Thursday, June 23, 2022

Thursday Night Links

  • Yes, EVs are coming in, but new ICE cars are still accumulating by tens of millions per year, and are being driven for longer. Academic research shows that a car-owner is less inclined to scrap their vehicle if the cost to repair it is less than its salvage value. Which brings about a couple of important questions. Will a rapid introduction of EVs increase or decrease used ICE values? And the corollary: How will banning ICE vehicles affect consumer behaviour? The answer is that we don’t yet know how attached people are to their pistons. In fact, banning ICE vehicles may yield a scarcity backlash. People may want used ICE vehicles, raising their values. Scrappage rates would fall, keeping a larger-than-expected number of them around for longer. On the flip side, countries could impose massive carbon taxes and registration fees on remaining ICE vehicles, to scrap them faster. Select countries may. Yet assuming every country disallows the sale of ICE engines by 2040 is already a stretched assumption; thinking that political leaders will have the backbone to tax your average SUV owner is a whole other level of belief. Even under an aggressive EV adoption scenario, our second figure shows that peak piston isn’t likely to occur before 2030. That’s because of the residual sales momentum and retention of petroleum power vehicles. By 2050, 60% of the global fleet of personal vehicles could be composed of EVs, but the number of ICE vehicles remaining on the roads would not likely to be much less than today. [ARC Energy Research Institute]
  • The physical oil market tightness remains strong. High refining margin also indicates end-user demand, for now, is fine. Low refining capacity coupled with low product storage will likely keep refining margin elevated. However, we expect +5 million b/d of global refinery throughput in the next 2 months. Despite the crude sell-off, timespreads are moving higher. This indicates to me physical demand for crude remains strong. As a result, the sell-off in crude appears to be pure financial positioning/hedging. [HFI Research]
  • For seventy years, driven by ideological zeal and the imperative to colonize and industrialize its vast frontiers, communist planners forced people to live in Siberia. They did this in true totalitarian fashion by using the GULAG prison system and slave labor to build huge factories and million-person cities to support them. Today, tens of millions of people and thousands of large-scale industrial enterprises languish in the cold and distant places communist planners put them––not where market forces or free choice would have placed them. Russian leaders still believe that an industrialized Siberia is the key to Russia’s prosperity. As a result, the country is burdened by the ever-increasing costs of subsidizing economic activity in some of the most forbidding places on the planet. [The Siberian Curse]
  • Hi Steve, writing you from beautiful Tijuana, BCN. I’m watching the German Moto GP in the hotel room at 3 am. We just had a beautiful plate of rock shrimp and fresh tuna sashimi and jaloro peppers stuffed with smoked marlin, breaded and deep fried. Best meal I’ve had in years. Going to wine country in the morning to Valle de Guadalupe, going to get my girlfriend drunk on some big Syrah. The tequila expo in rosarito is a couple weeks away. Bring your wife it will be fun. There’s nothing more beautiful than 30+ tequila houses coming up from Jalisco to sell their wares. This is a formal invitation. Email me for the punto de reunion. [Sailer]
  • The thesis of the book is essentially that the world was on an exponential growth curve in total energy output until around 1970, when it became linear. And if that energy growth had continued, the world today would be utterly transformed. So many things now challenging would become possible. [Goodreads]
  • Can you comment on like the sustainability of that? Because, you know, on the one hand you're like, well, a trillion dollars of institutional money is going to come into Bitcoin. And on the other hand you're like basically there are a lot of Ponzis that have done really well. [Matt Levine]
  • The author is an engine designer himself, and he doesn't always consider it necessary to provide technical background. Often enough he does, but when the does not, the result can be cryptic to many readers. Calum Douglas sort of expects you to know that the connecting rods of a Daimler-Benz DB601 inverted V-12 are in a fork-and-blade arrangement, and what that is. I think this book would have been more digestible for most aviation history fans if it had an introductory chapter on the structure and workings of high-performance piston aero-engines. [Goodreads]
  • Well that totally sucks... crashed my Model X in Yosemite... 5 Teslas (including mine) have had accidents at this very same spot in Yosemite... Rangers told me 3 Tesla accidents in the past here, then my accident... a local stopped to tell me their Tesla always has issues here and also say there've been multiple accidents here... then just today my tow truck driver sent me pictures of another accident with a Model S last Friday - that's 5 that I know of. This really needs to be alerted, I love Tesla but don't want to take to the media, just want to alert Tesla but several calls and emails doesn't lead to much interest. Would love them to fix this, and covering repairs and expenses and a loaner would be really nice of course. [r/SelfDrivingCars]
  • Agaves can be confused with cacti, aloes, or stonecrops, but although these plants all share similar morphological adaptations to arid environments (e.g. succulence), each group belongs to a different plant family and probably experienced convergent evolution. Further, cactus (Cactaceae) and stonecrop (Crassulaceae) lineages are eudicots, while aloes (Asphodelaceae) and agaves (Asparagaceae) are monocots. [Agave
  • Both men claim to channel the rage of an electorate that feels sneered at and dismissed by liberal institutions. But while Trump, with his lazy, Barnumesque persona, projects a fundamental lack of seriousness, DeSantis has an intense work ethic, a formidable intelligence, and a granular understanding of policy. Articulate and fast on his feet, he has been described as Trump with a brain. [New Yorker]
  • My view: owning Sears as a property play is a demonstration of the arrogance and breathtaking naivete of much that passes on Wall Street. Sears Holdings has over 300 thousand employees. I don't know how you successfully liquidate a business integrated with that many lives. I don't know of anyone who has ever successfully liquidated a business with that many employees. I am not sure it can be done and it certainly can't be done by someone with my skill-set (highly analytical, ability to spy value or value traps but no people management skill and not much tact). The idea that Sears was going to be managed/liquidated by a bunch of hedge fund guys (people like me) well - that was comical. [John Hempton]
  • The Food and Drug Administration is preparing to order Juul Labs Inc. to take its e-cigarettes off the U.S. market, according to people familiar with the matter. The FDA could announce its decision as early as Wednesday, the people said. The marketing denial order would follow a nearly two-year review of data presented by the vaping company, which sought authorization for its tobacco- and menthol-flavored products to stay on the U.S. market. Uncertainty has clouded Juul since it landed in the FDA’s sights four years ago, when its fruity flavors and hip marketing were blamed for fueling a surge of underage vaping. The company since then has been trying to regain the trust of regulators and the public. It limited its marketing and in 2019 stopped selling sweet and fruity flavors. Juul’s sales have tumbled in recent years. [WSJ]

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