6 thoughts on “PBS: How Will Plunging Oil Prices Affect the Economy?”
If people have more disposable income as a result, then they may install more solar more quickly and avoid a shock when the oil price inevitably rebounds.
An optimist may see the Saudi’s refusal to cut production as a cunning plan to shut down marginal dirty tarsands and shale oil before they get too established, and give renewables an extra leg up.
If they had any sense, the Saudi Arabia could also be the Saudi Arabia of solar energy, and make fuel from sunlight before their oil reserves run dry.
Now is a great opportunity to put a tax on crude oil, with the proceeds to pay for incentives increasing biofuel and green vehicle substitution into the transportation fleet. This creates a reinforcing cycle of falling oil demand, causing lower oil prices, with more tax revenues from the crude oil tax (tied to prices falling below the trend forecast), that in turn drives more green vehicle substitution.
I already provide a link in the comment section of the previous post, but here is the link again to a proposal to form a Green Vehicle Group that would fund substitution incentives. Part 2 covers the oil market and this proposal. The analysis includes a very detailed look at the problems in the oil market that cause customers to pay for very expensive fully loaded cost of transportation fuels, compared to an optimal cost.
Crude Oil Market and Related Markets – Summary and Conclusions
The “substitution for oil” example and preliminary analysis of green vehicle substitution leads to some extremely important conclusions:
1. The crude oil market, and the related transportation fuels market don’t serve customers and other stakeholders well.
2. Rapid deployment of green energy substitutes for oil results in much lower customer costs for crude oil purchases, addresses key national security concerns, improves the economy, and addresses environmental objectives and goals.
3. Existing crude oil producers and refiners exhibit predatory behavior and use a TTMAR business model; they engaged in efforts to restrict and stop substitution and stymie regulations to improve effective use of energy.
4. Vehicle manufacturers have used business plans that didn’t include the value created by the impact of green vehicles on crude oil prices.
5. Government regulations and subsidies won’t drive substitution and reduce oil demand quickly enough to provide the best outcome for customers. A better approach uses a regulated private sector group to fund substitution and reduce oil demand.
There are many good ideas in what you say. How does one make that happen? An example? Here is a utility that has really changed its tune drastically:
“Executives from E.ON, Germany’s biggest utility, announced plans today to leave the centralized power business in order to focus exclusively on distributed energy and “empowering customers.”
With EON, what it took was realizing what changes had happened around them and having a taste for survival. Somehow, it seems that the energy transition is inevitable, but we need to know what are the ways that hasten it. Its a bit like a growing plant. If we do the right things, its growth is strong.
Christopher Arcus: “… what it took was realizing what changes had happened around them and having a taste for survival. Somehow, it seems that the energy transition is inevitable, but we need to know what are the ways that hasten it. Its a bit like a growing plant. If we do the right things, its growth is strong.”
YES! My analysis of changing the American energy markets found this true. And the changes can be adopted and adapted globally.
I built an economic case using the assumption of rapidly declining fossil fuel use, caused by implementing green vehicle substitution, subsidizing green power deployment, and funding major efforts to improve energy effectiveness. The result of a rapid green energy transition: energy costs decline from 8.5% of GDP to approximately 4% in 25 years, with much of the decline coming in the first eight years due to collapsing global oil prices.
The inevitable transition to green energy sources and more effective energy systems will happen, and companies need to position themselves appropriately. My analysis found that many oil companies, particularly refiners, will go bankrupt if they continue to follow their existing “take the money and run” TTMAR business plans.
Because oil prices at $70 per barrel aren’t low; the price greatly exceeds the optimal price for customers. The price of oil wouldn’t have risen above $40, if the major vehicle fleet countries/regions had understood the oil market and funded green vehicles and biofuels substitution. Customers are still overpaying for an inferior product with high fully loaded long term costs.
If people have more disposable income as a result, then they may install more solar more quickly and avoid a shock when the oil price inevitably rebounds.
An optimist may see the Saudi’s refusal to cut production as a cunning plan to shut down marginal dirty tarsands and shale oil before they get too established, and give renewables an extra leg up.
