The Price of Oil Is About to Blow a Hole in Corporate Accounting • Hacker News Board

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#61

Post by imaginenore » Mon, Mar 09, 2015, 9:23 AM UTC

adventured wrote: post #23

imaginenore wrote: post #14

Earlier quoted context omitted.

You don't know that. The world is really on the way of getting rid of oil. Electric cars, bioplastics, solar panels getting exponentially cheap. From my point of view the only thing that stops us all from switching to electric cars is the battery technology. When it comes to the industrial use of solar energy, we already have the technology of storing energy - flywheel (google Beacon Power).

The largest impediment to everyone switching over to electric cars, is grid and supply, not storage. We can do the battery storage right now, it's just not as great as what we'd like. If you switched all cars over to electric tomorrow, the grid would melt down in every country that attempted it. There is not even remotely enough power available to handle it. Most first world countries are running their national power…

As soon as we have good cheap batteries, you don't need the grid. You have batteries charging from solar during the day, your car is charging at night.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#62

Post by SixSigma » Mon, Mar 09, 2015, 9:32 AM UTC

crdoconnor wrote: post #35

SixSigma wrote: post #18

Earlier quoted context omitted.

> exponentially cheap Solar is following an exponential fall, but the tail has long been wagged http://io9.com/solar-powers-epic-price-drop-visualized-51044...

It's funny how the amount of FUD has shot up as the price has precipitously dropped: * They're unreliable. * The intermittency makes it impossible to use. * It's unfair on the monopolistic power companies.

That last one is particularly egregious. They could have been reaping the benefits themselves but they, like incumbents everywhere, sat on their hands and watched the cash roll past.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#63

Post by computator » Mon, Mar 09, 2015, 9:48 AM UTC

lancewiggs wrote: post #59

computator wrote: post #54

Earlier quoted context omitted.

> The vast majority of people don't buy a brand new car more than once or twice in their life. The adage has been that "Americans buy, on average, a new car or truck every 3 or 4 years."[1] That's like a dozen new cars in a lifetime. I was going to call bravo sierra on your assertion, but I decided to try a back-of-the-envelope calculation to check the plausibility: Roughly 10 million cars are sold each year in the U…

2nd hand cars? The 10m is just new cars right?

I do mean 10 million new cars are sold yearly in the U.S.[1][2]

Without doing a lot of research, I couldn't decide how to deal with questions of:

- Including or excluding light trucks

- Including or excluding cars that are new but being leased rather than sold

- Large year-to-year variations in sales (esp. of low sales during the recession)

But I think 10 million is reasonable rough estimate.

[1] http://en.wikipedia.org/wiki/Passenger_vehicles_in_the_Unite... [2] http://online.wsj.com/mdc/public/page/2_3022-autosales.html

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#64

Post by mjevans » Mon, Mar 09, 2015, 9:59 AM UTC

peteretep wrote: post #46

ubernostrum wrote: post #41

Earlier quoted context omitted.

the markets are too stupid to have done the maths Lucky for us, the markets are made up entirely of perfectly-informed, perfectly-rational, perfectly-self-interested frictionless spherical humanoids in uniform harmonic motion.

That's a straw man. If you think the markets are as predictable as you're suggesting they are, put your money where your mouth is. Otherwise, best to assume the information has already been priced in.

It seems satire is lost on you.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#65

Post by Padding » Mon, Mar 09, 2015, 10:05 AM UTC

mikeash wrote: post #40

adventured wrote: post #39

Earlier quoted context omitted.

Emphasis on tens of trillions and decades (not merely a few trillion). Batteries are not a $30 trillion and 30 year problem, not even remotely close. Batteries are an order of a magnitude smaller of a problem. We can build the Tesla S already. Musk is going to spend $5 billion building a plant that can produce 500,000+ car battery systems. We can already make effective battery systems for mainstream electric cars, th…

Right now, batteries for a realistic replacement car (not a compromise EV like a Leaf) cost about $20,000 per vehicle. That's $10 trillion for 500 million cars. It doesn't look an order of magnitude smaller to me. As for where the money comes from, doesn't that just fall out of supply and demand? As demand for electricity increases, prices will go up, funding the infrastructure improvements needed to accommodate the…

> As for where the money comes from, doesn't that just fall out of supply and demand? As demand for electricity increases, prices will go up, funding the infrastructure improvements needed to accommodate the increased demand.

Looking forward to oil-shareholders claiming how expensive electric cars for the elites are making electricity unaffordable for the poor.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#66

Post by peteretep » Mon, Mar 09, 2015, 10:36 AM UTC

mjevans wrote: post #64

peteretep wrote: post #46

Earlier quoted context omitted.

That's a straw man. If you think the markets are as predictable as you're suggesting they are, put your money where your mouth is. Otherwise, best to assume the information has already been priced in.

It seems satire is lost on you.

