PPCC: Pisitófilos Creditófagos. Verano 2023

[senslev]

RENT vs. INCOME

https://x.com/WinfieldSmart/status/1701227710100484477?s=20

[el malo]

RENT vs. INCOME

https://x.com/WinfieldSmart/status/1701227710100484477?s=20

Estaba viendo el gráfico subir y subir y me estaba dando angustia. Qué manera de cargarnos nuestro propio futuro. Espero que en el futuro esto se estudie como uno de los períodos negros de la humanidad y que los estudiantes no entiendan qué se nos podía pasar por la cabeza para endeudarnos de por vida por un tulipán puñetero piso.

Mientras tanto hay que adaptarse a los tiempos que tenemos y buscar nuestra propia salida. No hay otra.

[Derby]

https://www.cityam.com/value-of-mortgages-in-arrears-climbs-to-highest-level-since-2016-as-rising-interest-rates-bite/

Brits face mortgage crisis as number in arrears climbs to highest this decade

The value of UK mortgages in arrears climbed to its highest level since 2016, as rising interest rates pour pressure on borrowers.

According to Bank of England data, the total value of residential mortgages in arrears of at least 1.5 per cent of the outstanding mortgage increased by 13 per cent on the previous quarter to £16.9bn.

This was the highest seen since the third quarter of 2016 and 28.8 per cent greater than a year earlier.(...)

[newclo]

RENT vs. INCOME

https://x.com/WinfieldSmart/status/1701227710100484477?s=20

Estaba viendo el gráfico subir y subir y me estaba dando angustia. Qué manera de cargarnos nuestro propio futuro. Espero que en el futuro esto se estudie como uno de los períodos negros de la humanidad y que los estudiantes no entiendan qué se nos podía pasar por la cabeza para endeudarnos de por vida por un tulipán puñetero piso.

Mientras tanto hay que adaptarse a los tiempos que tenemos y buscar nuestra propia salida. No hay otra.

https://twitter.com/WallStreetSilv/status/1701337655886102874

During the Great Depression houses were 3x the average salary. Today it's 8x

Cars were 46% of the yearly salary. Today it's 85%

Rent only took 16% of the annual salary. Today it's 42%

[Derby]

https://www.cityam.com/london-rent-crisis-spirals-as-almost-half-of-uk-landlords-tried-to-sell-up-in-last-year/

London rent crisis spirals as almost half of UK landlords tried to sell up in last year

Almost half of UK landlords have tried to sell their property in the last 12 months, as owners look to rid themselves of mortgage pressures in a worrying blow for renters.

In a survey which quizzed both landlords and estate agents – conducted by lettings platform Goodlord – some 77.5 per cent of respondents in London alone cited rising mortgage rates as a reason for homeowners trying to exit the market.

A further 98 per cent of estate agents in London reported that at least one of their landlords was selling a property. As a whole across the UK, 47 per cent of the landlords have tried to shift their property in the last 12 months.

The ecosystem of the UK’s housing market has been battered in the last year – first by the fall out of last September’s mini budget and then by the central bank’s 14 straight interest rate hikes which sent borrowing costs into a frenzy.

Despite mortgage rates cooling from their summer peak, landlords appear to still be bruised from the fall out, as 80 per cent of agents warned that they expected more landlords to reduce their property portfolio in the next 12 months.

The figures will spell misery for the UK’s 4.6 million private tenants who have seen the renting pool shrink over the last year.

Some 73 per cent of renters said that finding a property to rent was “one of the most stressful things they have ever done.”

The dwindling supply has also allowed landlords to ramp up the asking monthly renting price on their properties – 13 per cent of tenants this year said that they paid more rent per month than the rate originally advertised.

“When tenant contracts come to an end, they now look around the marketplace and realise that there’s little point moving to another property, as it’s likely to cost them another hundred pounds or more per month,” Mark Gray, director at Elevation Lettings.

“That in itself has contributed to much lower numbers of fluidity of movement and availability across all the property portals.”

