The New Yorker:
High oil prices would force governments, corporations, and consumers to find another way to power the world. It was a nice dream, but it’s over now. We are awash in cheap oil. Propelled largely by a boom in domestic production, due to hydraulic fracturing, or “fracking,’’ and horizontal drilling, oil prices fell below $70 a barrel on Thursday—from a high in June of $112.12. Prices have fallen nearly every day for the past two months, and some economists predict that we will soon see oil selling for less than fifty dollars a barrel.
Domestic production isn’t the only reason prices are falling but it’s certainly true that cheaper oil just delays the inevitable.
Bit of advice to folks, take it or not as it pleases thee…
Watch the documentary Collapse by Michael Ruppert. it can be found on YouTube. Or better yet, get a copy of the DVD. (not spruiking, just saying)
The trouble with cheap oil is that it won’t stay cheap, it’s a finite resource. And when the price goes up, it’ll be higher and stay that way for longer, there will come a point where nobody can afford it, things will deteriorate quickly then.
As for the argument of when we should have activley started pursuing renewable resource technologies, the greatest missed opportunity was around the time Peak Oil became a thing, it was as good as it was ever going to get back then, and it has been quite literally ‘all downhill from there’ ever since.
Heh.
I thought the reason we have cheap oil right now is that OPEC was flooding the market. When oil was high, it became an economical business for domestic producers. OPEC doesn’t like them, so it’s trying to put the domestics out of business.
Word. “The good lord giveth and the good lord taketh away”.
It won’t stay cheap for too awful long. There’s a long history of booms and busts in oil. This is just a bust. What will happen is that oil will get too cheap to support paying people to operate the equipment starting on the smaller offshore drills but will eventually make its way elsewhere as prices drop more and stay that way, so they’ll be furloughed until prices go up. This reduces production and therefore increases the price eventually. The oil companies won’t be satisfied with just a price leveling, so they’ll manufacture a slight boom by decreasing production more than is necessary.
This will occur off and on until fracking is done as it won’t produce massive amounts of oil for very long. We’ll then be back to expensive oil. Fortunately for environmentalists the U.S. is pretty much the only country benefitting heavily from this. The rest of the world sees a drop in their prices, but they’re nowhere near as significant as it is here.
Domestic oil prices are driving down revenues in Alaska where I’m visiting right now and causing a major panic in Juneau, the capital. They’re about to drop tax exemptions for the elderly, that is sales taxes and income taxes, to make up for this loss of revenue. In fact they’re now talking about prices bottoming out at $35, and then coming back up to $60 per barrel.
It’s amazing to think that Sarah Palin will probably go down in history as having made her most positive contribution to Alaska by raising taxes significantly on the oil industry. Ha!
Nope. In fact OPEC is being c-opted by domestic production. They can’t control the price of oil currently.
Yeah its terrible prices are so low! Actually this is a good thing. Not only does it mean gas is cheap, it means shipping is cheap, which means the price of everything decreases.
Will it last? A) Who cares, its cheap now. B) If it doesn’t, once it starts going back up, companies will see more profits and find another way to find oil or alternate energy sources. That’s what great about the free market. In fact that’s what happened- oil was expensive, so they could invest in fracking (which is quite safe), and that made it cheap.
It’s a bit of both actually. Saudi Arabia is increasing shipments to attempt to limit the growth of North American sources.
Added bonus: Large oil profits have helped fund some very mischievous governments such as those in Iran, Russia, Venezuela.
Alternative energy sources will be found… when they are more economical than fossil fuels. Oil prices eventually will go up again someday. They may have developed sooner if there was a real drive in the Alt-energy biz to make genuinely competitive energy sources.
As it stands now, the Alt energy business is about regulatory capture. Forcing high priced energy on markets, or collecting government subsidies. So real innovation to compete with existing oil supplies came from creating new ways of extracting fossil fuels.