Justin’s note: The electric vehicle revolution is one of the world’s most unstoppable trends… and it’s just getting started.
Yesterday, in the first part of our discussion, Doug Casey told us why this megatrend needs to be on your radar today. Below, we pick up where we left off and talk about what this means for certain commodities…what the investing implications are… and much more…
Justin: Doug, what happens to oil as EVs and self-driving cars go mainstream?
Doug: Almost all gasoline is used for vehicles. In fact, something like 75% of oil production is used for transportation. So, this will put a cap on petroleum prices. There’s going to be a glut of oil. Petroleum’s main use is basically going to be a feed stock for plastics and things of that nature. It’s going to collapse the production, if not the prices, of corn, palm oil, and perhaps sugar as well, because so much of those crops are – idiotically – used as biofuels.
Based on that, it doesn’t make any sense to own an oil company for the long-term. Pipelines, tank farms, refineries… there will be a lot less of them. The auto insurance industry is going to have to find something else to do for a living. Ambulance-chasing lawyers are going to get less business because there will be fewer auto accidents. Drunk driving won’t be much of a problem.
Justin: I totally agree with your outlook. I mean, we’ll probably see a few more oil and oil stocks rallies in the coming years. But the long-term outlook is not promising.
Doug: This has major geopolitical implications, too. Many countries, mostly in the Muslim world, produce nothing except oil. They got lucky the stuff was buried under their sand, and Westerners showed them what to do with it. However, most of them have frittered away the proceeds, and now they don’t know how to do anything but produce a surplus of unskilled people. Those places are going to collapse. Oil will still be of value, of course – but at nowhere near the gross revenues it is today.
So, big geopolitical changes are coming to the Middle East.
This will also affect Russia, which is essentially just a gas station with an attached gun store in the middle of a wheat field. It’s going to have a huge positive effect, however, on oil importers – especially Japan. Self-driving EVs will cause a gigantic economic earthquake. And nobody is looking at it or talking about it yet.
Justin: It’s going to be fascinating to see how this all shakes out. Other than oil and battery metals, what other commodities stand to gain or lose the most from EVs and self-driving vehicles?
Doug: Well, I’ve long been a believer that nuclear is by far the safest, cheapest, and cleanest form of mass power generation. Of course, it’s subject to so much mass hysteria and misinformation that it’s highly regulated and highly politicized. That’s why today’s costs are many times higher than they should be.
We’re using 60-year-old technology as a result. Which is silly, but still far safer and cleaner than coal or oil.
But if the technology had been allowed to evolve in a free market, we wouldn’t be using gigantic, centralized, gigawatt-sized plants. We would instead be using small, self-contained, 50-megawatt units that can be buried, with no need of service for 10 years, until they need to be refueled.
The technology is out there, but politics and hysteria have kept these things in the closet. And the fuel doesn’t have to be uranium – which was used because of the U.S. nuclear weapons program. It could be thorium, which is vastly harder to weaponize. But that’s off-topic.
There’s no point crying over past mistakes though. As Einstein said, after hydrogen, stupidity is the most common thing in the universe. One of the real bright sides about the change to EVs is that it will greatly increase the demand for electricity, and there will be a boom in nuclear, which is the only sensible way to provide it.
As for technologies like wind and solar, they’re still comparatively uneconomic. Although there’s definitely a place for them in remote locations, and for personal use in houses. Fortunately, their efficiency is also advancing, and their costs declining, at the rate of Moore’s Law.
The bottom line is that the whole world is going electric. Fossil fuels are no longer going to be fuels. They’re going to be basically feed stocks – primarily plastics, fertilizers, chemicals, lubricants, and the like. The demand for gasoline and diesel – which is the vast majority of oil usage – is going way down.
Amazon’s Very Strange Move — New Crypto Coin?
US No.1 company is on the verge of a massive announcement? Silicon Valley insiders believe it could have a major impact on the stock market…
Justin: It’s clear you have a lot of conviction in this idea. Have you made any major bets on EVs or self-driving cars?