“London has always experienced high demand from tenants which has been met as much as possible by private as well as corporate landlords,” Richard Davies, chief operating officer of Chestertons, said.

“With major changes such as the Renters Reform Bill being introduced as well as rising interest rates generating less profit for overleveraged landlords in particular, the market has seen some deciding to sell up.

He added: “At the same time, however, we are liaising with homeowners; not landlords; who delay their sale due to the weaker sales market and put their property on the rental market instead.”

[Lem]

RENT vs. INCOME

https://x.com/WinfieldSmart/status/1701227710100484477?s=20

sí y no.

de entre las respuestas al tuit:

@DannyHeinz57

This already been debunked. They're showing inflation adjusted wages and nominal rent, but saying both are inflation adjusted

@bhendrickson

That data seems wrong. Here are rents vs income data direct from FRED, which show they have tracked fairly closely.

Rent vs income, inflation adjusted:
https://fred.stlouisfed.org/graph/?g=18JXu

Rent vs income, nominal dollars:
https://fred.stlouisfed.org/graph/?g=18JWw

y este tiene un video corrigiendo el (incorrecto) original:

@EconChrisClarke

The viral rent to income video is a lie. I tracked down the original source & methodology. It forgot to adjust HUD's rental data for inflation, but did use "real" median income, which is adjusted for inflation. While a problematic rent/income gap exists, we need to tell the truth

https://twitter.com/econchrisclarke/status/1701418358133166229?s=61&t=Wgd1NWmSitn-SDkoeqmUHQ

[Lem]

https://twitter.com/WallStreetSilv/status/1701337655886102874

During the Great Depression houses were 3x the average salary. Today it's 8x

Cars were 46% of the yearly salary. Today it's 85%

Rent only took 16% of the annual salary. Today it's 42%

sin entrar a revisar lo que dice el tuit en cuestión, lo que diga Wall Street Silver con pinzas mínimo:

[newclo]

https://twitter.com/WallStreetSilv/status/1701337655886102874

During the Great Depression houses were 3x the average salary. Today it's 8x

Cars were 46% of the yearly salary. Today it's 85%

Rent only took 16% of the annual salary. Today it's 42%

sin entrar a revisar lo que dice el tuit en cuestión, lo que diga Wall Street Silver con pinzas mínimo:

Otra vez me he dejado llevar....


Se ve que es lo que mi cerebro quería ver

mil perdones... y mil gracias !

[Derby]

https://www.ft.com/content/80a03108-c9f0-4362-b46e-5d9067bd624c

EU lawmakers vote to sharply increase bloc’s renewable energy target


European parliament agrees to lift green energy share to 42.5% by 2030 after nuclear power concessions

EU lawmakers have voted to increase the bloc’s share of renewable energy to more than 40 per cent by 2030 and to loosen permitting procedures, just as its solar and wind power groups warn they are at risk of insolvency.

The European parliament’s vote on Tuesday to increase the share of renewable power in the EU’s energy mix from a 30 per cent target to 42.5 per cent by 2030 comes against the backdrop of a global push to accelerate clean power.

The day before, however, European solar module manufacturers said they faced bankruptcy as a result of “fierce competition” from Chinese companies that benefit from vast state subsidies and cheap labour.

The EU agreement on the new target was only reached after last-minute concessions were made to France and eastern European countries on nuclear power, which is low carbon but produces radioactive waste.

The outcome was met with applause after almost three-quarters of lawmakers voted in favour of the rules, despite opposition from some rightwing politicians. Several French lawmakers abstained.

The legislation also said that national authorities should only take up to two years to approve renewables projects by allowing them to be recognised as having an overriding public interest and by simplifying permitting procedures.

Kadri Simson, the EU’s energy commissioner, said the upgraded target was “the right signal to attract the massive investment required” and that “the new permitting [procedures] will be a game-changer for renewable deployment”.

About 130GW of renewable energy projects — equivalent to about 120bn cubic metres of gas — are awaiting approval in the EU, according to the European Commission.

