General / Off-Topic The Combustion Engine is NOT dead

[varonica]

Oil is here to stay for a long while. If oil starts to drop in price due to lower demand from the transport sector,

That will actually cause an increase in price, not a reduced price, the reason oil is so cheap is because there's so much demand, reduce that demand and prices start rising. The oil producing nations won't be able to ship as much oil due to reduced demand, but they won't want their income cut so they will increase prices to maintain the same income, the same applies through all the sector, suddenly got oil ship sitting idle? Going to start costing more to ship, refineries have to stop refining due to no storage left because there's not as much demand, it all follows through the entire system, reduced demand will increase prices.

 

[Han_Zen]

That will actually cause an increase in price, not a reduced price, the reason oil is so cheap is because there's so much demand, reduce that demand and prices start rising. The oil producing nations won't be able to ship as much oil due to reduced demand, but they won't want their income cut so they will increase prices to maintain the same income, the same applies through all the sector, suddenly got oil ship sitting idle? Going to start costing more to ship, refineries have to stop refining due to no storage left because there's not as much demand, it all follows through the entire system, reduced demand will increase prices.

The oil producers don't decide on the price. What they (OPEC) do when the price is to low for their liking, is to limit production. In the late 80's the US and Saudi Arabia agreed to flood the maket. This dropped the oil price to 15 USD/barre, ruining the oil dependant Soviet economy.

We have newer really had a significant drop in demand for oil, so we don't know exactly what will happen. I would guess that crude oil prices will dropp, while some refined products will become more expensive.

 

[varonica]

The oil producers don't decide on the price. What they (OPEC) do when the price is to low for their liking, is to limit production. In the late 80's the US and Saudi Arabia agreed to flood the maket. This dropped the oil price to 15 USD/barre, ruining the oil dependant Soviet economy.

We have newer really had a significant drop in demand for oil, so we don't know exactly what will happen. I would guess that crude oil prices will dropp, while some refined products will become more expensive.

Yes they limit production artificially, and what you are talking about here is the production being limited naturally, once the refineries are at capacity and can refine no more and the ships are no longer picking up crude because they are all full, and the OPEC countries oils storage has no more capacity, they will have cease pumping oil from the ground, this has the exact same effect, in fact it exactly the same as them limiting production artificially, when they want to reduce prices they flood the marker, but what happens when the market is permanently flooded, it may seem like the price should drop, but you don't just shut down refineries and oil pumping fields and the entire kit willy nilly, and continue paying the workers, eventually that will flow through to the end of the market and prices will start to rise. It may seem a bonanza to start with because there's plenty of oil, but reality will turn up and give everyone a good kicking because production will be lowered permanently.

If the big oil producers can't ship their product they will permanently reduce the amount of oil pumped to take that into account, the prices will rise to the level they were before the price drop but now there will be added costs in the supply chain as pumping and refining stops and starts, increasing prices at the supply end, this cycle will continue up and down as demand drops until the cost to pump crude oil is no longer viable for many of the small producers, refineries will shut because they can't sell their product, ships will be decommissioned and broken up for scrap. Artificially limiting production doesn't cause this issue, but natural demand reduction will because it will be permanent.

Producing less than the demand will increase prices, but reduced demand will also increase prices as oil producers attempt to maintain profit with reduced sales, and increased costs associated with non-functioning oil fields. Granted it's a complex problem, but if the demand is reduced enough oil fields will simply shut down and the remaining oil fields will seek to increase profit to cover higher operating costs.

 

[Becks]

Oil is here to stay for a long while. If oil starts to drop in price due to lower demand from the transport sector, it will just start to replace coal for electricity production and industrial use. Heavy transportation, aviation and shipping are many years away from going electric. They will need oil.
I think we will get fuel for our ICE cars, for a long time yet.

The question is more if anyone will bother to make IC engines, for consumer cars. Electric cars are vastly simpler and will inevitably get cheaper than ICE cars. I read somewhere that a typical ICE car has about 10,000 moving parts. The electric has about 150.

We will get to the point where it's more economical to have an electric car that you charge from a diesel generator, than to have the IC engine in the car.

I suppose that ICEs for car will become a niche at some point with only small numbers produced in series. Electrical Vehicles are, imo, more advantageous, especially in urban and suburban areas and will replace existing ICEs at least in those contexts over time.

I suppose it'll be similiar to the manual/automatic transmission divide over in the US.

That will actually cause an increase in price, not a reduced price, the reason oil is so cheap is because there's so much demand, reduce that demand and prices start rising. The oil producing nations won't be able to ship as much oil due to reduced demand, but they won't want their income cut so they will increase prices to maintain the same income, the same applies through all the sector, suddenly got oil ship sitting idle? Going to start costing more to ship, refineries have to stop refining due to no storage left because there's not as much demand, it all follows through the entire system, reduced demand will increase prices.

It's vastly more complicated than that. Some oil fields can't just cease to produce, some are extremely cheap to produce, some keep producing for strategic reasons. There have been negative (local) oil prices before, where fields literally paid transporters to take their oil, because their storages were full and they couldn't stop producing without closing the wells permanently.

A drop in oil price might also have the consequence of price drops in other related industries and lead to increased consumption there. Unwanted byproducts in that case might just get flared if possible.