Doug: Well, I recently made a large investment in a private company that’s accumulating royalties on battery metals. And I generally hate private companies, especially now, when we’re on the ragged edge of a collapse of the financial markets. But it’s a royalty company, and collecting royalties from financing mining operations is by far the safest way to invest in mining.
So that’s the way I’m speculating in weird metals that few people can find on the Periodic Table. That includes so-called rare earth elements; they’ll become more and more important as technology keeps advancing. About 80% of them are produced in China. So, there will be opportunities for developing new deposits in more politically reliable parts of the world.
Justin: Yeah, that will be an interesting space to watch going forward. One last question, do you own an EV or plan on purchasing one?
Doug: No, I don’t. It’s impractical here in South America right now. Socialist countries are always technologically backward. I’m here for the lifestyle, not to be on the cutting edge. Self-driving EVs will come first to advanced parts of the world – and this isn’t one of them. And I doubt I’ll get one in the United States. When I want another car, I’ll probably get another ICE. A slightly used one, because their prices are likely to collapse in the near future. I hope I won’t seem an anachronism, driving an ICE in a world of self-driving EVs. Like Grandma Duck, when she drove an EV in a world of ICEs…
But the changeover is going to happen very fast – starting right now. Make sure you’re not adversely affected by having money in the wrong places, real estate and energy companies among them.
Justin: Thanks, Doug.
Doug: You’re welcome.
US Millionaire says writing on the wall for these states
by the theory of this article:
the introduction of the bicycle means people will not need to walk, run or even buy appropriate foot ware, we can all wear python boots from now on.
the introduction of the telegraph means the end of the mail system
the invention of nuclear bombs and mutually assured destruction means we can give up war, etc.
I could go on, but you get the point.
The idea that any technology is going to change the power structure on this planet, and allow the plebes some sort of new freedom, is an oxymoran (sic)/sarc
The oil companies will morph into to the plastics/materials companies and the battery business
The tobacco companies are currently changing into the weed companies.
and Elon musk will be smoking weed on mars, laughing all the way to the space bank, when he sells his company to GM.
EV for thee, but not for me. Casey thinks he will be able to avoid the dragnet by living in a place “not for the lifestyle” where the ability of the ruling class (he hopes) will be constrained by technological ineptitude. As surveillance and monitoring tech gets better and better, and cheaper and cheaper, he better head way into some godforsaken jungle or desert, or inaccessible mountainous area that nobody of note gives a damn about to live his libertarian dream. Good luck finding a gas station there.
Casey is, in a weird way he does not see, a hard authoritarian. He thinks that everyone should be their own hardass boss and reap the profit or suffer the loss individually. I am sympathetic to that belief, but know (from my own experience, and the study of history) that this is a fantasy. Very few people are able, let alone willing, to live that hard libertarian existence. And they do not tend to play well with people who do not share and embrace their ethos. Maybe these folks prevail when a lot of the rest of humanity dies off, and maybe the libertarians would be pleased to see it happen, if not help it along.
Good luck, Doug. You, or more accurately your children, are going to need it.
Eliminate the govt. money and let’s see who really survives and for how long. John
The price of old cars from the 1950s-90s has been going up, up, and up non-stop for decades. I have made more %-wise from restored cars than any other investment. The shift will cause prices for cool ICE cars to triple. He’s wrong, as often he is. Very full of himself, very unoriginal, very – very – drunk.
Electric vehicles can’t do what fueled vehicles can. Namely tow, transport, refuel quickly and so on, over long distances. They are wonderful to drive, as long as distance or capability are factored out.
While I agree with your statement, your comments on the limitations of EVs are simply technological challenges to be overcome, which they will be.
The Doug says Nuclear energy is the safest means of power generation, and I think he needs to vacation for a week in Chernobyl or Fukishima.
Read some of his 2011 articles with Porter Stansberry on how silver was gonna be 150 and to back the truck up.