At the weekend, leaders of the G20 economies, which are responsible for about 80 per cent of greenhouse gas emissions, agreed to a goal of tripling renewable energy capacity by 2030 during a difficult summit, where they simultaneously failed to set a timeline for the end of fossil fuel use.

Brussels proposed that it would improve its renewable energy targets after its gas supply from Russia was steadily cut off by Moscow following the full-scale invasion of Ukraine.

But final approval was held up after France made a late push for better recognition of nuclear power, which makes up about three-quarters of its energy mix.

Ultimately, small concessions on the production of ammonia from nuclear energy were secured. However, the hold-up by Paris forms part of a broader trend of member states seeking carve-outs from climate laws that affect their individual energy mixes.

Germany secured greater allowances for so-called e-fuels for cars in rules to phase out the combustion engine by 2035, while Poland is suing the European Commission over a series of regulations that it argues threaten its energy security.

The renewables directive is part of the EU’s Green Deal climate law, which aims to position the bloc as a leader in environmental regulations. But since its announcement in 2019, the EU has fallen behind in the global race for clean technology as it tries to compete with huge subsidies in China and the US.

“We need to be a little bit careful in the EU,” said Markus Pieper, a German lawmaker who led negotiations on the renewables law. “We have 24 per cent renewables in the energy mix, twice as much as worldwide, but the EU last year only . . . installed half the wind turbine capacity compared to the global average.”

He also called for an “import strategy” for green hydrogen as he acknowledged that the EU would not be able to produce all of its own clean energy domestically.

The EU’s renewables law, which also sets out criteria for hydrogen production, has proved controversial among environmental campaigners for giving allowances for the burning of biomass for energy.

“Burning scarce and valuable wood and other primary biomass sources risks EU climate and nature targets,” said Elise Attal, head of EU policy at Principles for Responsible Investment, a UN-backed agency.

A future revision of the renewable energy rules, which policymakers are already working on, “exclude tax benefits or other support for using biomass for heating and power generation”, she said.

[Derby]

https://www.economiadigital.es/economia/agosto-cerro-con-la-inflacion-en-el-26-pero-los-alimentos-siguen-disparados-al-105.html

Agosto cerró con la inflación en el 2,6% pero los alimentos siguen disparados al 10,5%

La inflación subyacente, la que no incluye los alimentos frescos ni los precios energéticos, se mantiene enquistada por encima del 6%

El mes de agosto cerró con un repunte de la inflación general al 2,6%, debido a la subida de los precios de los combustibles, y con una ligera moderación en el coste de los alimentos, que siguen disparados por encima del 10% (10,5%, tres décimas menos que en julio). En lo que respecta al índice subyacente, sin la volatilidad de los productos frescos y energéticos, se moderó en una décima, hasta el 6,1%, pero se mantiene enquistado en niveles muy altos.

«Durante el mes de agosto la inflación se mantuvo por debajo del 3% y se moderó la de los alimentos. España se consolida como la economía europea con mayor crecimiento y menor inflación, lo cual beneficia a la competitividad de nuestras empresas y también el poder adquisitivo de los salarios», ha celebrado la vicepresidenta primera en funciones y ministra de Asuntos Económicos, Nadia Calviño, en declaraciones remitidas a los medios.(...)

[Derby]

https://www.ft.com/content/e7504053-2108-40d8-a898-3cda891140ac

Assets of world’s top pension funds fall for first time in 5 years
Josephine Cumbo in London

Total assets at the world’s 300 largest pension funds declined for the first time since 2018, as elevated inflation and higher interest rates disrupted stock and bond markets.

Their assets totalled $20.6tn at the end of 2022, a 12.9 per cent decline after 8.9 per cent growth in 2021, according to WTW’s Thinking Ahead Institute.

“High inflation and higher interest rates disrupted equity and bond markets worldwide, piling the pressure on pension funds to adapt their strategies,” said WTW in its Global Top 300 Pension Funds report.

The UK and Japan had the largest number of pension funds fall out of the top 300 globally, the report said.