If they had any sense, the Saudi Arabia could also be the Saudi Arabia of solar energy, and make fuel from sunlight before their oil reserves run dry.
Now is a great opportunity to put a tax on crude oil, with the proceeds to pay for incentives increasing biofuel and green vehicle substitution into the transportation fleet. This creates a reinforcing cycle of falling oil demand, causing lower oil prices, with more tax revenues from the crude oil tax (tied to prices falling below the trend forecast), that in turn drives more green vehicle substitution.
I already provide a link in the comment section of the previous post, but here is the link again to a proposal to form a Green Vehicle Group that would fund substitution incentives. Part 2 covers the oil market and this proposal. The analysis includes a very detailed look at the problems in the oil market that cause customers to pay for very expensive fully loaded cost of transportation fuels, compared to an optimal cost.
https://drive.google.com/folderview?id=0B6HOZyGCkCB9YTVLYWZST1ZKTm8&usp=sharing
I have clipped the final general conclusions:
Crude Oil Market and Related Markets – Summary and Conclusions
The “substitution for oil” example and preliminary analysis of green vehicle substitution leads to some extremely important conclusions:
1. The crude oil market, and the related transportation fuels market don’t serve customers and other stakeholders well.
2. Rapid deployment of green energy substitutes for oil results in much lower customer costs for crude oil purchases, addresses key national security concerns, improves the economy, and addresses environmental objectives and goals.
3. Existing crude oil producers and refiners exhibit predatory behavior and use a TTMAR business model; they engaged in efforts to restrict and stop substitution and stymie regulations to improve effective use of energy.
4. Vehicle manufacturers have used business plans that didn’t include the value created by the impact of green vehicles on crude oil prices.
5. Government regulations and subsidies won’t drive substitution and reduce oil demand quickly enough to provide the best outcome for customers. A better approach uses a regulated private sector group to fund substitution and reduce oil demand.
There are many good ideas in what you say. How does one make that happen? An example? Here is a utility that has really changed its tune drastically:
“Executives from E.ON, Germany’s biggest utility, announced plans today to leave the centralized power business in order to focus exclusively on distributed energy and “empowering customers.”
http://www.greentechmedia.com/articles/read/Germanys-Biggest-Utility-Is-Divesting-From-Centralized-Power
Is Jeremy Rifkin’s global commons idea becoming recognized by the old school?
https://www.youtube.com/watch?v=c-NA9gM49qU
With EON, what it took was realizing what changes had happened around them and having a taste for survival. Somehow, it seems that the energy transition is inevitable, but we need to know what are the ways that hasten it. Its a bit like a growing plant. If we do the right things, its growth is strong.
Christopher Arcus: “… what it took was realizing what changes had happened around them and having a taste for survival. Somehow, it seems that the energy transition is inevitable, but we need to know what are the ways that hasten it. Its a bit like a growing plant. If we do the right things, its growth is strong.”
YES! My analysis of changing the American energy markets found this true. And the changes can be adopted and adapted globally.
I built an economic case using the assumption of rapidly declining fossil fuel use, caused by implementing green vehicle substitution, subsidizing green power deployment, and funding major efforts to improve energy effectiveness. The result of a rapid green energy transition: energy costs decline from 8.5% of GDP to approximately 4% in 25 years, with much of the decline coming in the first eight years due to collapsing global oil prices.
The inevitable transition to green energy sources and more effective energy systems will happen, and companies need to position themselves appropriately. My analysis found that many oil companies, particularly refiners, will go bankrupt if they continue to follow their existing “take the money and run” TTMAR business plans.
Why not let people enjoy the obvious benefit of lower energy prices??
Because oil prices at $70 per barrel aren’t low; the price greatly exceeds the optimal price for customers. The price of oil wouldn’t have risen above $40, if the major vehicle fleet countries/regions had understood the oil market and funded green vehicles and biofuels substitution. Customers are still overpaying for an inferior product with high fully loaded long term costs.