If you were OPEC and could see the rise of EVs around the world, what would your response be to it?

I am curious about what will happen given that it means a reduction in demand for petrol, so would they cut back production or increase production?

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FormulaNova said..
If you were OPEC and could see the rise of EVs around the world, what would your response be to it?

Two hypotheticals there, neither of which are plausible.

If I was OPEC, then I wouldn't see a decrease in oil demand for the forecastable future, despite any rise in EVs. OPEC see demand increasing out beyond 2050. Have a read: www.opec.org/assets/assetdb/woo-2025-1.pdf

Peak oil has been forecast by everyone (curiously except OPEC) as being 20 to 30 years away. This forecast has been made every decade since the 1950s. Always the same incorrect prediction.

So I'd assume OPEC will continue to do what they have always done - keep prices high enough to make money, but low enough to discourage anyone developing an alternative. Then sit back and giggle at all the people forecasting when peak oil will be.


If it is a double-implausible hypothetical, that I was OPEC and I did indeed believe EVs are about to cause the immanent demise of oil, the answer would be the same. Given that I am OPEC, I believe my actions control the worlds energy markets, I would thus continue to keep the price in a band that ensures profits are made, whilst discouraging further uptake of alternatives.

The only hypothetical that could have an alternate answer to "continue as usual" would be a triple-ludicrous hypothetical - I am OPEC, I believe EVs are about to eliminate oil consumption and for some reason I now also believe my actions in setting the price have zero effect on that transition. Under which scenario OPEC would no longer exist as each member and entity would go their own way, due to the entire premise of OPEC's existence is to control the market. Hence I would no longer be a hypothetical OPEC.


You gotta think about these topics a bit more FN before you start them.

Excellent topic FN!

If I was OPEC I'd probably sell all my bitcoin. What would be the point of owning bitcoin if you are OPEC?

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myscreenname said..
If I was OPEC I'd probably sell all my bitcoin. What would be the point of owning bitcoin if you are OPEC?

I assumed FN was referring to the Organization of Petroleum Exporting Countries.

Not 'Ordinary People Exhibiting Common-sense'

But yes, I'd agree. If myscreenname was an ordinary person exhibiting common-sense then what would be the point of owning bitcoin.

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Carantoc said..


Two hypotheticals there, neither of which are plausible.

If I was OPEC, then I wouldn't see a decrease in oil demand for the forecastable future, despite any rise in EVs. OPEC see demand increasing out beyond 2050. Have a read: www.opec.org/assets/assetdb/woo-2025-1.pdf
...."

The OPEC document is an interesting read indeed. I am sure those more learned in the field would raise some concerns about the key assumptions on future growth, demand and technological improvements in this document. (e.g. Forecasting barely plausible slow new tech development and policy action). The various authors make mention they are trying to present an independent view. However, in the 70 odd pages I have read thus far, there does not seem to be many verifiable references to independent peer reviewed research and/or forecasting sources. The authors may well be correct, but on face value, the document must be regarded as an opinion piece and glossy faux prospectus, and unsurprisingly, paints a rosy picture for OPEC that is not supported by IEA research.

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fangman said..

The OPEC document is an interesting read indeed. I am sure those more learned in the field would raise some concerns about the key assumptions on future growth, demand and technological improvements in this document. (e.g. Forecasting barely plausible slow new tech development and policy action). The various authors make mention they are trying to present an independent view. However, in the 70 odd pages I have read thus far, there does not seem to be many verifiable references to independent peer reviewed research and/or forecasting sources. The authors may well be correct, but on face value, the document must be regarded as an opinion piece and glossy faux prospectus, and unsurprisingly, paints a rosy picture for OPEC that is not supported by IEA research.

Obviously a fossil fuel biased document. The AI summary notes...The document, titled "2025 World Oil Outlook 2050," published by OPEC, provides a detailed analysis of global energy trends and projections up to 2050. ? Key highlights include:

