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Why We Have To Kiss Off Big Carbon Now
mdsolar writes When the fossil-fuel divestment movement first stirred on college campuses three years ago, you could almost hear Big Oil and Wall Street laughing. Crude prices were flirting with $100 a barrel, and domestic oil production, from Texas to North Dakota, was in the midst of a historic boom. But the quixotic campus campaign suddenly has the smell of smart money.
One of the biggest names in the history of Big Oil – the Rockefellers – announced last September that they would be purging the portfolio of the Rockefeller Brothers Fund of 'risky' oil investments. And that risk has been underscored by the sudden collapse of the oil market. After cresting at more than $107 in mid-June, the price of a barrel of West Texas Intermediate dipped below $50 a barrel in early January. The crash carries big costs: Goldman Sachs warned that nearly $1 trillion in planned oil-field investments would be unprofitable – even if oil were to stabilize at $70 per barrel.
One of the biggest names in the history of Big Oil – the Rockefellers – announced last September that they would be purging the portfolio of the Rockefeller Brothers Fund of 'risky' oil investments. And that risk has been underscored by the sudden collapse of the oil market. After cresting at more than $107 in mid-June, the price of a barrel of West Texas Intermediate dipped below $50 a barrel in early January. The crash carries big costs: Goldman Sachs warned that nearly $1 trillion in planned oil-field investments would be unprofitable – even if oil were to stabilize at $70 per barrel.
Some of us are doing quite a lot ourselves, actually. Starting a couple years ago I actually started refusing to commute to do work that can be done just as well over the internet. Sure, it meant turning down some jobs, but it also cut my total miles driven per year (at low speed in stop-and-go traffic no less) by thousands, and my total gasoline consumption by a factor of over 90%, and though I didn't plant a tree (I don't own any land to plant it on), I did plant an herb garden on my balcony.
I am not a greenie and I don't tell others what they should or should not do but...
I don't consider myself a "greenie" either honestly, but I'd be remiss if I didn't point out that you totally just did tell us all what we should and should not do. I'm not disagreeing with what you're saying we should and should not do either, I'm just saying you did tell us exactly that, and you're not the only one doing it. There are lots of us, and the numbers are quietly growing. The telecommuting revolution is long overdue.
I would tell people to enjoy the oil drop while it lasts. This may be long gone by Memorial Day. Why? A few reasons:
1: China is a very thirsty nation. They are also extremely rich and about to embark on infrastructure improvements that make the US's highway structure look like building a McDonalds. So, the demand for oil will be from them. Yes, US demand is in the 1990s levels... but with China guzzling the oil barrels, total demand is a lot higher.
2: Venezuela leaders and others are in Russia today. People forgot about 1972 and 1973 and the US oil embargo, which destroyed the economy until the 1980s. This can easily happen again. OPEC tends to get the prices it wants, and even though fracking might have increased supply, most of the wells done this way are depleted or near depletion, so the "golden" era of this is ending, especially with states like New York banning it wholesale. So, supply will go back down, and OPEC will ensure it stays down.
3: China is building their own canal across the Americas. This way, they can get their oil from Venezuela a lot more easily, completely bypassing any influence from the US.
4: Congress changed. Already, the solar subsidies are on the chopping block, and in January 2017, it won't be a surprise when the next President yanks the solar panels off the White House. Big Oil is now firmly in control of the US again.
5: The Keystone XL pipeline and a repealing of the ban on selling US oil overseas are pretty much guaranteed to happen. This means that any US oil will be trading at world prices.
6: As always, we are always one incident from price spikes. Should someone have a heart attack at a refinery, prices for crude will be back in the triple digits.
7: Alternative energy has grown, but most people's cars are still fueled by gasoline or diesel. If we had more electric cars, they effectively run on solar, wind, coal, nuclear, geothermal, hydro, or many sources. However, internal combustion engined vehicles require fossil fuel to run, and barring a major battery development, will continue to do so.
To, tl;dr... it is nice to have gas prices as low as they are, but they are going to be back to what they were in 2008, if not to $5-$6 a gallon by the summer. Oil prices are controlled by supply and demand, and demand is high due to a thirsty China, and supply is easily removed from the market.
In 2000, Sheikh Yamani, former oil minister of Saudi Arabia, gave an interview in which he said:
"Thirty years from now there will be a huge amount of oil - and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil." - http://www.nasdaq.com/article/...
in a world where a producer sees the end of its market on the horizon, then every barrel sold at a profit is more valuable than a barrel that will never be sold. Current Saudi oil minister Ali al-Naimi had this to say about production cuts in late December: "it is not in the interest of OPEC to cut their production whatever the price is," adding that even if prices fell to $20 "it is irrelevant." Implied, if not explicitly stated, is that Saudi Arabia wants its oil out of the ground, regardless of how thin its profit margin per barrel becomes. - http://www.nasdaq.com/article/...