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Tuesday, May 30, 2017

Petrol cars will vanish in 8 years, says US report from Stanford economist

From a few years ago I have been warning about the end of the oil age. 
But I had a longer term view of 2020 and thereafter.
Since our gomen derives 30% of its revenue from Petronas the implications are obvious.

Who would have guessed that (in 2014) the Saudis would begin their pissing contest with shale oil. So far they have lost the pissing contest. 

Oil prices have gone from over US115 per barrel (June 2014) to yesterday's below US$50 per barrel. And shale oil is here to stay.  

Now here is a research based article written by Professor Tony Seba, an economist from Stanford University in California. This guy says that petrol cars will be extinct in just another eight years.

He is tracking developments in battery technology for electric vehicles. The battery technology has reached the "tipping point" of exceeding 200 miles (this is US ok) on one charge. Plus the costs of EVs (electric vehicles) is also reaching the tipping point of going below US30,000 per vehicle. 

Prof Seba says these two "tipping points" will combine in a perfect storm and create a massive explosion in EV production. Tesla for example is giving an "unlimited mileage warranty" on its Tesla s because the EV has only 18 moving parts. Service and maintenance costs will be almost zero.

Here is the article in full:

"A Tesla Model S, which has 18 moving parts, one hundred times fewer than a combustion engine car. "Maintenance is essentially zero," says Stanford University economist Tony Seba. "That is why Tesla is offering infinite-mile warranties. You can drive it to the moon and back and they will still warranty it."

No more petrol or diesel cars, buses, or trucks will be sold anywhere in the world within eight years. 

The entire market for land transport will switch to electrification, leading to a collapse of oil prices and the demise of the petroleum industry as we have known it for a century.
This is the futuristic forecast by Stanford University economist Tony Seba. The professor's report, with the deceptively bland title Rethinking Transportation 2020-2030, has gone viral in green circles and is causing spasms of anxiety in the established industries.

Mr Seba's premise is that people will stop driving altogether. They will switch en masse to self-drive electric vehicles (EVs) that are 10 times cheaper to run than fossil-based cars, with a near-zero marginal cost of fuel and an expected lifespan of 1 million miles (1.6 million kilometres).

Only nostalgics will cling to the old habit of car ownership. The rest will adapt to vehicles on demand. It will become harder to find a petrol station, spares, or anybody to fix the 2000 moving parts that bedevil the internal combustion engine. Dealers will disappear by 2024.

Cities will ban human drivers once the data confirms how dangerous they can be behind a wheel. This will spread to suburbs, and then beyond. There will be a "mass stranding of existing vehicles". The value of second-hard cars will plunge. You will have to pay to dispose of your old vehicle.

It is a twin "death spiral" for big oil and big autos, with ugly implications for some big companies on the London Stock Exchange unless they adapt in time.

The long-term price of crude will fall to $US25 a barrel. Most forms of shale and deep-water drilling will no longer be viable. Assets will be stranded. Scotland will forfeit any North Sea bonanza. Russia, Saudi Arabia, Nigeria, and Venezuela will be in trouble.

It is an existential threat to Ford, General Motors, and the German car industry. They will face a choice between manufacturing EVs in a brutal low-profit market, or reinventing themselves a self-drive service companies, variants of Uber and Lyft.

They are in the wrong business. The next generation of cars will be "computers on wheels". Google, Apple, and Foxconn have the disruptive edge, and are going in for the kill. Silicon Valley is where the auto action is, not Detroit, Wolfsburg, or Toyota City.

The shift, according to Mr Seba, is driven by technology, not climate policies. Market forces are bringing it about with a speed and ferocity that governments could never hope to achieve.

"We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history," Mr Seba said. "Internal combustion engine vehicles will enter a vicious cycle of increasing costs."

The "tipping point" will arrive over the next two to three years as EV battery ranges surpass 200 miles and electric car prices in the US drop to $US30,000 . By 2022, the low-end models will be down to $US20,000. After that, the avalanche will sweep all before it.

"What the cost curve says is that by 2025 all new vehicles will be electric, all new buses, all new cars, all new tractors, all new vans, anything that moves on wheels will be electric, globally," Mr Seba said.

"Global oil demand will peak at 100 million barrels per day by 2020, dropping to 70 million by 2030." There will be oil demand for use in the chemical industries, and for aviation, though Nasa and Boeing are working on hybrid-electric aircraft for short-haul passenger flights.