[Zelig]

Blackstone sube precios hasta el 70% y alquila pisos por meses para salvar sus cuentas
El fondo de inversión está incrementando los arrendamientos entre un 38% y un 70% en viviendas que antiguamente eran de protección pública
https://www.economiadigital.es/empresas/blackstone-precios-contratos-temporales.html

Sobre esto, lo primero que esto implica amueblar y dotar el piso. Nadie en su sano juicio hace una mudanza con muebles para irse a la fuerza en menos de un año (aunque algún casero listillo intentándolo sí he visto).

Pero luego está el problema de que les salga un inquilino cabrón. Los jueces están hartos de estos casos. No se puede disfrazar de temporal un contrato de vivienda habitual, igual que es un fraude disfrazar de temporal un trabajo habitual. Se arriesgan a comerse un contrato de 7 años con la revisión de la renta bloqueada.

Demasiado arriesgado para el fondo buitre. Claro que hay que tener agallas de denunciar.

Te voy a dar una hipotesis.
No son para alquilar, son para "sacarlos" del mercado de alquiler, provocar escasez, subir los precios del alquiler del entorno con lo que sube el precio de venta.
Compran bloques que están ya en alquiler, no bloques vacios ni en construcción, que yo sepa y "echan" a los inquilinos subiendo precios.
Nadie que conozco vive en piso de alquiler de fondo buitre.

Compras bloque por 100, echas a inquilinos que te rentaban 10, ahora rentaría 20 (pero esos inquilinos no sé si existen) con lo que el valor pasa a 200. Hasta que sea el momento de hacer un rug pull.

Esto es por lo que veo desde fuera, en Lavapies que han adquirido montones de bloques para gentrificar y mirando el famoso bloque del ensanche de vallekas. Pues no veo viviendo mucha gente en ninguno.

Pero vamos muy hipotésis todo, no tengo cifras, ni las encuentro.

[Derby]

Efectivamente, para atraer a posibles inquilinos, lo primero que se ofrece es un periodo de carencia (una o dos semanas) para hacer la mudanza y sólo en última instancia se rebaja la renta. Hay que pensar además, que con la Ley de la Vivienda, el importe máximo lo fija el último contrato de alquiler vigente; con lo que rebajar la renta es siempre la última opción para el propietario.

https://www.foxbusiness.com/lifestyle/some-landlords-offer-deals-asking-rents-sit-near-record-highs

Some landlords offer deals as asking rents sit near record highs

Median asking rent in August climbed to $2,052

Landlords in certain areas of the U.S. are offering discounts to attract tenants while keeping asking rents near record highs.

The median U.S. asking rent in August rose to $2,052, up 0.7% from the month prior and only $2 below the record high set a year earlier, according to recent data from real estate brokerage Redfin.

Meanwhile, the national rental vacancy rate reached 6.3% in the second quarter, which is the latest data available. That figure is just shy of the 6.4% vacancy rate reached during the first quarter, the highest seen in two years, according to Redfin.

With surging prices and vacancies on the rise, some landlords are offering anywhere between one and three months free to attract renters without lowering their asking rents, according to Rent. CEO Jon Ziglar.

It's similar to what landlords, especially in major metropolitan areas, were forced to do during the pandemic when renters were fleeing cities. However, a year ago, when demand was surging, concessions were less common.

As a result of these new concessions, rents are coming down in certain areas even though the declines don't show up in asking-rent data.

"Higher-end properties are beginning to see pressure in certain markets as a significant portion of new units coming online are in the higher-end and luxury segment," Ziglar said.

At the same time, there is still "a lot of competition for more affordable units due to less new supply, as well as increased pressure on consumer wallets limiting the ability to stretch for that higher level experience," he added.

The good news is that while rents are still sitting near record highs, rent growth is cooling due to slowing household formation, economic uncertainty, affordability challenges and an increase in rental supply, Redfin said.

Over the past two years, rents have been posting large year-over-year gains because of surging demand. For instance, in August 2022, the median asking rent was up 12.3% from the prior year.