Energy Demand and Mix: Global primary energy demand is expected to grow by 23%, with oil and gas remaining dominant in the energy mix. Renewables, especially wind and solar, will see rapid growth, while coal demand declines.
Oil Demand and Trade: Global oil demand is projected to increase significantly, driven by non-OECD regions like India, Other Asia, and Africa. Interregional oil trade will grow, with rising demand in Asia-Pacific and increased exports from the Middle East and Latin America.
Electricity and Refining: Electricity demand will rise by over 80%, dominated by renewables, while refining capacity expands by 19.5 mb/d, primarily in developing regions.
Technological Innovations: Advances in energy technologies, including carbon capture, hydrogen production, and renewable systems, are highlighted as key enablers for energy transitions.
Investment Needs: The oil sector will require $18.2 trillion in investments by 2050, with $14.9 trillion allocated to upstream activities.
Regional Trends: Developing regions will dominate energy demand and refining capacity growth, while developed regions face declining demand. ? Brazil is noted for its diversified energy mix and leadership in climate diplomacy. ?
Challenges and Scenarios: The document explores uncertainties in energy policies, geopolitical tensions, and alternative scenarios like technology-driven and equitable growth pathways.
Overall, the report emphasizes balanced energy policies, strategic investments, and collaboration to ensure energy security, affordability, and sustainability.

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fangman said..
... but on face value, the document must be regarded as an opinion piece and glossy faux prospectus...

Mmmmm, I think if you keep reading and get deeper into it than just the first 70 pages you might change your opinion.

You might remove the 'on face value' part of that statement.

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remery said..
Obviously a fossil fuel biased document

Yeah, no **** Sherlock. You really need to outsource your thinking to AI for that ?

OPEC is a fossil fuel based organisation. You can't even say OPEC is based on promotion of fossil fuel - because OPEC exists solely to promote fossil fuels and ensure, via cartel behavior, that OPEC's fossil fuels remain dominant. Sorry, but I didn't realise that was a debatable point.

And that was the point. FN asked "if you were OPEC....". The point is if you were OPEC and thought like OPEC and saw the world like OPEC sees it then you would have the same opinion as OPEC and continue to do what OPEC does because OPEC believes a certain thing and thus so would you.

I assume what FN really meant was more like - if you didn't think like OPEC but had an oil well in your backyard, would you increase or decrease the volume and price if you thought that both the oil and the market for the oil were both exhaustible soon, but you weren't 100% sure which would come first.

If you were a bear and you saw a public toilet block would you still **** in the woods ?

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Carantoc said..

Yeah, no **** Sherlock. You really need to outsource your thinking to AI for that ?

OPEC is a fossil fuel based organisation. You can't even say OPEC is based on promotion of fossil fuel - because OPEC exists solely to promote fossil fuels and ensure, via cartel behavior, that OPEC's fossil fuels remain dominant. Sorry, but I didn't realise that was a debatable point.

And that was the point. FN asked "if you were OPEC....". The point is if you were OPEC and thought like OPEC and saw the world like OPEC sees it then you would have the same opinion as OPEC and continue to do what OPEC does because OPEC believes a certain thing and thus so would you.

I assume what FN really meant was more like - if you didn't think like OPEC but had an oil well in your backyard, would you increase or decrease the volume and price if you thought that both the oil and the market for the oil were both exhaustible soon, but you weren't 100% sure which would come first.

Carantoc is obviously confused by all the big words.

I'm just glad Gareth Ward isn't OPEC

I only read the executive summary.
" with the fastest growth expected in the segment of electric vehicles (EVs). Nevertheless, internal combustion engine (ICE) vehicles are set to continue dominating the global fleet and still account for around 72% in 2050"

That sounded a bit optimistic to me. They haven't got an epidemiologist on board. Look at the R value! Assume that a person who's owned an EV would never ever go back to an ICE. Then when they trade in the old Tesla on a new one the old one goes on to hook in a poor uni student. It's going to be an avalanche once a few more second hand ones get on the market.

And then there's the climate, a big unknown. A few ice-free summers in the Arctic, heatwaves in Europe every second year, coral bleaching ramping up even more. Govt incentives will go to next level if that happens and the transition will be even quicker.

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Carantoc said..

fangman said..
... but on face value, the document must be regarded as an opinion piece and glossy faux prospectus...

Mmmmm, I think if you keep reading and get deeper into it than just the first 70 pages you might change your opinion.

You might remove the 'on face value' part of that statement.

You were right. I kept reading and I am happy to remove ' on face value' . My post should simply read "...the document must be regarded as an opinion piece and glossy faux prospectus.."