Mr Seba said the residual stock of fossil-based vehicles will take time to clear, but 95 per cent of the miles driven by 2030 in the US will be in autonomous EVs for reasons of costs, convenience, and efficiency. Oil use for road transport will crash from 8 million barrels a day to 1 million.

Insurance costs to fall by 90 per cent
  • The cost per mile for EVs will be 6.8 cents, rendering petrol cars obsolete
  • Insurance costs will fall by 90 per cent. 
  • The average American household will save $US5600 per year by making the switch. 
  • The US government will lose $50 billion a year in fuel taxes. 
  • Britain's exchequer will be hit at the same rate.
"Our research and modelling indicate that the $10 trillion annual revenues in the existing vehicle and oil supply chains will shrink dramatically," Mr Seba said.

"Certain high-cost countries, companies, and fields will see their oil production entirely wiped out. Exxon-Mobil, Shell and BP could see 40 per cent to 50 per cent of their assets become stranded," the report said.

These are all large claims, though familiar to those on the cutting edge of energy technology. While the professor's timing may be off by a few years, there is little doubt about the general direction.

India is drawing up plans to phase out all petrol and diesel cars by 2032, leap-frogging China in an electrification race across Asia. The brains trust of Prime Minister Narendra Modi has called for a mix of subsidies, car-pooling, and caps on fossil-based cars. The goal is to cut pollution and break reliance on imported oil, but markets will pick up the baton quickly once the process starts.

China is moving in parallel, pushing for 7 million electric vehicles by 2025, enforced by a minimum quota for "new energy" vehicles that shifts the burden for the switch onto manufacturers. 

"The trend is irreversible," said Wang Chuanfu, head of the Chinese electric car producer BYD, backed by Warren Buffett's Berkshire Hathaway.

At the same time, global shipping rules are clamping down on dirty high-sulphur oil used in the cargo trade, a move that may lead to widespread use of liquefied natural gas for ship fuel.

This is all happening much faster than Saudi Arabia and Opec had assumed. The cartel's World Oil Outlook last year dismissed electric vehicles as a fringe curiosity that would make little difference to ever-rising global demand for oil.

It predicted a jump in crude consumption by a further 16.4 million barrels a day to 109 million by 2040, with India increasingly taking over from China as growing market. The cartel said fossils will still make up 77 per cent of global energy use, much like today. It implicitly treated the Paris agreement on climate targets as empty rhetoric.

Whether Opec believes its own claims is doubtful. Saudi Arabia's actions suggest otherwise. The kingdom is hedging its bets by selling off chunks of the state oil giant Saudi Aramco to fund diversification away from oil.

Opec, Russia, and the oil-exporting states are now caught in a squeeze and will probably be forced to extend output caps into 2018 to stop prices falling. Shale fracking in the US is now so efficient, and rebounding so fast, that it may cap oil prices in a range of $US45 to $US55 until the end of the decade. By then the historic window will be closing.

Experts will argue over Mr Seba's claims. His broad point is that multiple technological trends are combining in a perfect storm. The simplicity of the EV model is breath-taking. The Tesla S has 18 moving parts, one hundred times fewer than a combustion engine car. "Maintenance is essentially zero. That is why Tesla is offering infinite-mile warranties. You can drive it to the moon and back and they will still warranty it," Mr Seba said.

Self-drive "vehicles on demand" will be running at much higher levels of daily use than today's cars and will last for 500,000 to 1 million miles each.

It has long been known that EVs are four times more efficient than petrol or diesel cars, which lose 80 per cent of their power in heat. What changes the equation is the advent of EV models with the acceleration and performance of a Lamborghini costing five or 10 times less to buy, and at least 10 times less to run.

"The electric drive-train is so much more powerful. The gasoline and diesel cars cannot possibly compete," Mr Seba said. The parallel is what happened to film cameras - and to Kodak - once digital rivals hit the market. It was swift and brutal. "You can't compete with zero marginal costs," he said.

The effect is not confined to cars. Trucks will switch in tandem. Over 70 per cent of US haulage routes are already within battery range, and batteries are getting better each year.

EVs will increase US electricity demand by 18 per cent, but that does not imply the need for more capacity. They will draw power at times of peak supply and release it during peak demand. They are themselves a storage reservoir, helping to smooth the effects of intermittent solar and wind, and to absorb excess base-load from power plants.

Mark Carney, the Governor of the Bank England and chairman of Basel's Financial Stability Board, has repeatedly warned that fossil energy companies are booking assets that can never be burnt under the Paris agreement.

