The International Energy Agency expects global crude oil prices to climb back up to $80 a barrel by 2020. They are currently around $32 a barrel. The agency also believes there will be a second leg to the US shale oil boom which will be quick to recover when crude oil prices rise and will send US domestic oil production to new highs by 2021. Once having established itself in an area with drill sites, permits, and the logistic infrastructure already in place, shale oil production can be increased very rapidly in comparison to what would be required to increase OPEC members’ production.

It has been noted that there have been very few mergers involving failing US shale oil companies. The reason is that many company debts become due the minute the company comes under new ownership. Few buyers are willing to bear the upfront costs of paying off the debt of new acquisitions, even at bargain basement prices.

Concerns once again are increasing that a shortage of oil and oil product storage capacity in the US could drive crude oil prices considerably lower within the next few months. The main US storage facility at Cushing, Oklahoma is already 80% full and at the current rate of filling will be completely filled in another four months. The same problem is occurring in other facilities along the US Gulf Coast and in the mid-west. Indeed, The US is so awash in crude oil that oil traders are experimenting with empty railcars as new places to store it.  Some analysts are convinced that another major downturn in oil prices is virtually certain to occur before supply and demand come back into balance.

Despite the tumble in world oil prices, Canadian oil production should continue increasing through 2017, according to the Energy Information Agency. Canadian oil sands projects that were already under construction when prices began to fall in 2014 are expected to begin production in the next two years.

The UK’s North Sea crude oil and natural gas producers will spend 40% less this year on exploration and production than in 2014 as low crude prices force them to tighten budgets. Capital expenditure will drop to 9 billion pounds this year versus 14.8 billion pounds in 2014.

Mexico ended a 76-year crude oil monopoly in 2014 and is now speeding up the liberalization of the fuel market as it seeks to lure investment and push down prices for consumers. Starting in April, companies other than state-owned Petroleos Mexicanos will be allowed to buy gasoline and diesel from overseas markets for the first time since the industry was nationalized in 1938.

Dutch oil trader Trafigura confirmed the US has started exporting crude oil to Israeli refineries, as US crude exports begin after a hiatus of more than 30 years.

China is hoping to take the lead in electric vehicle development by focusing on EV battery technologies and public vehicle fleets, rather than just subsidizing EV purchases.

There are reports that German auto maker Volkswagen has been asked by the US Environmental Protection Agency to produce electric vehicles in the United States as a way of making up for its rigging of emission tests for its diesel vehicles.

Prices of lithium carbonate — an industrial chemical used in lithium ion batteries — have surged 47% in 2016 from last year’s average, according to London-based Benchmark Mineral Intelligence Ltd. Lithium batteries are used in pure electric and hybrid vehicles. Navigant Consulting Inc. reports that over the next decade the market for lithium automobile batteries may total $220 billion.

There are now about 1.3 million electric cars globally according to research from the Centre for Solar Energy and Hydrogen Research Baden-Württemberg. The USA has the world’s largest EV fleet overall with 410,000 vehicles on the road followed by China with 307,000.  Norway has the most EVs per capita with 3% of all its vehicles being electric. Last year the world’s largest selling electric vehicle was the The Tesla Model S with 42,730 vehicles sold. It was followed by the Mitsubishi Outlander (41,080) and the Nissan Leaf (40,270).  (This analysis is based on cars with battery-powered electric drives, range extenders and plug-in hybrids. It does not include motorcycles, trucks, buses or hybrid vehicles.)

 

 

 

with h/t Tom Whipple

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