Average Joe – Just from the start, I am not a fan of EV. I think that they are being forced on us. That being said, the disasters you are thinking of are caused by Uranium fueled actively managed nuclear reactors. The plants that Doug is referring to are what is called – LFTR. Liquid Flouride Thorium Reactors. They were first run in a lab in Oak Ridge in the 1960’s. The program was scrapped by – shocker – the military. They could not make bombs from Thorium, so it was decided to go with Uranium based reactors. Stupid, but the war machine must prosper for the health of the state.
Anyway, LFTR technology is passive, it does not need to have active controls to keep it from melting down. No Chernobyl or Fukishima possible. Yes, it is radioactive, so you would not want to stick your hand in one, but you would not have the devastating nuclear fallout and melting down that occurs with Uranium.
Realistically, nuclear generation is the only viable, long term solution for the exponential growth of energy consumption of the world. Either that, or we seriously curtail our use of electricity.
I think EV is a long way away, for many reasons. To think that as Doug says “it will happen quickly” is assuming that someone will come up with a battery that can power an EV for over 350 miles without a charge, AND that you can quick charge that EV in under 10 minutes without blowing up the filling station. Not going to happen with ANY combination of rare earth metals even conceived as of yet.
The fact is that barring government force, any EV is going to need to be able to be as efficient in recharge, cost and distance as a comparable sized ICE vehicle. So far the physics say otherwise.
I am not saying that someday someone may not figure out a new chemical combination to make a battery from that allows for the safe storage of the amount of power needed for an EV to compete with an ICE, but it will take a radically different approach than just making bigger and lighter laptop batteries and bolting them on to the bottom of a car.
Greetings,
Again, this fantasy is never going to happen. I live in SoCal which is an urban region of 20 million people. The number of electric car charging stations that I’m aware of or have ever witnessed with my own two eyes is, wait for it, ZERO. That doesn’t mean that there are not charging stations but I’ve never seen one and I live in Tourist Town right at the beach. How can all the visiting tourists charge their EV’s when they come to town? That’s right, they can’t. (Note: I did a google search and found 3 charging stations for our region. One is at Disneyland)
A single fast charging DC station for your home can cost upwards of 50k each. If you wish to charge more than one car then you are probably going to have to upgrade the transformer provided by the electric company so as to handle more current.
Most of the parking here is on the street. This is true of homeowners as well as many of the homes here do not have garages because of the weather. Anyone I know that does own a garage has converted that garage to an additional “living space” and is currently renting it out for $700 or more per month. Again, how is everyone supposed to charge their cars when they must park in the street?
Finally, what happens to all the cars that run out of power? Our roads barely move as it is and if on any given day, say, 1% of the drivers take a chance on reaching their destination and that fails then we can expect our freeways to become never ending parking lots where all the cars sit and empty their batteries.
Oh yeah, EV’s are heavier than traditional cars – 1500 lbs or more per car because of the 7000+ batteries it must lug around. That extra weight per car will do wonders for our roads which currently look like the surface of the moon. The State of California is already 120 billion behind in desperately needed infrastructure repairs so destroying our roads at an accelerated pace isn’t going to help anyone.
Oil isn’t going away and EV’s are a fantasy.
I live in a small city in Canada of about 90,000 people. There are 10 charging stations (not sure why, I have only seen 1 Tesla and a few Leafs in town). My point is, the stations are being built and will continue to be built.
Those stations must have been “make-work” projects because it could NOT have been driven by need. After, you prove my point by stating that there are 3 charging station per car in your town. This is all nothing more than a gross misallocation of resources.
Not disagreeing with you at all. It just seems to me that the move to EVs is happening whether we like it or not. I think Casey calling it a megatrend is accurate.
I think EVs might be practical in some areas, but I lived through two week-long and statewide power outages in Connecticut in 2011- and EV would have left the entire population immobile after day one. I think people like Casey are vastly underestimating the technological hurdle of batteries themselves- they have improved, but the fact is that chemistry is what limits these things, and that chemistry won’t change that much going forward- lithium ion batteries are about as good as it is going to get, and they will have to be replaced at intervals shorter than the normal ICE of today, again because the chemistry pretty well guarantees it.