He pointed out last year that it took only a small shift in global demand for coal to bankrupt three of the four largest coal-mining companies in short order

Other seemingly entrenched sectors could be just as vulnerable. He warned of a "Minsky moment", if we do not prepare in time, where the energy revolution moves so fast that it precipitates a global financial crisis.

The crunch may be coming even sooner than he thought. The Basel Board may have to add the car industry to the mix. There will be losers. Whole countries will spin into crisis. 

The world's geopolitical order will be reshaped almost overnight. But humanity as a whole should enjoy an enormous welfare gain. 

Conclusion :  Just follow basic laws of economics, just follow basic business practises and everything will be fine - for everyone. Besides 'Mother Nature' the most powerful forces  in the world are 'Market forces'.

You ignore market forces, you mess with market forces and you will become poor, barefooted and dumb.  This is the Sharia and this is the Sunnatullah.

Surah 47:38  -  Lo! ye are those who are called to spend in the way of Allah, yet among you there are some who hoard. And as for him who hoards, he hoards only from his Self.  And Allah is the Rich, and ye are the poor. And if ye turn away He will exchange you for some other folk, and they will not be the likes of you.

I call this the replacement theory.  If you mess up, the system will replace you.

Did Trump Outsmart Saudis Or Saudis Outsmarted Trump?

Firstly, according to Fareed Zakaria, the Saudis outsmarted Trump. Here is Fareed :

The Washington Post  May 27, 2017 

bombing in Manchester gruesome reminder of radical Islamic terrorism 
country central to spread of terrorism, Saudi Arabia
managed to evade, deflect any responsibility 
Trump given Saudi free pass and free hand in region

facts are : for 5 decades Saudis spread intolerant Islam 
(Wahhabism) practiced almost nowhere else — across Muslim world
Osama was Saudi, 15 of 19 terrorists of 9/11

leaked email by Hillary Clinton 
Saudi and Qatar “provide clandestine support to ISIS"
and other radical Sunni groups 

Saudis 2nd largest group of foreign fighters in ISIS 
largest in terrorist group’s Iraqi operations. 
Saudis in tacit alliance with al-Qaida 

ISIS beliefs from Saudi’s Wahhabi version of Islam
imam of Grand Mosque said, ISIS “exploited our principles, found in our books.
ISIS adopted Saudi curriculum as its own

Saudi money now transforming European Islam
German intelligence reports charities “closely connected with Saudi govt”  
funding mosques, schools, imams to disseminate intolerant Islam in Germany

In Kosovo 500-year-old tradition of moderate Islam being destroyed 
Saudi-trained imams propagate Wahhabism 
supremacy of Shariah, violent jihad and takfirism
killing of Muslims considered heretics 

Trump said, “No discussion of stamping out this threat would be complete without mentioning the government that gives terrorists ... safe harbor, financial backing, and the social standing needed for recruitment.”

But Trump was talking of Iran. 

wildly inaccurate to describe Iran as source of jihadi terror. 
94% of Islamic terrorism deaths since 2001 by ISIS, al-Qaida, Sunni jihadists
Iran is fighting those groups, not fueling them
Almost every terror attack some connection to Saudi Arabia
none have been linked to Iran

America has signed up for Saudi foreign policy 
relentless battles against Shiites throughout Middle East
enmesh Washington in never-ending sectarian struggle
fuel regional instability, complicate ties with Iraq 
will do nothing to address jihadi terrorism
Trump’s foreign policy going to put Saudi Arabia first

My comments : That is a gist of Fareed Zakaria's opinion that was carried by the Washington Post. By the way Fareed Zakaria describes himself as a 'non practising' Muslim. Fareed Zakaria is convinced that Saudi Arabia has pulled a number on Donald Trump.  

I look at it differently. 

My view is Donald Trump has put a gun to the head of the Saudis. If you watch the video, while Trump was speaking, King Salman was visibly nervous. You can see the King grabbing onto every single word that Trump was saying.
Here is a gist of Trump's speech in Saudi Arabia, with my comments in between.