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Ian K said..
I only read the executive summary.
" with the fastest growth expected in the segment of electric vehicles (EVs). Nevertheless, internal combustion engine (ICE) vehicles are set to continue dominating the global fleet and still account for around 72% in 2050"

That sounded a bit optimistic to me. They haven't got an epidemiologist on board. Look at the R value! Assume that a person who's owned an EV would never ever go back to an ICE. Then when they trade in the old Tesla on a new one the old one goes on to hook in a poor uni student. It's going to be an avalanche once a few more second hand ones get on the market.

And then there's the climate, a big unknown. A few ice-free summers in the Arctic, heatwaves in Europe every second year, coral bleaching ramping up even more. Govt incentives will go to next level if that happens and the transition will be even quicker.

It's interesting in that OPEC have a few goals that seem to be contradictory. Clearly they want to make as much money as they can, so how do they do it? Do they restrict supply and the price goes up but they don't sell as much? Do they increase supply and risk pushing the price down but sell much more volume?

I think as a long term move it would make sense for them to make oil cheaper so that EV takeup is slowed down as people don't see as much advantage in switching to an EV and keep on buying petrol cars.

As a group though I am sure internally they have people that hold different opinions, but they are going to hit a demand problem soon enough, so how do you maximise your money until then?

As an aside, and responding to your last paragraph, do people see EVs as a response to climate change or an opportunity to save money but also feel good about it? The point about government incentives though sort of addresses that as you achieve both.

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FormulaNova said..

I think as a long term move it would make sense for them to make oil cheaper so that EV takeup is slowed down as people don't see as much advantage in switching to an EV and keep on buying petrol cars.

They would have to make oil a great deal cheaper for it to have an effect. Ours is currently charging at 8c a kWh on excess rooftop solar being sold back to the grid at 3c a kWh. At 15 kWh per 100km that's equivalent to 16c a litre.

"do people see EVs as a response to climate change or an opportunity to save money but also feel good about it?"

Yes that, but you left out the fact that they just drive so much better. And you can run the AC while waiting at school pick up without poisoning all the little tackers.

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Ian K said..
They would have to make oil a great deal cheaper...

They could probably make it for free and it still wouldn't compete on the same home solar calculation basis (although I am not sure that is necessarily the correct calculation philosophy).

$80 / barrel for crude and about 40% of a barrel volume is the refined to petrol / diesel.

Something like:
1 litre of petrol needs about 1.4 2.5 litres of crude. Crude price say $80 / barrel = 200 litres so OPEC gets about 60 100cents / litre equivalent ?

$2 / litre at the pump, 20c is GST and 50c is fuel excise. if $1 is OPEC, then refining, transporting, selling is about 70c 30c / litre.

So even if OPEC were to halve the cost the pump price might only drop 15% 20%.

Fuel taxes alone are more than 3 times your 16c/litre equivalent.

EDIT : just updated that, bit of a minor error, although just checked and crude is 65 USD today so the original conclusion might still be about right.

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FormulaNova said..
....Clearly they want to make as much money as they can, so how do they do it? .

Not rocket science maaate. I though you were the Seabreeze expert on economics?

They do it pretty well same as every other business works in a market economy.

They try to keep the price as high as possible without encouraging alternatives into the market.

Exactly what that balance is might vary, but historically a price $60 to $120 / barrel seems to have worked for them, with $80 looking like the sweet spot of world economic growth, OPEC competition suppression and pretty good profit.

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Ian K said..

FormulaNova said..

I think as a long term move it would make sense for them to make oil cheaper so that EV takeup is slowed down as people don't see as much advantage in switching to an EV and keep on buying petrol cars.

They would have to make oil a great deal cheaper for it to have an effect. Ours is currently charging at 8c a kWh on excess rooftop solar being sold back to the grid at 3c a kWh. At 15 kWh per 100km that's equivalent to 16c a litre.

"do people see EVs as a response to climate change or an opportunity to save money but also feel good about it?"

Yes that, but you left out the fact that they just drive so much better. And you can run the AC while waiting at school pick up without poisoning all the little tackers.

That is cheap! I guess the significant change will happen when these cars flow down to the rest of us. By then I am sure that the fuel excise is rethought as they start to chase the revenue that has disappeared.

It is 46 cents per litre and I guess if you pick an arbitrary 8 litres per 100kms, then your cost will increase by $3.68 per 100kms. Still, that's $4.88 per 100km and better than $12 per 100kms.

So, what is OPEC supposed to do? They have agreed to increase their production levels, so I think we are going to see cheap petrol soon. Is this going to affect demand for EVs?