[Benzino Napaloni]

Te voy a dar una hipotesis.
No son para alquilar, son para "sacarlos" del mercado de alquiler, provocar escasez, subir los precios del alquiler del entorno con lo que sube el precio de venta.
Compran bloques que están ya en alquiler, no bloques vacios ni en construcción, que yo sepa y "echan" a los inquilinos subiendo precios.
Nadie que conozco vive en piso de alquiler de fondo buitre.

Compras bloque por 100, echas a inquilinos que te rentaban 10, ahora rentaría 20 (pero esos inquilinos no sé si existen) con lo que el valor pasa a 200. Hasta que sea el momento de hacer un rug pull.

Esto es por lo que veo desde fuera, en Lavapies que han adquirido montones de bloques para gentrificar y mirando el famoso bloque del ensanche de vallekas. Pues no veo viviendo mucha gente en ninguno.

Pero vamos muy hipotésis todo, no tengo cifras, ni las encuentro.

Más sencillo que eso.

El especulador sólo quiere dos cosas. Una obvia, comprar barato y vender caro. Pero además de necesitar perspectivas de vender caro, también necesita poder soltar lastre rápido si las cosas se tuercen. En el caso del alquiler, poder romper los contratos.

Esto último se vincula directamente al "si no lo vendoalquilo, lo alquilovendo". Ahora mismo el especulador se ha pillado los dedos. La venta no va a ser una salida para una larga temporada por los tipos altos, y la "hotelización del inquilinato" que abrió la LAU 2013 ya se ha cerrado. Al menos para contratos por vivienda habitual.

Todas estas marranadas de los alquileres temporales son fundamentalmente porque es la única escapatoria que ha quedado para tener la renta bloqueada al IPC para 5-7 años. Esto ya es la fase de pánico final en la que alguien se va a comer pérdidas sí o sí. Viendo las noticias que no destacan especialmente, como las que trae Derby avisando de que en GB los caseros van a la desesperada intentando vender, o las que reflejan que los bancos evalúan en un 60% el sobreprecio, o que "la crisis de precios se da por descontada" revelando que "el escudo de la banca está puesto", se ve cómo nos vamos acercando al punto crítico.

[Cadavre Exquis]

Aunque inicialmente iba a ponerlo en el hilo de Coches eléctricos, en realidad tiene que ver con la transición energética y, creo que encaja muy bien con el artículo del Financial Times que nos ha traído Derby esta mañana..

https://www.ft.com/content/9df6003b-3760-4eee-b189-92c0247fa1a5

World at ‘beginning of end’ of fossil fuel era, IEA says

Global demand for oil, natural gas and coal expected to peak before end of 2030

https://twitter.com/AAretxaba/status/1701234931785953630

Right for the Wrong Reasons

B · The Honest Sorcerer | Sept. 11, 2023

No. This is not sustainable, either. Photo by Jenny Ueberberg on Unsplash

We are continue to be misled by mainstream media, oil companies and their advisors alike up to a point of self-delusion. Not only when it comes to climate change and its causes, but about matters of peak supply and demand as well. The message is clear: there can be no doubt that we will prevail as a high-tech society forever — with or without fossil fuels. This notion, however, is driven by ignorance and blind optimism. What we are facing is neither peak demand nor peak supply but a collapse in energy use, something completely unseen by most commentators. Might it be, despite all this, that forecasts made by advocates of peak oil demand will prove to be right in the end…?


According to a widely shared misbelief among industry “experts” and economic pundits alike, an increasing share of electric vehicles (EVs) will reduce overall oil demand worldwide, eventually degrading it to zero in a couple of decades. It’s high time that we educate ourselves in the topic and start to look at oil production and consumption as a whole, not focusing solely on aspects close to our hearts.¹ So, where do we begin? I collected some basic points completely missing from the discussions on the topic, so that you can decide for yourself whether to place your bet on peak demand occurring soon.

