Now that global oil demand growth is over, and we enter a plateau-of-consumption period of at least several years where demand oscillates (but does not fall, yet), trading price is imo going to be far more difficult than ever. Here are some themes: 1/ Price is going to stay firmer than one would expect: The end of demand growth has long been anticipated by the industry, which has been rapidly converting to a strategy of capital discipline. So, ex-NOCs, the pressure in to conform to supply constraint is in place.

So IEA sees such a bright three year run through 2025 in global powergrid decarbonization, that it's forecasting renewables and nuclear take 90% of marginal growth, thus suppressing power sector emissions effectively.
iea.org/reports/electr… 1/ And Euro group Rystad Energy is also coming to a similar conclusion, both within and outside the power sector two, and actually sees a peak in power sector emissions right here, right now.
rystadenergy.com/news/fossil-fu… 2/

For about 30 years now there's been a notion in western think tanks and financial market research that Non-OECD per capita oil consumption would inexorably move towards OECD per capita use. Directionally, this was right of course. They just got the magnitude all wrong. OECD per capita oil consumption growth was a one-time, spectacular mash-up of multiple economic drivers, concurrent with the rollout of ICE vehicles. Transposing that to the Non-OECD, say, post 1990 was irresistible I guess. But it's not even useful. It's a big analytical miss.

California put 237, 618 new EV on the road last year.

Conservatively speaking (i.e. being generous and cautious) that represents nearly 1 new TWh of electricity demand needed (0.95 TWh).

How much *newly created* electricity from wind+solar alone, in CA last year? --> 8.45 TWh. The bitter complaint that we can't possibly run the cars on wind and solar will press onward as we create overwhelming surpluses of wind and solar, from which we will indeed power the cars. It's fun, and it's already happening.

The most common assumption I read currently in oil analysis is the view that production growth absolutely must come from somewhere soon, to serve demand growth that's coming next year. This assumption is often paired with the view that western oil producers are making.... 1/ ...a kind of policy mistake in their cautious reluctance to return to growth-oriented drilling. I'm on the other side of both assumptions. Indeed, I think western oil companies see--and have seen for some time--a very serious risk that total global oil demand.... 2/

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/

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...

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/

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.

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/

https://twitter.com/GregorMacdonald/status/1082018027967664128

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/

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.

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.

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.

15 US states are now producing wind+solar at, or above, 10% of electricity sales. This week's letter also cites work from @ramez @MLiebreich @ChrisGoodall2 and @AtifRMian, plus a final wrap on 2018 California EV sales. gregor.substack.com/p/rates-of-int… 2/ Great example of how the theory of "value deflation" (there will be too much variable energy and it will wreck power supply economics) ignored how market arbitrage emerges: you actually want wind+solar to be cheap to drive investment. wsj.com/articles/exten… via @russellgold

Any New Green Deal we propose now will release massive economic savings over time. Appreciate the Op-Ed invite from @Buzzfeed to explain how rapid cost declines for wind, solar, and EV mean a green way forward is now a bargain. Let's do it. buzzfeednews.com/article/gregor… 2/ My advice to new green-dealers: don't come bearing scary high price tags. Lead, instead, with the savings. 65% of the energy the US consumes is wasted, lost to the atmosphere. That lost energy forms your budget to drive efficiency gains through the economy.

1/ China just re-shaped the future of the global car market. Let's take a look at the numbers rolling in now, as we get the full year picture on China's EV sales and road fuel demand. First and foremost: the sales growth of ICE vehicles has now peaked, in China w/ no way back. 2/ Sales of ICE vehicles peaked in China in 2017 at 28.102 million units. In 2017, EV sold 777 thousand units but it was not enough to blunt ICE sales. And then, last year, the EV earthquake happened: EVs sold reached 1.26 million units. ICE tanked, to 26.821 million.

1/ Electricity is the new oil. China just killed the future of the internal combustion engine. And climate action (energy transition) is neither scary nor costly to the economy, but will pay for itself over twenty years. That's why I've written Oil Fall. gum.co/OilFall 2/ Years ago I coined a phrase "It's going to take alot of oil, to get off oil." The idea: to fight fossil fuel path dependency and build new energy infrastructure would mean a massive, ongoing hit to global GDP. I loved these words and thought them clever. Now, they're wrong.

1/Clearly, neither the FED, nor many US economy observers took the impacts of the tariffs, seriously enough. Tariffs are an extremely effective method to damage not just your own economy, but your trading partner's as well. Ricardo laid it all out. 2/ Historically, if you moved your economy from autarky to free trade, those who did the same and traded with you not only benefited through specialization, but, through the expansion of existing markets to their fuller potential. Trump three this into reverse. It's an Own Goal.

1/Over the past three months, I’ve undertaken a very deep dive into energy-storage. I’ve read tons of literature, spoken to professionals and policy makers, eventually giving me a view of the current landscape. I’ve got pieces coming soon in @routefifty and @pvmagazine @routefifty @pvmagazine 2/ I see the term ‘intelligent layer’ is ubiquitous and probably overused in tech but it couldn’t possibly be more apt and on point for energy-storage. Software + energy-storage makes, and will make, a clever, arbitraging entity that will perform crucial work in electricity.

1/ The EV sales growth take-off point is now arriving and everyone is going to have to revise their projections (again). IEA and EIA are of course the farthest behind. But even BNEF may have to revise. China is of course leading the way, but edge-economy California also roaring. 2/ The future of ICE sales growth, already in doubt generally, is very unlikely now in key domains like the UK and especially California. I'd like to see an assertion that ICE vehicles can return to growth in CA when EV share already powering towards 10%. us7.campaign-archive.com/?u=0860f685d9d…

1/The hunt for peak oil demand is a worthwhile task, given that half the oil market is already past peak. Here, DNVGL's estimate of a five year timeline chimes in with my own view that 2021 or 2022 will see the first strong signal that demand growth is sharply slowing down.

https://twitter.com/DNVGL/status/1039892568274886656

2/ By half the oil market, I mean this: regions on the left side of this chart are past peak. (Bonus: look at that, an actual use case for the justifiably scorned pie chart).