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FormulaNova said..>>>>So, what is OPEC supposed to do? They have agreed to increase their production levels, so I think we are going to see cheap petrol soon. Is this going to affect demand for EVs?

Probably, but I'm not sure how much, there's more reasons to go electric other than the price of fuel.

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FormulaNova said..
....It is 46 cents per litre and I guess if you pick an arbitrary 8 litres per 100kms, then your cost will increase by $3.68 per 100kms. Still, that's $4.88 per 100km and better than $12 per 100kms.

So just on those numbers (not saying I think they are right or wrong and I appreciate they include an EV road user charge that doesn't yet exist, but is likely to sometime) :

$7.12 saving per 100km
say 10,000km per year average = $712 fuel saving per year
say 10 year life of car / life of battery

= $7,120 total fuel saving for an EV over an ICE for the life of the vehicle.

Doesn't seem much really.

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FormulaNova said..

It's interesting in that OPEC have a few goals that seem to be contradictory. Clearly they want to make as much money as they can, so how do they do it? Do they restrict supply and the price goes up but they don't sell as much? Do they increase supply and risk pushing the price down but sell much more volume?

I think as a long term move it would make sense for them to make oil cheaper so that EV takeup is slowed down as people don't see as much advantage in switching to an EV and keep on buying petrol cars.

As a group though I am sure internally they have people that hold different opinions, but they are going to hit a demand problem soon enough, so how do you maximise your money until then?

As an aside, and responding to your last paragraph, do people see EVs as a response to climate change or an opportunity to save money but also feel good about it? The point about government incentives though sort of addresses that as you achieve both.

OPEC are likely reading from the big tobacco playbook.

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Carantoc said..
Doesn't seem much really.

87.2% chance FormulaNova is right.

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remery said..

FormulaNova said..

It's interesting in that OPEC have a few goals that seem to be contradictory. Clearly they want to make as much money as they can, so how do they do it? Do they restrict supply and the price goes up but they don't sell as much? Do they increase supply and risk pushing the price down but sell much more volume?

I think as a long term move it would make sense for them to make oil cheaper so that EV takeup is slowed down as people don't see as much advantage in switching to an EV and keep on buying petrol cars.

As a group though I am sure internally they have people that hold different opinions, but they are going to hit a demand problem soon enough, so how do you maximise your money until then?

As an aside, and responding to your last paragraph, do people see EVs as a response to climate change or an opportunity to save money but also feel good about it? The point about government incentives though sort of addresses that as you achieve both.

OPEC are likely reading from the big tobacco playbook.

It will be interesting to see how they go. Have we seen the last of expensive fuel? I am sure the market will change things in the short term, but over the long term I wonder how high they can push it before more and more switch to EVs?

I think they already run a game where higher prices push other countries to look at alternative petroleum sources, so they don't want to be that high, but they want to maximise their revenue while also trying to keep EVs less viable. That would be a lot of fun while different member countries want to just get as much money as they can in the short term.

Big tobacco is another interesting comparison at the moment. High excise on cigarettes is intended to reduce smoking while also returning important revenue to the government. Now all this dodgy tobacco on the market is impacting revenue and not making people give up smoking, so the government is losing both ways.

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Ian K said..


That sounded a bit optimistic to me. They haven't got an epidemiologist on board. Look at the R value! Assume that a person who's owned an EV would never ever go back to an ICE. Then when they trade in the old Tesla on a new one the old one goes on to hook in a poor uni student. It's going to be an avalanche once a few more second hand ones get on the market.

Will there be a second hand market, I thought the batteries needed replacing after about 10 years and that will not worth be doing, it will cost more than the value of the car.

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myscreenname said..
87.2% chance FormulaNova is right.

I don't have the raw data to fact-check that, but I'd estimate it as 'plausible', based on contemporary experience and anecdotal evidence of peer reviews.

FN is showing as having 15,010 posts on seabreeze.com.au. 87.2% chance that one of those is right. Variables are right and wrong.

Hence, assuming FN's rate of change of being right is zero, needs another 2,203 post before we have surety that one of them is right.

An equivalent ratio of 58 right posts per million. Meh, - so long as he stays away from subjects such as carburetor repairs and how OPEC think, he may get up to that ratio.

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cammd said..

Ian K said..