The process of distilling Crude Oil. Source

• Anyone interested in the subject of refining oil at least a little knows that petroleum is not magic fairy dust. You cannot wish away parts of it, or conjure up stuff from it at will. It has a certain chemical composition ranging from light substances used in plastics production through gasoline, diesel, jet fuel, heavy fuel oil, lubricants and finally to asphalt. While decomposing heavier substances (found lower down the list above) is technically possible with a lot of energy and additional hydrogen inputs (usually both coming from natural gas), fusing lighter components into heavier ones is practically impossible (you can do it in a lab, but never at an economic scale due to large energy inputs and losses). In a nutshell: there is a certain ratio of gasoline to diesel (and other oil products) in any given barrel of oil, one which cannot be fiddled with too much.
  
  
• Electric vehicles replace gasoline use only. Diesel, used in long distance transport from trucks to locomotives and ships cannot be replaced neither by batteries nor hydrogen. (The same is true for jet fuel.) And while you can operate short distance transport (so called ‘milk runs’) on electric trucks — carrying a three ton battery pack and costing 5 times as much as a diesel vehicle — you cannot deliver anything beyond a couple hundred miles by using electricity only. Trucks and fuel are only half the cost of operating a freight vehicle, the other half is coming from the driver’s salary and insurance. Now, can you imagine running a successful freight forwarder business if you had to stop every two to three hours (or every 150 miles) to charge your truck for an hour and a half (even on a fast charger)? Well, I guess you start to see my point.
  
  
• The manufacturing of EVs take more minerals (nickel, cobalt, graphite, copper etc.) than their internal combustion engine counterparts. Since the mining and transportation of these minerals is done almost exclusively by diesel engines (which electric drive trains cannot replace due to the reasons above), the demand for diesel will actually increase with a wider adoption of electric vehicles. Knowing that the ratio of diesel and gasoline in any given barrel of oil is pretty much fixed, a rise in EV production volumes would thus give rise to oil demand, as paradoxical as it may sound.
  
  
• An increased demand on precious minerals will also inevitably lead to shortages and price spikes, not only in case of battery metals but diesel fuel as well. The higher demand climbs the costlier it will become to satisfy it. Long gone are the days of cheap fuel, and readily expandable mining production. What is left to dig up lies further and further away from civilization and comes in lower and lower concentrations. As a result (thanks to this direct feedback mechanism) raw material costs for EVs will rise even higher, putting an end to the fall of battery costs experienced in the past decades. Besides, did you ever wander if there is physically enough metal reserves to cover all this demand…?
  
  
• Besides an ever growing diesel demand, there are million other reasons why you cannot reduce oil production, even if you think that eventually all transportation can be electrified or all required metals could be magically conjured up in warehouses around the world. For starters, you will still need plastics to cover the interiors, make the seats, tires, cable insulation, then you will still need paint and lubricants (no, plant oil is not a substitute either); not to mention asphalt, a key ingredient to modern road pavement. (Unless you want to cover everything in concrete, but then you will run out of sand pretty quick). Let’s face it: oil has become an indispensable raw material in and of itself, besides being an integral part of modern transport technology. Doing away with one part of it (gasoline) does not solve anything. At all.
  
  
• Despite all this hurdles, let’s presume that the EV transition still succeeds somehow. (I hope there is a school somewhere training armies of magi mastering the art of conjuration to make that happen, though.) Now, the question poses itself: what should we do with all that surplus gasoline, displaced by EVs? Burn it…? But then why the fuss? Should we then pump it back underground, hoping that it will never leak and seep into the groundwater? (Trust me, it will.) In earlier times gasoline was an industrial byproduct of lamp oil refinement, and was released into rivers and streams — so much so, that sometimes these waters caught fire. Carl Benz’s invention has actually found a “solution” to this burning environmental issue by combusting this dangerous pollutant in personal vehicles. (And thereby contributing to climate change… as it is often the case with “solutions” creating more and bigger “problems” than what they solve; but that’s another story.)
  
