Lithium: The Fuel of the Green Revolution
The world is shifting greener.
And while people have always wanted electric cars and inexpensive solar power, the reality is that until recently, battery technology just wasn’t good enough to store energy on an economical or practical basis.
Things have changed, and the green revolution has been kickstarted by battery power. The commercialization of the lithium-ion battery has solved a crucial green energy problem for two major reasons that can be related back to the properties of lithium:
1) Lithium has extremely high electrochemical potential, and so do lithium-ion cells:
|Battery cell||Typical Voltage|
This means one lithium-ion cell can do more – making it much more efficient to use in everything from electronics to energy storage.
2) Lithium is also the lightest metal on the periodic table. Batteries need to be as light as possible, especially in electric cars.
How Lithium Gets Used
Many years ago, lithium was used chiefly for a variety of industrial purposes. Major sources of lithium demand included ceramics, glass, aluminum production, lubricants, and as a catalyst for rubber production.
In modern times, with the commercialization of the lithium-ion, batteries are now the major source of demand for lithium at 39%.
According to a report by Deutsche Bank, in 2025 the battery market for lithium alone will be more than 2x bigger than the total lithium market today.
About 70% of all lithium will go to electric vehicles, e-bikes, traditional batteries, and energy storage, making it the uncontested fuel of the green revolution.
Major Lithium Drivers
Lithium-ion battery demand is primarily driven by rapid growth in the electric vehicle market, which is expected to make up 35% of all vehicle demand by 2040.
But renewable energy storage also plays a role in driving lithium demand. With solar and wind energy being installed at a rapid pace, that means more batteries must be procured to store this energy. This can be done for a home system with a product like Tesla’s Powerwall 2.0, and it is being done on a utility scale as well.
Two Types of Lithium
Prices for lithium have skyrocketed in the last two years – and it is worth knowing the two different types of lithium used by the market.
This is the first chemical in the production chain, and as a result, sells for less than lithium hydroxide. It can be used as cathode material in some batteries, such as the Nissan Leaf, where it is used in a LMO with NMC formulation (Lithium manganese oxide / nickel manganese cobalt oxide chemistries)
This is a by-product of lithium carbonate, created by a metathesis reaction with calcium hydroxide. It can be used to produce cathode material more efficiently and is actually necessary for some types of cathodes. It’s used in the Tesla Powerwall and Model S, for example.
There are two basic ways to extract lithium: from brine or from hard rock. The latter mainly consists of spodumene production.
Brine deposits represent about 66% of global lithium resources, and are found mainly in the salt flats of Chile, Argentina, Bolivia, China, and Tibet.
The most famous area for lithium is known as the Lithium Triangle, located on the border between Chile, Argentina, and Bolivia. Salar de Atacama, the world’s third largest salt flat, resides on the Chilean side, and contains about 50% of global reserves.
The largest lithium producers in 2015 were Chile (37%) and Australia (33%). Argentina is the only other double-digit producer at 11%.
Lithium is Fueling the Green Revolution
Here’s the estimated amount of lithium that can be found in everyday items using lithium-ion batteries:
Tesla Model S: 51kg
Electric Vehicles: 10-63kg
Tesla Powerwall 2.0: 10kg
Hybrids: 0.8kg to 2.0kg
Power tool batteries: 40-60g
Mobile phones: 2-3g
What’s Made from a Barrel of Oil?
Oil is a building block that makes modern life possible. Here are the proportion of finished products that are created from a barrel of oil.
What Products Are Made from a Barrel of Oil?
From the gasoline in our cars to the plastic in countless everyday items, crude oil is an essential raw material that shows up everywhere in our lives.
With around 18 million barrels of crude oil consumed every day just in America, this commodity powers transport, utilities, and is a vital ingredient in many of the things we use on a daily basis.
This graphic visualizes how much crude oil is refined into various finished products, using a barrel of oil to represent the proportional breakdown.
Barrel of Oil to Functional Fuel and More
Crude oil is primarily refined into various types of fuels to power transport and vital utilities. More than 85% of crude oil is refined into fuels like gasoline, diesel, and hydrocarbon gas liquids (HGLs) like propane and butane.
Along with being fuels for transportation, heating, and cooking, HGLs are used as feedstock for the production of chemicals, plastics, and synthetic rubber, and as additives for motor gasoline production.
|Refined Crude Oil Product||Share of Crude Oil Refined|
|Hydrocarbon gas liquids||2.0%|
Source: Canadian Association of Petroleum Producers
Crude oil not only powers our vehicles, but it also helps pave the roads we drive on. About 4% of refined crude oil becomes asphalt, which is used to make concrete and different kinds of sealing and insulation products.
Although transportation and utility fuels dominate a large proportion of refined products, essential everyday materials like wax and plastic are also dependent on crude oil. With about 10% of refined products used to make plastics, cosmetics, and textiles, a barrel of crude oil can produce a variety of unexpected everyday products.
