.3% of electricity in the US is generated by oil (in 2018). The proper comparison for wind/solar for grid energy would be against natural gas/nuclear/hydropower.

The argument is that oil via combustion engine vehicles compete against renewables/gas/hydro/nuclear via battery-powered electric vehicles in a single transportation energy economy.

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#35

Post by [deleted] » Mon, Aug 05, 2019, 11:54 AM UTC

AlanSE wrote: post #10

marble-drink wrote: post #7

Earlier quoted context omitted.

Not quite. Oil and its derivatives are also subject to heavy subsidies and taxation. These "corrections" are supposed to take into account external costs and benefits that wouldn't be otherwise in the price but, unfortunately, it is also susceptible to corruption. In the case of oil the external costs are so large that taxation can completely take its competitive edge.

Claiming that oil is subsidized is a tired trope. Yes you can argue that the Iraq War was done for oil, it's just not a strong argument. Many oil producing nations use oil revenue to subsidize everything else they (the government) wants, so the subsidy argument stands on weak footing for both consuming and producing nations. Oil has unpaid for economic externalities, specifically climate change. This is not the same…

[deleted]

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#36

Post by Brakenshire » Mon, Aug 05, 2019, 11:59 AM UTC

thiago_fm wrote: post #27

What people need to have in mind is that oil, when compared with solar/wind power, acts both as a storage for energy(battery) and also the power/energy itself. So that means, you need a battery. The price of the battery, its decay and so on, has to be taken into account in that price. Does that aforementioned price for the barrel of oil includes that? I think not. If everybody would go electric Today, the price of a…

> So that means, you need a battery. The price of the battery, its decay and so on, has to be taken into account

That is the analysis they have done.

> If everybody would go electric Today, the price of a battery would go to infinity, as there is not enough supply for that demand.

I don’t understand why this is relevant, they are talking about a comparison for projected costs in 25 years, there’s plenty of time for battery production to increase, it would be 15% a year over that timeframe even for a total transition, and the industry is currently sustaining 75% a year growth.

25 years seems like a long time, but it’s a relevant timescale for oil investments made today and in the next years.

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#37

Post by navigatesol » Mon, Aug 05, 2019, 12:01 PM UTC

marvin wrote: post #17

AlanSE wrote: post #10

Earlier quoted context omitted.

Claiming that oil is subsidized is a tired trope. Yes you can argue that the Iraq War was done for oil, it's just not a strong argument. Many oil producing nations use oil revenue to subsidize everything else they (the government) wants, so the subsidy argument stands on weak footing for both consuming and producing nations. Oil has unpaid for economic externalities, specifically climate change. This is not the same…

Here is an article with a long list of literal fossil fuel subsidies that are largely ignored when discussing the economic environment for fossil fuels vs. non-CO2 energy sources. (The article also discusses some of the indirect subsidies that you're describing as a 'tired trope', but the main theme is economic stimulus that directly supports extraction, exploration, distribution, transport and consumption of fossil…

Why do they compare absolute figures? Is it surprising to you that fossil fuel subsidies are greater than renewable subsidies by such a measure? How much does each industry earn in taxes?

>Yet this fact, so inconvenient to the conservative worldview

Can you explain what "the conservative worldview" is for the readers? Sounds like the author has an obvious political leaning.

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#38

Post by romaaeterna » Mon, Aug 05, 2019, 12:08 PM UTC

gnode wrote: post #34

romaaeterna wrote: post #22

> new wind and solar energy projects combined with battery-powered electric vehicles Less than 0.3% of electricity in the US is generated by oil (in 2018). The proper comparison for wind/solar for grid energy would be against natural gas/nuclear/hydropower.

The argument is that oil via combustion engine vehicles compete against renewables/gas/hydro/nuclear via battery-powered electric vehicles in a single transportation energy economy.

If electric vehicles were to displace gas vehicles, then oil would be displaced by grid electricity.

But gas vehicles remain very competitive against electric vehicles on total cost of ownership, even with oil prices far higher than $20/barrel. And since gas is so much easier to transport, gas vehicles have numerous technical advantages.

If electric vehicles do not fully displace gas vehicles, then this article is wrong. Oil prices can stay high.

If electric vehicles do fully displace gas vehicles, the article is still wrong, because oil will not be competitive with grid energy even at $20/barrel.

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#39

Post by ptah » Mon, Aug 05, 2019, 12:09 PM UTC

Brakenshire wrote: post #15

The worry is that oil companies are making investments now for 10, 20 or 30 years into the future and not taking into account the realities of making a return. There are all sorts of long term capital costs for setting up oil fields, refineries, pipelines and so on, and then marginal costs for each barrel thereafter. Under a scenario of total road transport electrification, demand would be drastically reduced, meanin…

investors would not lose their shirt. typically taxpayer picks up bills like these. already taxpayers are subsidising the current competitiveness of oil

Re: Oil Needs to Fall Below $20 to Compete With Green Alternatives

#40

Post by ptah » Mon, Aug 05, 2019, 12:10 PM UTC

runeks wrote: post #30

Brakenshire wrote: post #15

The worry is that oil companies are making investments now for 10, 20 or 30 years into the future and not taking into account the realities of making a return. There are all sorts of long term capital costs for setting up oil fields, refineries, pipelines and so on, and then marginal costs for each barrel thereafter. Under a scenario of total road transport electrification, demand would be drastically reduced, meanin…

> Under a scenario of total road transport electrification [...] I think 30-year oil investments are relatively safe if this is their threat. I can’t see this happening in less than 30 years.

only if current levels of subsidies last