Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
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Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#2This looks like fantastic work. I hadn't come across it before. Thank you for sharing it on HN.
The authors simulate a network of ~6 million real-world assets used for extracting/processing/using fossil fuels, interconnected by ~16 million ground/maritime transportation flows. The simulations match actual fossil fuel flows at every location. The data and code have been open-sourced.
The authors use the simulation to ask questions such as, "what happens if demand for fossil fuels declines gradually, say, due to a transition to green energy technologies, causing the least profitable fossil-fuel assets to shut down?"
The answer to that particular question is counterintuitive: A gradual reduction in demand for fossil fuels can lead to sudden large shortages and supply-chain backlogs in many parts of the world.
Think of it this way: if enough "seemingly unimportant" assets go offline, all their connections (flows) go offline too, and the remainder of the network's assets and connections (flows) suddenly lack the capacity to get fossil fuel to all the places it needs to go.
I've added the paper to my reading list; I want to read it more carefully.
Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#3I recently started a book on a similar subject - "The End of the World is Just the Beginning" by Peter Zeihan. It mainly discusses the coming demographic bust most places in the world will see, and how that will lead to a breakdown of the author calls "The Order" - the American-backed protection of cheap and safe transport of materials across the oceans.
He sees a bright outlook for America, which can create all the energy it needs at home, and a bad outlook for places like China, which imports almost everything.
I recommend the book, but I do think he doesn't do a great job of making a solid argument that the demographic bust must lead to "the end of the world".
Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#4I recently started a book on a similar subject - "The End of the World is Just the Beginning" by Peter Zeihan. It mainly discusses the coming demographic bust most places in the world will see, and how that will lead to a breakdown of the author calls "The Order" - the American-backed protection of cheap and safe transport of materials across the oceans. He sees a bright outlook for America, which can create all the…
I’m reading the same book. I think what Peter misses with regards to energy is that roughly 40% of ocean shipments are moving fossil energy around [1]; if you move to renewables, a lot of shipping goes away. China currently generates more power from renewables than all of Europe [2], and the CCP seems to be aware of how foundational cheap, reliable energy is to their economic prospects. They have the will and government system to dictate their energy transformation.
Demographics will cause rapid economic growth deceleration in developed and almost developed countries (China’s TFR hit a low of 1.15 last year and continues to decline [3]), and “the order” will change as globalization somewhat reverses, but this is all opportunity imho (shipping declines but reshoring increases for security and resilience reasons, see manufacturing and semiconductors).
[1] https://qz.com/2113243/forty-percent-of-all-shipping-cargo-c...
[2] https://archive.ph/2022.06.30-103521/https://www.bloomberg.c...
[3] https://www.bbc.com/future/article/20220531-why-chinas-popul...
Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#5On a related note, I've been getting increasingly worried that we're imminently and blindly walking into a human catastrophe due to our current energy policies. I'd be interested to hear about holes that anyone here might be able to poke in any of the red flags being raised by people like Anas-Alhajji[1], the Doomberg team[2] and Wil VanLoh[3].
1. https://www.macrovoices.com/1087-macrovoices-328-dr-anas-alh...
2. https://doomberg.substack.com/
3. https://www.realvision.com/shows/the-kyle-bass-interviews/vi...
Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#6I recently started a book on a similar subject - "The End of the World is Just the Beginning" by Peter Zeihan. It mainly discusses the coming demographic bust most places in the world will see, and how that will lead to a breakdown of the author calls "The Order" - the American-backed protection of cheap and safe transport of materials across the oceans. He sees a bright outlook for America, which can create all the…
Thank you, I came here to mention Zeihan’s excellent book also. I am totally into studying geopolitical stuff while my wife generally hates these topics. I played this as an audiobook while driving for 5 hours yesterday and my wife loved it. My point is that he writes in a generally interesting style.
I am only half way through so I don’t yet know how good his ‘end of the world’ case is.
He does make a compelling case for the advantages that the US has in the potential for self sufficiency, but those advantages go away if we can’t control our political bigotry (i.e., democrats and republicans make sweeping generalizations against the other side with no interest in meaningful dialog - but to be fair, this is planned for easier control of the population).
Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#7I recently started a book on a similar subject - "The End of the World is Just the Beginning" by Peter Zeihan. It mainly discusses the coming demographic bust most places in the world will see, and how that will lead to a breakdown of the author calls "The Order" - the American-backed protection of cheap and safe transport of materials across the oceans. He sees a bright outlook for America, which can create all the…
Came to mention this book as well. I am halfway through but while reading the book this research is very complimentary.
Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#8I recently started a book on a similar subject - "The End of the World is Just the Beginning" by Peter Zeihan. It mainly discusses the coming demographic bust most places in the world will see, and how that will lead to a breakdown of the author calls "The Order" - the American-backed protection of cheap and safe transport of materials across the oceans. He sees a bright outlook for America, which can create all the…
I’m reading the same book. I think what Peter misses with regards to energy is that roughly 40% of ocean shipments are moving fossil energy around [1]; if you move to renewables, a lot of shipping goes away. China currently generates more power from renewables than all of Europe [2], and the CCP seems to be aware of how foundational cheap, reliable energy is to their economic prospects. They have the will and governm…
That does appear to be a blindspot of his... For all that he likes to write about transformational technology and other factors that can transcend geography, he doesn't like to include stuff like green energy or even climate change in general in his model.
Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#9This looks like fantastic work. I hadn't come across it before. Thank you for sharing it on HN. The authors simulate a network of ~6 million real-world assets used for extracting/processing/using fossil fuels, interconnected by ~16 million ground/maritime transportation flows. The simulations match actual fossil fuel flows at every location. The data and code have been open-sourced. The authors use the simulation to…
Fascinating. I wonder if that conclusion holds if, instead of assets being shut down due to lack of demand, links are chopped off by war & geopolitical instability. This is another likely consequence of climate change and we're seeing it already with MidEast instability + Russia/Ukraine war.
The lesson perhaps is that regions and individuals should do their best to disconnect their energy usage from the global fossil-fuel supply chain while it still exists, and develop new energy networks that are entirely in-region. I wonder if California's push to "go green" isn't really to benefit the planet, but to benefit California when the system collapses. It's just an easier sell to say "We're saving the planet" rather than "The planet is fucked, we're doing our best to ensure we survive when everybody else dies."
Edit: Looks like the paper covers this, and counter-intuitively, most supply-shocks do not have far-reaching impacts to the global supply. There are a few exceptions of strongly-connected nodes: most crude oil ones seem to be in Southeast Asia (affecting Japan/Taiwan/Australia) as well as Port Said, Egypt (Suez Canal), while the biggest natural gas impacts come from facilities in the Midwest (primarily affecting the U.S. East Coast). Their data does not include Russia, so it can't model things like the Russia/Ukraine war.
Re: Asset-Level Transition Risk in the Global Coal, Oil, and Gas Supply Chains
#10Earlier quoted context omitted.
I’m reading the same book. I think what Peter misses with regards to energy is that roughly 40% of ocean shipments are moving fossil energy around [1]; if you move to renewables, a lot of shipping goes away. China currently generates more power from renewables than all of Europe [2], and the CCP seems to be aware of how foundational cheap, reliable energy is to their economic prospects. They have the will and governm…
That does appear to be a blindspot of his... For all that he likes to write about transformational technology and other factors that can transcend geography, he doesn't like to include stuff like green energy or even climate change in general in his model.
Agree, I would say much of what he communicates isn't actionable, it's more history lessons than current geopolitics. Still a fun read regardless, worth the $20.