Personal care products like cosmetics and shampoo are made using petroleum products, as are medical supplies like IV bags and pharmaceuticals. Modern life would look very different without crude oil.
The Process of Refining Crude Oil
You might have noticed that while a barrel of oil contains 42 gallons, it ends up producing 45 gallons of refined products. This is because the majority of refined products have a lower density than crude oil, resulting in an increase in volume that is called processing gain.
Along with this, there are other inputs aside from crude oil that are used in the refining process. While crude oil is the primary input, fuel ethanol, hydrocarbon gas liquids, and other blending liquids are also used.
|U.S. Refiner and Blender Inputs||Share of Total|
|Hydrocarbon gas liquids||3.0%|
The process of refining a 30,000-barrel batch of crude oil typically takes between 12-24 hours, with refineries operating 24 hours a day, 365 days a year. Although the proportions of individual refined products can vary depending on market demand and other factors, the majority of crude oil will continue to become fuel for the world’s transport and utilities.
The Difficulty of Cutting Down on Crude Oil
From the burning of heavy fuels that tarnish icebergs found in Arctic waters to the mounds of plastic made with petrochemicals that end up in our rivers, each barrel of oil and its refined products impact our environment in many different ways.
But even as the world works to reduce its consumption of fossil fuels in order to reach climate goals, a world without crude oil seems unfathomable.
Skyrocketing sales of EVs still haven’t managed to curb petroleum consumption in places like Norway, California, and China, and the steady reopening of travel and the economy will only result in increased petroleum consumption.
Completely replacing the multi-faceted “black gold” that’s in a barrel of oil isn’t possible right now, but as electrification continues and we find alternatives to petrochemical materials, humanity might at least manage to reduce its dependence on burning fossil fuels.
Mapped: Visualizing U.S. Oil Production by State
The U.S. is the largest oil producer in the world. Here we map the share of oil production in the country by all 50 states in 2020.
Mapped: Visualizing U.S. Oil Production by State
In 2018, the United States became the world’s top crude oil producer. It has strongly held this position ever since.
According to the U.S. Energy Information Administration (EIA), the country accounted for nearly 15% of the world’s total oil production in 2020, churning out close to 13 million barrels of crude oil per day—more than Russia or Saudi Arabia.
Although total U.S. oil production declined between 1985 and 2008, annual production increased nearly every year from 2009 through 2019, reaching the highest amount on record in 2019.
The Dominant Oil Producing States
Impressively, 71% of total U.S. oil production came from just five states. An additional 14.6% came from the Gulf of Mexico, which is a federal jurisdiction.
Here are the five states that produce the largest amount of crude oil:
|Share of Total Production|
Rounding the top 10 are states like Alaska, California, Wyoming, Louisiana, and Utah.
Texas is undoubtedly the largest oil-producing state in the United States. In 2020, Texas produced a total of 1.78 billion barrels of oil. Texas is home to the most productive U.S. oil basin, the Permian, routinely accounting for at least 50% of total onshore production. A distant second is North Dakota, which produced about 431.2 million barrels of oil in 2020.
Regional Distribution of U.S. Oil Production
A total of 32 of the 50 U.S. states produce oil. They are divided among five regional divisions for oil production in the U.S., known as the Petroleum Administration for Defense Districts (PADD).
These five regional divisions of the allocation of fuels were established in the U.S. during the Second World War and are still used today for data collection purposes.
Given that Texas is the largest U.S. oil-producing state, PADD 3 (Gulf Coast) is also the largest oil-producing PADD. PADD 3 also includes the federal offshore region in the Gulf of Mexico. There are around 400 operational oil and gas rigs in the country.
Impact of U.S. Oil Production on Employment
Rapid growth in oil production using advanced drilling methods has created high-paying jobs in states like North Dakota and Texas.
Thanks to the rapid development in the Bakken Shale formation, North Dakota boasts the nation’s lowest unemployment rate. The state has also grown personal income and state economic output at a fast rate, due to oil and gas industry growth.
Oil production from the Eagle Ford Shale has transformed a relatively poor region of South Texas into one of the nation’s most significant economic development zones. In fact, due largely to the oil and natural gas industry, the Texas Comptroller estimates that Texas has recovered 100% of the jobs lost during the Great Recession.
Looking to the Future
The U.S. slashed its oil production forecast through next year just as OPEC and its allies begin to roll back their production cuts in the coming months.
U.S. oil output will drop to 11.04 million barrels a day this year, down from a forecasted 11.15 million. This was a result of the deep freeze that shut down the oil industry in Texas. The EIA also lowered its output forecast for 2022 by 100,000 barrels a day.
Despite its forecast for a rise in supply from outside the cartel this year, OPEC said in its report that it is uncertain about the levels of investment expected to determine the non-OPEC supply outlook for the years to come.
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