Let's play the superlative game: the biggest story in global climate is unfolding in real time right now in China's EV market which is absolutely off the hook. EV (NEV) sales are headed towards 3 million this year, as ICE sales get absolutely crushed. 1/
In my latest newsletter I showed that after ICE sales peaked at 28.1 million units in 2017, China's road fuel demand stopped growing. While we can't count on fuel demand to stay flat (on-road ICE fleet in China is mighty) ICE sales are on course to be < 22 million this year. 2/
Kinda fascinating is that China's data agencies have started reporting electricity demand from the emerging EV fleet. Counter to people's intuitions, it's not much. But it's not nothing. 3 million EV hitting the road in 2021 places roughly 10 TWh of new demand on the grid. 3/
Let's place that in context. China generated 7780 TWh of power in 2020. And as I tirelessly point out, China creates so much new power each year from *wind and solar alone* that it overwhelmingly covers new EV demand. 2020: 61 TWh from *new* wind. 37 TWh from *new* solar. 4/
But what's unfolding right now in China's car market is far closer to some of the heady forecasts from a couple years back, that at the time just seemed dreamy and wishful. 3 million NEV sales in a 25 million unit market already, in 2021? That is absolutely brutal for oil. 5/
Care to make a guess where we're headed, with EV starting to blow past 10% market share in China? How about 7 million EV sales in a 28 million unit market during 2025? Through the lever of petroleum product demand, what is the signal to oil markets from this point forward? 6/
To set the context for oil, here is our current position:
Something folks may not know about me: I used to be an oil market trader 2002-2008. My entire edge was trading against the hatred of higher oil prices, because I knew, and was correct, there was a structural shortage problem. A multi-year problem. What do I see now? 8/
I have never seen the global oil market in its current position: a really scary house of cards, with enormous spare capacity held by OPEC, and "turn it on" flexibility outside of OPEC. And all this is shrouded currently in logistical delivery issues, and high prices. #cuidado 9/
We are therefore exiting the period when early EV adoption globally was unable to have much of an effect on oil demand. Exiting quickly now, more quickly than can be easily absorbed or accepted--to a new domain where EV are like a WTF? Viking Raid on ICE, and oil. 10/fin.

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More from @GregorMacdonald

31 Jan
1/ I'm moderately concerned the Reddit Army, should it decide to choose $SLV as its next short squeeze target, may wind up causing some near term disruption to the global PV market. To be sure, global PV manufacturers are what's known as 'commercials' and as such, they...
2/ ...routinely hedge their silver exposure, just as an industrial concern hedges their future expected need for all manner of inputs, from oil to industrial metals. That's why I'm only moderately concerned. However, the chatter on WSB is very much about wanting to disrupt...
3... the physical market, by pushing the futures market into extreme territory. My general guess is the Reddit Army will find it far more challenging to disrupt the silver market. Unless of course we see a repeat, as we did last week, when much larger players got involved.
Read 14 tweets
17 Oct 20
Democrats currently have a single issue offered to them on a silver platter, against which Republicans are defenseless, one that would catalyze majority buy-in on the need to expand not just SCOTUS but other federal courts, and one that is clearly most pressing: Voting. 1/
Nothing is going to happen without voting modernization and liberalization. No climate policy, no health care, no gun control. Everything is downstream of voting. And it's obvious the @GOP has already made voting their own number one issue: that is, voting suppression. 2/
Perhaps there isn't clarity on how obvious this is, how voting should be the Democratic party's spearhead, because leadership is endlessly lost in the "complexity" of all the things voters and the party cares about. Look at the time wasted already on court expansion... 3/
Read 6 tweets
13 Sep 20
Chatter suddenly rising of inflation risk maps almost perfectly to this same juncture during the great recession. After the Fed showed it could put a floor under asset prices, the trumpets sounded. But, it didn't happen then, and isn't going to happen this time either. $SPY $TLT
The apex of inflation chatter will likely hit next year, when Green New Deal policies edge closer to reality. But it will just be Lucy and the Football all over again, because $GND (at least in energy-infrastructure terms) is ultimately deflationary, wringing out costs, waste.
Imagine looking back on us from the year 2120, and realizing "those people" seriously believed that investing in cheaper, faster, better, lower-cost infrastructure was both a bad investment, and...wait for it...inflationary. Can't make it up.
Read 8 tweets
20 Apr 20
Over the past two years I've been telling the story of how global oil demand growth would eventually flatten, decimating the industry. Today's oil gotterdammerung is a very different story; a macro crisis that will not as many hope deliver easy progress to the climate problem. 1/
To be sure, the massive revisions to 2020 global oil demand, if realized, will stand as a deep crater. And it'll take years for oil to slowly crawl out back to the rim. We might cautiously conclude the crisis has therefore brought the peak of demand forward, from 2025 to 2019. 2/
So in the first instance, we can pretty safely conclude that the long arc of oil's demand growth, from the first half the 20thC to the early part of the 21st, is over. It was ending anyway. For all the various reasons I and others have been writing about for years. 3/
Read 20 tweets
1 Jan 20
Over the holidays I rode around Portland on a borrowed e-bike while writing up this story for the Atlantic's @RouteFifty. One conclusion: the impact on the short-trip end of the transport spectrum could, in these early days, be comparable to EV. routefifty.com/infrastructure…
2/ If you've not yet ridden an e-bike the effects are simple enough to describe: imagine a quiet motor kicking in every time your cadence slows. You are still very much riding a bike, still pedaling. Over at @iamspecialized they say "it's you, only faster" and that sums it up.
3/Sales of e-bikes, by one estimate are on pace to rise 50% in the US this year, coming from a low base. In Europe, however, there is a more startling metric: 2018 e-bike sales were 10X EV sales. I mean, that is a full-on viking raid into the short-trips typically taken by cars.
Read 10 tweets
10 Dec 19
1/Recent lows in oil and gas equities have predictably triggered the usual flurry of articles about value or mean-reverting investors sniffing around for bargains. But I see no reason to conclude Oil & Gas is anything other now than a long-term value trap.
2/ Other than the usual price oscillations I'm not sure what Oil and Gas investors are looking for now. Another oil cycle? It's obvious the last oil cycle is well behind us now. The leading edge proxy, $OIH, never sustainably recovered after the last big oil decline. Dead sector.
3/ As 2019 comes to a close, once again we see the main forecasting agencies like EIA and IEA having spent much of the year downward revising their demand forecasts. That's getting old, frankly. IEA's STEO today also revised down 2017 + 2018 demand levels--not hugely. But, still.
Read 13 tweets

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