You mean sarcasm, and you should read more carefully. The post was implying that markets are irrational, through sarcasm, and that in fact it was possible to predict this irrationality. HTH HAND.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#67

Post by dredmorbius » Mon, Mar 09, 2015, 12:51 PM UTC

computator wrote: post #54

caseysoftware wrote: post #25

Earlier quoted context omitted.

Even if a perfect battery was introduced tomorrow it would still take at least 10 years before it made a serious dent in the car market. The Prius was introduced in the US in 2000 and it took about 11 years for them to sell the first million.[1] The vast majority of people don't buy a brand new car more than once or twice in their life. They simply don't have the money. The rest of the people buy a car used and drive…

> The vast majority of people don't buy a brand new car more than once or twice in their life. The adage has been that "Americans buy, on average, a new car or truck every 3 or 4 years."[1] That's like a dozen new cars in a lifetime. I was going to call bravo sierra on your assertion, but I decided to try a back-of-the-envelope calculation to check the plausibility: Roughly 10 million cars are sold each year in the U…

If you look at fleet life then you'll find it's markedly more than 3-4 years. It stood at 10.8 years as of 2011.

http://usatoday30.usatoday.com/money/autos/story/2012-01-17/...

33.8% of cars were older than 10 years as of 2001: https://en.wikipedia.org/wiki/Passenger_vehicles_in_the_Unit... http://www.nada.org/Content/NavigationMenu/MediaCenter/NADAD...

If you run the statistics as median number of lifetime purchases by person (rather than average), you'll likely get a lower count as well. High-volume purchasing is likely concentrated among wealthy (or exceptionally unlucky) drivers.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#68

Post by dredmorbius » Mon, Mar 09, 2015, 1:04 PM UTC

tptacek wrote: post #31

x0x0 wrote: post #20

Earlier quoted context omitted.

You should look at the graph [1: the article, 2: a hotlink] labeled "Welcome to the Terrordome..." showing the prices of various oil sources vs solar over time. If the fantastic decline in solar prices continue, many oil sources will soon be not economical. And yes, I know there's storage problems and energy density problems for mobile vehicles, but oil is still a riskier bet than I think you portray. [1] http://www.…

This is pretty weak. The reason solar-power generation will increasingly dominate: it’s a technology, not a fuel. As such, efficiency increases and prices fall as time goes on. That's true of shale oil extraction as well. The corresponding chart conflates all natural gas extraction under the "Henry Hub" label, and all crude extraction under "Brent". Meanwhile, it tries to show an exponential price decline in solar by…

"That's true of shale oil extraction as well."

If you're arguing that the price of shale-oil extraction can and will only fall, you're almost certainly in error.

Yes, there's some room for improvement in any technical process, initially, but in virtually all (IT and IC design specifically being the notable exception), diminishing returns set in.

For oil, the challenges are twofold.

One is accessing ever more difficult to extract resources -- further offshore, more remote, tighter shale, etc. US EIA's own estimates call for a peak in US shale / tight-oil extraction likely before 2020. http://www.eia.gov/pressroom/presentations/sieminski_0521201... (p. 11, "reference case")

Per-well extraction rates fall off tremendously in 18-24 months, and constant new exploration and drilling (both expensive) are required. Contrast with First Oil Well, Bahrain, completed in 1931, and still providing 35,000 bbl/day nearly 85 years later: https://en.wikipedia.org/wiki/First_Oil_Well,_Bahrain

They don't make 'em like they used to.

The other is the increasing likelihood that fossil carbon assets will be stranded -- prohibited from access until climate and environmental impacts are addressed. Almost certainly a process of a century or centuries.

Solar costs (direct PV) have been falling consistently, though other associated costs (labour, installation, structures, inverters, interconnects) haven't declined as much. The relatively fixed costs then become a larger

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#69

Post by cpwright » Mon, Mar 09, 2015, 1:17 PM UTC

Its useful to point out that although the standard accounting method was used for the official numbers, at least one of the drilling companies in this article also included the impact of current prices on their reserves. Investors care about this, know about it, and at least some of the the companies give them information so it can be properly priced in.

Re: The Price of Oil Is About to Blow a Hole in Corporate Accounting

#70

Post by andyzweb » Mon, Mar 09, 2015, 1:46 PM UTC

smcl wrote: post #60

adventured wrote: post #24

Earlier quoted context omitted.

It isn't only OPEC. The US dollar shaved at least 20%+ off the price of oil, and likely instigated this crash (the world was swimming in oversupply of oil for quite some time before the crash). The US dollar began skyrocketing, due to the end of QE, at exactly the same time oil began crashing. Not a coincidence, given oil is priced in dollars and the US dollar is on its greatest one year run in decades. Look at July…

Can you help me get my head around the USD chart? In my head it only makes sense to value one currency vs another (i.e. the USD to GBP exchange rate) so seeing one chart which simply plots "USD" over time is a bit tough to wrap my head around.

that chart most likely comes from this calculation: http://en.wikipedia.org/wiki/U.S._Dollar_Index