The Great Simplification with Nate Hagens - Just Stop Oil !? Part 1 - Gasoline | Frankly #37

Episode Date: July 14, 2023

In this must watch Frankly, Nate illustrates how a reduction in the demand for gasoline will not - as commonly believed  - result in a 1:1 reduction in the demand for oil. This is contrary to a widespread perception, which much growth in the Electric Vehicle industry has been based on, about the correlation between a decline in gasoline usage resulting in an overall decline in oil production and CO2 emissions. While a significant portion of oil refining results in gasoline, we need to be aware of modern civilization's deep dependencies on the remaining products that all come from the same barrel of oil. Only then can we understand and plan for feasible pathways to reducing oil production and consumption within the confines of a growth-dependent complex adaptive system. How can movements such as Just Stop Oil better reflect the reality of the current oil production system and our economy?    Stay tuned next week when Nate shares 7 potential paths to a less oil-dependent future.   A special thank you to Joris van der Schot, John Rowan, Robert Rapier, and Art Berman for helpful input on this video.   To Watch on Youtube: https://youtu.be/H-zYjcsLE_E   For Show Notes and More: https://www.thegreatsimplification.com/frankly-original/37-just-stop-oil-part-1-gasoline

Greetings. Systems, systems, systems. Kind of a core message from the Great Simplification podcast and these Franklies is we need to educate and inform more people about how the parts and the processes fit together. On this, frankly, I'd like to take a hypothetical example of what the implications would be if for whatever reason, technology, law, activism, we no longer needed gasoline in the world and what that would imply. Because I think the answer to this hypothetical experiment will shed light on a non-systemic practice in a multi-billion dollar industry in the world. Oil, this incredibly powerful substance that we use over 30 billion barrels of per year,

each barrel is condensed ancient algae phytoplankton from the ocean that lived between one and hundreds of millions of years ago in ancient oceans. This stuff on human timescales is indistinguishable from magic for what it does for us. In a barrel of oil, there are many thousands of products that come from the barrel. Gasoline, butane, propane, diesel, kerosene, jet fuel, asphalt, precursors for plastics, which result in paint and tires and all kinds of medicines and medical devices, all kinds of things. come from oil. But here is a prevalent misconception, especially in the environmental movement, on how oil is processed. So imagine we have five barrels of oil. We turn those into these products.

This is kind of a horizontal transfer of creating all these products that we want from this barrel of oil. So if suddenly we no longer needed gasoline, gasoline is around, 40% of a barrel of oil, then we don't need as much oil. We only need three barrels of oil to generate all the other products that we needed because the 40% of gasoline, there's no more demand for it. This is flawed because each component in a barrel of oil needs to sequentially be distilled off. So the super light fractions like butane and things that go in our lighters or some of our appliances, that gets distilled off at a lower temperature. And beneath that is the gasoline. And that's around 40, 42 percent of a barrel of oil. You distill that

off and you turn it into unleaded gasoline, which is at the pumps. After that, there is kerosene and jet fuel. That gets distilled off. Then the heavier fractions are still left at higher and higher temperatures, those get distilled off. Heavy bunker fuel used for ships and all the, the hydrocarbon inputs to the plastics industry and paint and the things I was talking about earlier, football helmets and tents and this chair I'm sitting in and probably the shirt I'm wearing, they all come from oil. So the reality is that we process oil vertically from the top down.

So if suddenly we had no demand for gasoline whatsoever, we would still need the exact same amount of oil in the world as we did when we did need gasoline. And that's because every barrel has to be sequentially processed. Now, over time, over decades, we could shift the refinery process so that instead of cat crackers, which resulted in, gasoline. We can get rid of those and install hydro crackers which generate more diesel. But this takes a long time and it's quite costly. And we're not even building any new refineries now because of the messed up light oil and oil decline in all the regions in the U.S. except for the Permian. So there is a cost and affordability aspect to it. In a perfect world, 20 years from now, If we didn't need any gasoline at all, we might need 10 to 20% less oil, not 42% less oil,

because we need all those other fractions for other things in the world, which begs a question, what would we do with 42% of the barrel of oil if there was no demand for gasoline? Would we flare it because we didn't need it? Would we dump it in the rivers? because we didn't need it and didn't know, but we still needed all the things underneath it, probably we would find another use for it. This stuff is superhero juice relative to human and animal labor. We wouldn't just flare it.

So this is not such a hypothetical example because this is what the electric vehicle industry is based on. With the exception of China, which is scaling electric vehicles quite rapidly, not for climate reasons ostensibly, but because of air pollution reasons. Electric cars are cool. They use less energy. They're cleaner. But if we're scaling EVs because oil is bad, this is a totally flawed strategy because scaling EVs and removing internal combustion engines is not going to change the amount of

oil in the world that we consume. This is a fundamental flaw in the logic of why we're pursuing electric vehicles. On a wider boundary thing, there's in the news lately is a European or a British environmental organization called Just Stop Oil. I have such mixed feelings when I see what's going on because I empathize. especially with the young people who are seeing the impact of carbon and hydrocarbon emissions, warming the atmosphere and the oceans, and that's just on the metabolism. They're also impacting, you know, global ecosystems from what we do with the energy.

So I really empathize with that sentiment, but at the same time, it is utterly delusional that we're going to just stop oil. So many reasons why there's a metabolism. Oil and GDP are incredibly tightly linked. There is no one who could stop oil. There is no politician or billionaire or cabal of same. Not even Klaus Schwab can stop oil. In fact, I think next week's frankly, I will discuss what are the ways we actually could stop oil.

It is embedded in this culture. It is a requirement on a daily, weekly, monthly, quarterly basis. The non-systemic response to stopping oil is let's build solar panels and renewables, as if they were a one-for-one plug-in play. So my dearest wish is that we start to understand second, third order effects, and then what? and look at the world as a interplay between the parts and the processes and how the parts and process fit together. Systems, systems, systems. We will not use less oil because we no longer need gasoline for internal combustion engines, except in the very long term. Next week, I will continue

this thought experiment. Thank you. Thank you.