That sounded a bit optimistic to me. They haven't got an epidemiologist on board. Look at the R value! Assume that a person who's owned an EV would never ever go back to an ICE. Then when they trade in the old Tesla on a new one the old one goes on to hook in a poor uni student. It's going to be an avalanche once a few more second hand ones get on the market.

Will there be a second hand market, I thought the batteries needed replacing after about 10 years and that will not worth be doing, it will cost more than the value of the car.

Yeah, I wonder about this as well. Its one thing to maintain a normal ICE, but if the new owner has to stump up $5k for a new battery pack, that's a big pill to swallow.

Others here have suggested that the new batteries are going to last longer, but I guess you only find out 10 years down the track.

I had a friend that used to make fun of all the commodores and falcons that he would notice broken down on the side of the road. What he was really seeing was the result of that segment of the market where they can afford a 10 year old cheap commodore or falcon, and maintenance was not done, so breakdowns would happen. Now imagine that same person gets told that their second hand car needs a new battery pack. Suddenly the car is worth nothing, or at least the cost minus a new battery.

What are the recharging costs for an EV if you don't have surplus solar energy available during the day? Such as the example of a university student where they are presumably using the car to get to Uni but have no way to charge it there.

Edit: I just realised that recharging an EV without time of use billing would cost you about 32cents per KwH and someone on time of use would pay 53 cents per KwH during the time from 9am to 3pm.

This would push the cost per 100kms up to $4.80 or $7.95. still much cheaper than petrol, but when you consider the capital costs of the car itself, maybe not enough to justify it.

So would I be wrong to say that EVs really suit those people that are able to charge it during the 9am to 3pm period from rooftop solar (via the grid or their own setup)? For the rest of us it is not so easy. It would sort of make sense to have charging points for EVs at every parking spot at train stations, even if it weren't fast charging.

Going way off tangent, have people seen those battery exchange services overseas where electric motorbike users can checkin their flat batteries and get freshly charged ones? It seems like a pretty cool idea and avoids the issue of having to charge during the day and not being able to use the bike.

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myscreenname said..

Carantoc said..
Doesn't seem much really.

87.2% chance FormulaNova is right.

Which one of you is Statler and which one is Waldorf?

I would ask which one of you is Noddy but you both seem to be competing for that title, intentionally or not. I think you guys don't realise that you both are the reason that people don't post more.

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cammd said..>>>Will there be a second hand market, I thought the batteries needed replacing after about 10 years and that will not worth be doing, it will cost more than the value of the car.

This is wrong!
Yes very early Leaf batteries had problems and didn't last.
However the battery maintenance systems and batteries have improved markedly since the first leafs came out.

In practice on the road batteries are lasting much longer than early predictions. Early tests were heavy fast cycles to simulate long term use, this degraded the batteries much faster than average road use.

With modern batteries we are expecting a usable life span of closer to 30years. much longer than a normal petrol engine.
Plus battery prices are dropping quickly. If there are suitable batteries around to drop into a 30 year old car is another problem.

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FormulaNova said..>> It would sort of make sense to have charging points for EVs at every parking spot at train stations, even if it weren't fast charging.

This sort of thing is happening in other parts of the World, paving chargers at every lamppost, chargers at work and chargers at shopping centers, restaurants, service stations, etc.
As always it's a matter of demand, and demand is increasing.
It will be interesting to see if transperth adds chargers in their car parks

We recently had a 2 day stay in the Ferguson valley and we charged overnight at the B&B for free.

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decrepit said..

FormulaNova said..>> It would sort of make sense to have charging points for EVs at every parking spot at train stations, even if it weren't fast charging.

This sort of thing is happening in other parts of the World, paving chargers at every lamppost, chargers at work and chargers at shopping centers, restaurants, service stations, etc.
As always it's a matter of demand, and demand is increasing.
It will be interesting to see if transperth adds chargers in their car parks

We recently had a 2 day stay in the Ferguson valley and we charged overnight at the B&B for free.

How will it be when demand is maximum.

Better open some more copper mines in third world countries with no environmental or workplace laws.

Not sure how current this number is but I heard somewhere sometime ago the number of mines, just for future copper is going to be 6 times as many as exist now.

A fully Electified future looks like a planet that is covered in mines, transmission wires, solar panels and wind farms.

How is that good?

Look what's happening now with lithium mines and rare earth mining and processing. Anyone see that doco on Indonesian rare earth industry. Yikes, imagine what planet will look like when demand is massive.