  
• The answer to the question posed above comes from economic theory itself. William Stanley Jevons famously stated in the 19th century already, that by using a resource more efficiently you actually increase the consumption of it. He has made this observation with coal: by designing more efficient steam engines, engineers actually made those machines more affordable for a wide range of businesses. High fuel consumption were no longer a deterrent, and thus more and more entrepreneurs decided to buy one of these hissing machines, more travelers choose the train as ticket prices started to fall, and more ships were converted to use this fuel. The end result: more coal consumption than ever. All things being equal, the same can be expected with an ever wider adoption of electric vehicles. Since refineries are working with a more or less fixed ratio between products, in case of an EV boom gasoline would suddenly be in oversupply. As soon as the price of fuel, a substance traded worldwide, would start to fall in tandem with falling demand in the well-to-do regions of the world, so would more and more people in Africa, Latin America and Asia be able to afford a car or upgrade from a bicycle to a motorbike. Remember: internal combustion engines will be always cheaper to manufacture than electric drivetrains, so combined with cheap gasoline they will become the obvious choice for many. All what an even wider adoption of EVs in the richer part of the world would thus do, is to bring about additional demand for gasoline elsewhere, leading to the burning of all available supply to the very last drop.
  
  
• Electric vehicles do not operate on thin air neither. They would need a massive ramp up in charging stations and electric networks. In 2022, about 134.5 billion gallons of finished motor gasoline were consumed in the United States. Translating this into EV charging demand this would mean a whopping 1024 Terawatts of electricity² requiring a 25% increase in power supplied to the grid. And it does not only mean a quarter more supply, but 25% more transmission lines, giant transformers, switchgear, everything. Since renewables alone cannot cover that increase (due to intermittency) more natural gas fired power plants would need to be added as well. All this additional equipment would have to be paid for, of course, by the end user. Who else? Elon Musk? It is thus safe to assume that electricity prices would increase significantly as a result, while at the same time gasoline prices would be falling. If anything, this alone would be enough to act as a negative feedback on EV adoption.

A not so green aspect of electric vehicles. Photo by Dominik Vanyi on Unsplash

Based on understanding all this, we are not headed towards an all electric utopia, but an unstable equilibrium between EVs and gasoline cars. Electric vehicles sales will slowly settle around a certain percentage of total vehicle sales, as this technology too reaches a point of diminishing returns. A certain market penetration, above which the costs of expanding the grid, adding new charging infrastructure, opening new mines to cover increased metal demand, burning more natural gas to increase electricity supply etc. exceed the net benefits provided by EVs — stymieing further growth in sales. On the balancing side gasoline will get cheaper, encouraging people to drive more traditional vehicles.

As an ominous sign of all this, and that car manufacturers might have become a tad bit overexcited about EVs (thanks to generous government subsidies) the supply of electric vehicles now significantly outstrips sales. Dealers are now sitting on an increasing stock of hard to sell cars waiting to be charged. In the meantime US consumer gasoline demand ticks up, while demand for diesel slumps. For me, these are not quite the tell tale signs of a successful EV transition. Rather, that despite all the happy talk, subsidies and “inflation reduction acts”, the green economy is not even close to doing fine, let alone being on a cusp of a “revolution”. Again, if electrification made economic sense beyond a few niche areas, no subsidies would be needed and we would see an uptick in resource and energy use as the transformation unfolds. None of that is the case right now.

The reason is, as always, false assumptions. All the prior optimism about EVs were based on an ideal world, where all of our raw material and oil demands could be met during the transition. The reality is, that US oil production will peak before the end of the decade, and other oil producing nations will start to ration exports to save fuel for their consumption. Oil keeps getting more and more energy intensive to get as cheap to produce traditional reserves give way to more complex and expensive to get ones. In order not to run themselves into bankruptcy by extracting these increasingly expensive oil deposits at a relatively low selling price, state owned companies (like Saudi Aramco) are rather curtailing production and exports.³

As I and others like Gail Tverberg keep telling: oil has slowly become too costly for producers to get, at the same time when consumers simply could not pay more. Since the price of oil builds into every single product we buy, expensive oil simply stymies consumption through products and services. It also curtails its own production through drilling equipment inflation and workers demanding higher pay — as a compensation for rising food and energy prices — all ultimately due to higher oil prices. If this sounds like a vicious cycle to you, then you are not entirely mistaken. Energy is the economy, and if it takes more and more energy to get the same amount of energy, it is only a question of time when this whole mess explodes into our face. Welcome to the big mad energy scramble, eventually leading to a collapse in energy use. Everywhere.

