Energy after oil

As slumping oil prices spread political and economic uncertainty through many parts of the world it is becoming clear that a sudden abundance of cheap oil could offer governments opportunities for long-delayed reforms once they have weathered their current short-term crises. Some oil-dependent countries face immediate economic peril, however, and there are already signs of panic. In Canada, for instance, the halving of the oil price has wiped Cdn$$7 billion from the projected income of the province of Alberta, and it has forced the federal government to delay its budget as it takes stock of the likely shortfall in its own finances.

The shocks are most noticeable in countries that have failed to diversify their economies, and several are uncomfortably close to collapse. Faced with the likelihood that Venezuela would default on its foreign debt — as it simultaneously grapples with food shortages, rapid inflation and the collapse of its petroleum profits — President Maduro was clearly relieved to obtain Beijing’s US$20 billion aid package earlier this week, even though it is likely to prove little more than a temporary reprieve. Significantly, China (which has already given Venezuela US$50 billion in similar agreements since 2007) described the latest loan as a means of buttressing Venezuela’s efforts to “adjust its economic structure and build a production-oriented economic model” — a less than subtle hint that Beijing’s largesse may be less forthcoming in the future.

Amidst the uncertainty, many governments have a rare opportunity to reconfigure their economies, eliminating costly subsidies to fossil fuel sources of energy and supplying overdue incentives for green technologies. As it happens, while oil prices are plummeting so is the cost of several key green technologies. Thanks to annual global investments of more than US$250 billion during the last five years, many of these technologies are also significantly more efficient than their predecessors. But while political support for green energy remains strong, lower oil prices threaten to undermine plans for continued investment in renewable energy, despite its considerable long-term promise.

Electric cars are a good example of the dilemma that cheap oil creates. Currently they represent less than one per cent of the cars on America’s roads. Bloomberg analysts expected this to reach nearly 10 per cent during the next five years, but with current oil prices the projection falls to just 6 per cent. Tesla motors, one of the pioneering manufacturers of electric cars, recently watched its share price wobble after analysts concluded that cheap oil would probably constrain the mass appeal of electric cars and constrain the company’s short-term growth.

In addition to supporting newer technologies, governments have the opportunity to eliminate costly subsidies for fossil fuels — the Economist estimates that in 2014 governments spent US$550 billion on these. Not only do these encourage the overuse of ‘dirty’ energy, they also prevent governments from taxing carbon emissions at appropriate levels. Cheap oil prices create the ideal conditions for widespread carbon taxes that nudge consumers towards cleaner energies, or at least towards less exorbitant use of fossil fuels.

The petroleum industry recognizes how volatile its future has become, even if many governments don’t. Some of its best-known firms, despite a decade of obscene profits, have suddenly become vulnerable to takeovers. British Petroleum, for example, which not too long ago was forecasting robust growth, based on estimates of oil prices of $100, is now rumoured to be in the crosshairs of a takeover bid by Chevron, Exxon Mobil or Shell. Yet despite this uncertainty, there is still significant political pressure within the United States for the Obama administration to authorize the construction of the Keystone XL pipeline. Meanwhile projects like the ambitious US$6 billion scheme to link national power grids in the UK and Iceland — expensive in the short-term but likely to produce huge savings in the future — remain far less well-known and politically viable.

Cheap oil has altered the economic outlook for governments across the globe and it offers a rare chance for them to invest in a green future. Their success in doing so will depend largely on their willingness to forgo the easy exploitation of cheap and ‘dirty’ energy while supporting renewable technologies that may cost more to build but produce long-term savings and reduce our impact on the environment. Ultimately such a shift will require coordinated planning and a commitment across the political spectrum to avoid the now well-documented political and economic miscalculations of our collective dependence on fossil fuels.

It does not matter what form of energy is used. As long as big corporations own and control it, the price of the commodity will be manipulated to profit a few. First they blamed the high price of oil for the sluggish economy and now they blame the low price of oil for the sluggish economy.

The whole globe is now trying to unhitch from the US Reserve Currency. The US/Euro Capitalist focus is to retain the declining US Super Power status with the rise of China. Since 1945, the US had controlled the Global financial system using Bretton Wood Agreement and the creation of CIA. Although, certain aspects of Bretton Wood like the US dollar backed by gold no longer exist; The IMF a creature of Bretton exist today. This institution including the World Bank among others permitted the US to virtually manage the global economy. However, contrary to some, the US economy is now behind China. It is in deep debt and hoping against hope it can creep out. The tools used to accomplish this task is among other things 'manipulate the international system by increasing its hegemonic control so as to sustain the Unipolar world.
In this process, many developing nations like SCO, MERCUSOR, ALBA, BRICS are resisting the US and its European allies. Seemingly, Europe is on the threshold of fracturing. There are many who agree that the falling price of oil is not because of Supply and Demand, but it is artificial. See William Engdahl article " Perhaps 60% of Today's Oil Price is Pure Speculation". But, to put a handle on the bigger game at play, read, Dr. Paul Craig Roberts article " Ruin is America's future". In final para. Dr. Roberts said, ' The greed for hegemonic power has made Washington the most corrupt government on earth.