Riyadh : Trump spoke to leaders of 50 Muslim countries 
outline his vision for US-Muslim relations

(My comments : Initially it was a meeting with Saudi Arabia and just a few Arab countries. Then it became a "world summit" at very short notice of almost all Muslim leaders. Clearly the US prepared the invitation list. The Saudis paid the hotel bills. Typical Trump.)

today we begin new chapter bring lasting benefits to our citizens
a message of friendship and hope
I chose to make my first foreign visit to the heart of Muslim world
I pledged to strengthen America's oldest friendships
build new partnerships in pursuit of peace
America will not seek to impose our way of life on others
but outstretch hands in spirit of cooperation and trust

(My comments : A great opening by Trump. America will not impose our way of life. It also means 'and dont try to impose your way of life on others'.)

goal is stamping out extremism, providing our children hopeful future 

US eager to bond friendships, security, culture, commerce

we signed historic agreements with Saudi
will invest US$400 billion in our two countries
create thousands of jobs in America, Saudi Arabia
landmark agreement includes US$110 billion defense purchase 
will help Saudi take a greater role in security operations

(My comments : My view is this was Trump's "Art of the Deal" in Saudi Arabia. Trump made Saudi Arabia his first overseas visit.  Giving the Saudi royals ample media opportunity and hype. The Saudis are highly insecure because they suffer serious legitimacy issues. Trump's visit and the Islamic leaders' summit in Riyadh makes the Saudis look good in downtown Jeddah and Riyadh.  

  • But there was a price to pay. 
  • First the Saudis had to buy US$110 Billion worth of weapons. 
  • Then the Saudis had to sign an agreement to invest US$400 B in the US 
  • ["create thousands of jobs in America, Saudi Arabia"]. 

You want the American President to come visiting and bring a life-vest to keep you from drowning, you have to pay for it. In this case the Saudis had to pay US$510 Billion worth. Plus they also had to foot the hotel bills for 50 heads of state who were invited by Donald Trump !! I think this was Trump's "Art of the Deal" in Saudi Arabia.)

Now here come the threats. And direct US intervention in Saudi affairs  :

opening Global Center for Combating Extremist Ideology --  right here
groundbreaking center represents clear declaration 

My comments : This "Global Center" in Saudi Arabia will work hand in hand with the US effort to check the flow of funds to terrorists.  In other words, it will check the Saudis themselves. As Fareed Zakaria has pointed out the Saudis are the biggest funders of terrorism in the world.  

This is also Donald Trump's 'Art of the Deal'. 

You want to survive, you pay for your survival. 
We will sell you weapons. You invest in our country.
But we will check your terrorist funding. 
No more terrorist funding.

This means that Zakir Naik may become stateless.   
Our local Salafi mullah Hussein Yee and friends may see less moolas coming from Saudi Arabia.  
Salafis all over the world will have to find new sources of funding.
More job openings for Nepalis. 

Muslim countries must take lead in combating radicalization
We are not here to lecture
we are not here to tell people how to live, what to do, who to be, how to worship
we are here to offer partnership -- based on shared interests and values 
above all we must be united in pursuing one goal 
to meet history's great test—to conquer extremism and vanquish terrorism

(My comments :  In other words, if the Arab countries decide to fight each other or go to war, they are on their own. If Saudi Arabia wants to fight Iran, then Saudi Arabia is on its own. America will sell them weapons of course. But the Saudis will have to fight their own wars. So please choose your wars carefully. This is what Trump is telling the Saudis. You want to start a fight, make sure you can finish the fight yourself. Dont cry for US help.)

  • Muslims should grow up free from fear, safe from violence, innocent of hatred
  • young Muslims should have chance for new era of prosperity 
  • beginning of end for those who practice terror and spread vile creed
  • this special gathering be remembered as beginning of peace in Middle East 
  • and maybe, even all over the world
  • future only achieved through defeating terrorism and ideology 

(My comments : I think this is a direct reference to the Saudis and their Wahhabi / Salafi ideology.  When Trump mentioned fear, violence, hatred, terror, vile creed, terrorism, extremist ideology he was hinting directly at the trade marks of the Wahhabi / Salafi ideology of Saudi Arabia. There is no mistaking here.)

95% of victims of terrorism are themselves Muslim
true toll of ISIS, al Qaeda, Hezbollah, Hamas must be counted not only in the dead
must also be counted in generations of vanished dreams
untapped potential held at bay by bloodshed and terror
There can be no coexistence with this violence
There can be no tolerating it, no accepting it, no excusing it, no ignoring it
If we do not act against this organized terror, we know what will happen
battle between barbaric criminals who seek to obliterate human life
This is a battle between Good and Evil

(My comments :  More of the same.)

everyone in this room does their fair share and fulfills their part of the burden
America is prepared to stand with you 
But Middle East cannot wait for American power to crush this enemy for them
Middle East will have to decide what kind of future they want 
it is a choice America CANNOT make for you
better future only possible if you drive out terrorists and extremists

Drive. Them. Out.
DRIVE THEM OUT of your places of worship.
DRIVE THEM OUT of your communities.
DRIVE THEM OUT of your holy land, and

(My comments :  I repeat, in other words, if the Arab countries decide to fight each other or go to war, they are on their own. If Saudi Arabia wants to fight Iran, then Saudi Arabia is on its own. America will sell them weapons of course. But the Saudis will have to fight their own wars. So please choose your wars carefully. This is what Trump is telling the Saudis and the Arabs. You want to start a fight, make sure you can finish the fight yourself. Dont cry for US help.)

