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1/ China is on pace to sell 4 million fewer ICE cars this year, as a cyclical auto sector slowdown merges into real problems w/ China's economy. A thread of fresh data on oil, transport, renewables, as a mid-year update to my Oil Fall series. gum.co/OilFall
2/ Hesitate to use the crash word but China's auto market is on pace to fall by 12-13% this year. 3.5 million fewer cars in total, but 4 million fewer ICE, as EV set to reach 1.8 million new sales. This is both a cause, and concurrent to broader macro impacts on road fuel demand. 
3/ The aggressive policy attack on ICE, and the surge of EV sales, are creating a perfect storm for road fuel demand as China's economy is near contraction. EV now set to even more quickly gain share in part because total car market is falling so hard.
4/China's economy is hurting from the knock-on effects of the trade war. Latest PMI over the weekend was just latest data point in constant stream of weak readings. The oil market has been rightly concerned: China is the axe in global oil demand changes.
5/ Contra perceptions, neither Africa nor Asia Ex-China is providing the demand growth boost to oil demand many expected--even though both are still yet to see peak demand. Half the world, meanwhile, is either post-peak or long past peak demand. Rate of change is up to China.
6/ The oil industry meanwhile remains mostly unprepared for a world in which oil demand no longer grows (and perhaps just flattens for years). That the Oil Services sector never recovered from the 2014 decline in oil prices, as measured by $OIH, is the tell: future is punk.
7/ Even BP, despite its continued higher rate of investment, projects in their outlook this year that *78% of the oil demand growth* between 2017 and 2040 is done, completed, by 2025. Leaves nothing for industry 2025 to 2040. bp.com/en/global/corp…
8/One oil major however has been preparing for over a decade for a world of slow, to no, oil demand growth: Shell. See recent work by @davidfickling here. Does Shell have an amazing plan to dodge what's coming? No, but relative to its peers, far better. bloomberg.com/opinion/articl…
9/ So what does Shell understand that its peers don't? The world is electrifying. Every year this decade except for 2015 the rate of electricity demand has outpaced oil demand. The marginal unit global GDP now calls more upon power, than oil--a good description of 21stC vs 20thC.
10/Make no mistake: slowing oil demand growth, clear in the last chart, is quite bad for the oil industry. No outright declines needed to cause trouble. So, in this regard, I took a great interest in @billmckibben's review of work by @KingsmillBond nybooks.com/articles/2019/…
11/ Both @KingsmillBond and I have the same thesis: with capital intensive industries like oil, the death blow doesn't wait until demand enters outright decline, but rather, with the end of growth. The global coal industry went bankrupt just below the all time highs of demand.
12/ China was and remains the last "big hope" for demand growth in a world of dwindling demand growth for oil. But China's fate is, at best, to grow oil demand at much lower rates in the years ahead, and eventually like the US, enter the post-peak club.
13/ It should be understood that China is already much more of an electricity based economy than an oil based economy. And there are huge gains to be had not only for re-weighting to electricity, but to do so with renewables. Fossil fuels are powerful, but hugely inefficient.
14/ I've talked less about the third and final part of the Oil Fall series, Waste Crash, but the transition to more efficient electricity is a big part of why oil's future is so dim, and why it's fate is the same as coal's. Most important are the energy savings.
15/ In Oil Fall, I aggregate energy waste estimates from Lawrence Livermore NL, IEA, IIASA, and find half the energy the world burns is lost in the form of waste heat. Why this matters: *because this is essentially the money we can spend* to fund an aggressive energy transition.
16/ Obviously, there is a huge misunderstanding over the "how do you pay for it" aspect of conducting a stepped up energy transition. Hard for many to accept: It pays for itself over twenty years. We can do the same work, with much less energy.
17/ I tried my best to explain these higher level concepts for a general audience earlier this year, in my Op-Ed for @BuzzFeed buzzfeednews.com/article/gregor…
18/ For a city like Los Angeles, the economic upside of a faster transition to renewables, and away from ICE cars, is intoxicating. In Oil Fall, I imagine LA in 2040 as a transformed city, with huge dislocations in real estate prices as a result of new era of clean air.
19/ I am currently both a critic and an enthusiast of LA's efforts so far, but even on current trajectory, LA is on course to be quite transformed by the time of 2028 Olympics. Some of the biggest gains imo are coming in long disfavored LA real estate. My LA vision for 2040:
20/ As I explain in Oil Fall, China, Europe, the US, and California are *all* creating more than enough new electricity from wind+solar alone to meet the demand of new electric cars. Like the US as a whole, California gasoline demand growth meanwhile has gone flat.
21/ Meanwhile in Los Angeles, one of the top EV markets in the world, tepid growth in the total vehicle fleet stalled out last year. (Gasoline growth in CA, despite a 10% increase the past decade in population, has gone nowhere.)
22/ Sales of ICE vehicles in California peaked three years ago now, in 2016. There is no growth future, none, for ICE in California. ICE are done. EV took nearly 8% of the market last year, and just as in China, are feasting on a falling market.
23/ Those EV market share percentages might look aggressive at first glance but this is a falling market-falling harder than the US market in Q1 2019. Importantly, CA will get all the new EV models first--next year, and especially 2021. EV (BEV+PHEV) will sell 1 out of 5 in 2021.
24/ California will fund *all* new demand for electricity from EV easily from new wind and solar--two sources still growing strong in the Golden State. "Wind and Solar can never scale!" vs "We're building too much wind and solar!" Same people.
25/ Will discuss this thread in my newsletter tomorrow, here: gregor.substack.com | And you should read Oil Fall if you want to understand how electricity is jailbreaking the powergrid, and headed to disrupt transportation. Cheers! /fin. gum.co/OilFall