hah hah har!  :-[ :-[ :-[

an observant man is a smart man

in reality low oil prices is better for every one.  but why have they forced high prices down ::confused::

the chief excuse from the start was to attack Russia by killing its major source of revenue.  but that wont kill the Russian economy.  indeed its the best medicine for Russia that they have been ignoring for too long themselves..the total build up of their own industry to meet internal consumption.  they have speeded that project up now.

then again Russia has to much gold..apart from being the worlds largest producer of gold. also Russia can end speculation of its currency at any time they decide to..if they decide to.  Russia also has a massive surplus of US dollars they can dump anytime and screw america..kill the USD absolutely. so why did Russia to retaliate to the falling oil prices engineered by the USA/ZION/SAUDIS?

prolly because it is not an attack on Russia but american attempt to create room for an expected inflationary boom, from the printing of too many dollars.

I am only speculating here and I cant yet explain the way and why, in which I came to that conclusion.  but very low oil price may put a margin of cash back into peoples pockets they can tax away to keep the economy rolling  without printing more dollars with threats of looming massive inflation.  they are creating a margin that now goes for oil from the pockets of the people, to siphon into their coffers to keep the system afloat

something like that I think is behind the fall in oil prices.  Saudi takes the hit but they can make up for that later.  America enemies also takes major hit but at the same time gain freedom ground and move into BRICS and other cover.  third world countries benefit and loose too depending.  but all win with lower prices for everything..save the people from whom the savings will be taxed away

its like when I bought my first house in Canada....Ontario.  I wanted a screen door but it was a lil high.  then the government cut a tax that made it cheaper but that is not what happened.  the door companies raised the price to the extent of the tax cut. in other words the government gave the companies a tax cut  indirectly.

I think its something like that happening here but on a massive and more detail rich intricate level.  but its cutting around to free up margins they can get their hands onto, with out risking more dangerous manipulations of their economy

that is the way I am thinking now.  never believe the reasons for anything in the media.  it was not to attack Russia as such, the single reason for the falling price of oil.  Russia would retaliate were  that the case.  Russia has not retaliated but gone on about its business because  Russia cannot be hurt fundamentally by falling oil prices

but the west must have known all that.  they dont need me to tell them

Cheap oil is a double-edged sword for diversified economies: On one hand, investment drops in the oil and gas sector, hurting jobs and the stock market; on the other hand, consumers and companies that use a lot of hydrocarbons see their costs go down. In the U.S. and in Europe, the two effects will probably cancel each other out -- as they have in the past.

well keep forgetting apparently that this is all a central bank debt based privatized currency scheme, a structure that ends up with the people in debt slavery, destroyed economy and environment, corrupt society...that it is a con, a skullduggery, was constructed to bleed the population... that it is not a real economy and that all that is necessary to end it  is to stop it, literally by shutting down all the banks, arresting all the bankers and financial speculators for big time fraud, try them and put them in jail forever.

then eliminate debt as a factor of government spending while setting non usury and permanent rates for lending money in the economy.  the privatizing of he currency must be written in stone...no way at ll for it to be changed from the peoples currency to be controlled by private central bank and loaned to the government at interest

that is the problem right there...BANKING.  toss them and their banking.  absolutely unnecessary in an economy..Banks/banking

no double edge...  investment balances out relative to need when prices are real..according to the labour involved, or required to produce units of oil...units of everything  produced.  if there is no need to invest then no investment....the sector is fine then, working out..at the moment no more investment needed.  jobs in the sector are relevant to its size and need. 
and phuck the stock market..unnecessary, an inflationary factor of great greed and corruption.  let it die for phuck sakes

hydrocarbons underpins any economy basing all that is done in the economy, in/on it.  if prices are low, based on labour/energy costs in productive activity then balance, or stable and low prices for everything can be achieved for along time. if you allow a stock market to play the arse  in there, then there will be constant inflation, price volatility, bacchanal, price fixing and robbery.... and financial crisis all the time

I have a suspicion that maybe it's Wall Street manipulation which is largely responsible for the collapse in oil prices. If my suspicion is correct, it would indicate yet another transfer of wealth from consumers to Wall Street, not the other way around.
Consumers benefit from lower gas prices, cheaper made-from-oil goods (or at least less upward price pressure on such goods), and so on. But, to the extent many of those consumers also have retirement plans with some of their investments in oil-related securities, they lose.
I have no firm data on which to base this notion. I have read some books in the past related to securities (and commodities) price manipulation. I'm also sympathetic to the idea that people dealing daily with large sums of money do not gamble them on "fundamentals" or "the news". They arrange things so that their customers lose. They are, in effect, the House, and the House doesn't lose.
If Wall Street squeals for intervention to stop the falling prices, it will not be to limit the damage done to their profits. It will be to ice their rich cakes with even more profits as they will have accumulated all the oil futures and just want a little government help to drive the prices up.

USA shale is quadruple the price of Saudi drills !

Russia extraction to refinery is expensive also.

This is a political game intended to be punitive with russia.

but will backfire on the USA .

Thats the only double edge sword I can imagine