The oil industry is already in its ‘death knell phase’ marked by a slow motion collapse in traditional oil exploration and extraction. Not because EVs are eating up oil demand — that is technically impossible as we have seen — but because new reserves take more and more energy and resources to tap into, and require more investment than ever in history. The slow agony of this once profitable industry inevitably has led to bottlenecks in supply, now leading to price spikes followed by steep falls. In this environment, made worse by ever higher interest rates, monetary returns on investments slowly become impossible to plan, and only the most secure projects will be executed. Since the reasons can be found in geology and physics, throwing more money at it will help only temporarily. As the situation worsens year by year, leading to a dearth of new supply coming online, the natural decline of old traditional wells will never be fully compensated. Oil supply as a result will start to fall, notwithstanding oil companies still having a ton of proven reserves on paper, lasting another half a century (theoretically).

A coming oil supply squeeze due to this global energy crisis might just prove Tony Seba — an advocate for peak oil demand, and one of the co-founders of RethinkX — to be right, but for the wrong reasons of course. It would be not at all inconceivable after all, that in a deteriorating energy situation people would rather sell their vehicles and opt for transportation as a service (TAAS i.e.: car sharing) instead. And as Seba predicts we very well might see:

• TAAS will be making up 60 per cent of U.S vehicle stock (you will own nothing and will be happy)
  
  
• The number of passenger vehicles on American roads will drop from 247 million in 2020 to 44 million in 2030
  
  
• As a result 70 percent fewer passenger cars and trucks will be manufactured each year, global automaker supply chains will shrink to a fraction of their current size, throwing millions out of work, with ripple effects throughout national economies.

Welcome to the economic collapse of the once mighty West. BMW is already ringing the alarm bell. (The Eastern hemisphere will hold on for a while, but after a decade or two they too will succumb to the reality of resource and energy depletion.) For sure, car sharing will help mitigate the negative effects of our global energy decline somewhat, until the predicament we have found ourselves in starts to really bite into material extraction and manufacturing. We are facing a massive transport fuel deficit, no nuclear, fusion or “renewable” sources can compensate. As the surplus energy from liquid fuels vanishes in the rear view mirror, their use will be increasingly limited to essentials (i.e. war and agriculture), putting an end to the fantasy of electrifying the Titanic as it slowly sinks into the Atlantic.

Until next time,

B

• I’m no petroleum geologist, but I read and listened to enough of those who are to insert my quibbles here. By the way, most neoclassical economists spreading this theory are no scientists either, so at least in this regard we are on equal footing. With that said, the level of ignorance on display from peak demand theorists and techno-optimists is so glaring that they must be called out and questioned, no matter what.
  
  
• Average fuel economy in 2021 was 25.4 mpg for new cars. Since there are older vehicles on the road as well (with much worse mpg-s) we can calculate with an average 22 miles covered per gallon consumed. Thus the 134.55 billion gallons consumed in 2022 translates to 2960 billion miles driven. Now, an average EV travels a mile by consuming 315 Wh of electricity (196 Wh/km). Calculating with an average 10% charging loss this goes up to 346 Wh/mile. So, you would need to draw a whopping 1 024 194 billion Wh (or Gigawatts) of electricity from the grid to replace all gasoline use with electricity (that is 1024 Terawatts or 1 Petawatt). For comparison, the US has consumed 4050 TW (4 trillion kwh) of electricity in 2022. Converting to all electric vehicles would thus increase demand by a quarter of that.
  
  
• Meanwhile, as a direct result of Saudi production cuts and sanctions, refining margins are on the rise in Europe due to a lack of suitable (medium heavy) oil to derive middle distillates (diesel and jet fuel) from. In this case increased US shale output is no panacea either, as it yields mostly light distillates. Europe has navigated itself into a blind alley and now cannot seem to find a way out of this mess.

Saludos.