America adjusting to meet evolving threats and new facts
We will discard strategies that have not worked
will apply new approaches informed by experience and judgment

(My comments : Forcing the Saudis to cough up US$510 BILLION is certainly a new approach. Plus US100 Million for Ivanka Trump's Women's NGO !!)

adopting Principled Realism, rooted in common values and shared interests
Our partnerships will advance security through stability, not radical disruption
We will make decisions based on real-world outcomes -- not inflexible ideology. 
We will be guided by experience, not confines of rigid thinking. 

(My comments :   
  • "Principled Realism" simple means 'cut the crap'. Better behave yourselves. 
  • Inflexible ideology is just an euphemism for wahhabism, salafism, islam, etc. 
  • Keep your religion inside your pants. 
  • Same applies for "rigid thinking".  
  • The ostard wal retards all over the world will start screaming louder. 
  • Dato Ayub Khan and the boys on Bukit Aman will have even more headaches.)

We seek partners, not perfection— make allies of all who share our goals

Muslim nations must take on the burden to defeat terrorism 
1st task is for you to deny all territory to  foot soldiers of evil
Every country has absolute duty to ensure terrorists find no sanctuary on their soil
deny terrorist organizations territory and populations
we must also strip them of their access to funds
cut off financial channels that let ISIS sell oil, terrorists smuggle reinforcements

(My comments :   After this speech by Donald Trump, Zakir Naik may find his welcome in Saudi Arabia and Qatar cut short.   He will soon be travelling again.  Malaysia is not exempted. So please dont be so stupid to give PR to terrorist preachers, terrorist mentors, terrorist leaders and other terrorist characters.)

nations here will sign agreement to prevent financing of terrorism
Terrorist Financing Targeting Center -- co-chaired by US and Saudi
joined by every member of Gulf Cooperation Council
another historic step that will be long remembered

(My comments : This Terrorist Financing Targeting Center will be set up inside Saudi Arabia. This means the US will have direct access to pry into Saudi financial transactions. The US will be able to pry into every Saudi funds transfer. Especially funds transfers to dubious Saudi linked charities around the world. Shall I name one in Malaysia? Ok lah we will not. Lets have some Mercy !)

honestly confront Islamist extremism and Islamist terror groups it inspires
stand against oppression of women, persecution of Jews, slaughter of Christians
Religious leaders must make this absolutely clear
Barbarism will deliver you no glory 
If you choose path of terror, your life will be empty, brief, and BE CONDEMNED

Starving terrorists of territory, funding, false ideology, basis for defeating them

Responsible nations must work together to eradicate ISIS 

(My comments : Another direct  remark about Saudi Arabia.)

King Salman, thank you for massive investment in America, its industry and jobs

( My comments : US$110b weapons + US$400b "investment" + US$100m for Ivanka = US$510.1 BILLION !! What a fantastic deal !! )

you can only unlock future if Middle East freed from extremism, terror, violence
Will we be indifferent in the presence of evil? 
Will we protect our citizens from its violent ideology? 
Will we let its venom spread through our societies? 
Will we let it destroy the most holy sites on earth? 
If do not confront this deadly terror, future will bring more suffering 

if we are determined to destroy terror 
no limit to great future our citizens will have

The birthplace of civilization is awaiting new renaissance
Just imagine what tomorrow could bring

Glorious wonders of science, art, medicine and commerce 
Great cities built on ruins of shattered towns
New jobs, industries that will lift up millions of people

I ask you to join me to FIGHT together— UNITED WE WILL NOT FAIL.

My comments :  Yup. And the Saudis will pay for all this. The Americans will supply the weapons and build the cities for them. Lets Make America Great Again !

If this goes where I think it is headed, a thousand more Osama bin Ladin's will rise up from inside Saudi Arabia.  This time they will overthrow the ruling Sauds.  

What Trump has said is extremely very good for Islam and for the Islamic countries.
But it is extremely very bad for "Saudi"  Arabia. 

And Donald Trump knows exactly what he is saying.