This is a basic challenge to our attempts to get off fossil fuels. The only way for alternative energy sources to be viable is if they are cheaper than fossil fuel. But since fossil fuel supply outstrips demand, and prices have been set since the 1970s by cartel rather than market forces, there's always been the potential for the cartel to simply drop prices through the floor if they felt it would advance their interests.
That time is here.
But as Ghandi said, first they ignore you, then they laugh at you, then they fight you, then you win. They've gone from laughing at alternative energy to fighting it.
I don't think the article is saying that we should. In fact, it's talking about Saudi Arabia's efforts to move on themselves. They apparently even created a University with guards so that students and professors can exist w/o the typical religious expectations of their society.
Agreed. We don't and shouldn't follow. We should continue with developing currently existing and new technologies to loosen the worlds dependency on oil.
Haven't we been moving away from oil for at least 40 years, since the U.S. oil crisis in the 1970's? Carter put solar energy in the White House. Are we on the 100 plan to move away from oil?
Some people do try to move away where practical. But if you really look at everything you do in a day, petroleum products are everywhere. Even if you take electric-powered transportation (or walk/bike), and run your own solar panels for electricity, and grow all your own food using hand tools... you still probably use plastic somewhere in your life.
That's just as bad as oil, and in some cases worse.
This type of manufacturing process requires tremendous inputs of energy, particularly the forging of materials like steel, aluminum, glass and plastic. Interestingly, lightweight vehicles can sometimes be more energy-intensive to build than heavier cars because lighter metals like aluminum are harder to forge than stainless steel [source: Moon]. Experts estimate that 10 to 20 percent of a vehicle's total lifetime greenhouse gas emissions are released during the manufacturing stage alone
Unfortunately, both nickel-hydride batteries and the newer lithium-ion batteries rely on the mining of nickel, copper and so-called rare earth metals. The production of lithium-ion batteries account for 2 to 5 percent of total lifetime hybrid emissions and nickel-hydride batteries are responsible for higher sulfur oxide emissions, roughly 22 pounds (10 kilograms) per hybrid compared with 2.2 pounds (about 1 kilogram) for a conventional vehicle [sources: Samaras and Burnham et al].
"Demand destruction" is nonsense. There will always be demand for hydrocarbons. Oil and its distillates remain the only viable means of fueling most motor vehicles, Tesla's hype machine notwithstanding. Even if you could somehow find the trillions of dollars needed to electrify every railway in the world and the tens of trillions more to build enough lithium batteries to replace every auto on the world's roads with an electric one (assuming you didn't use that lithium for grid-tied residential storage instead), you would still have shipping, industrial processes, home heating, forklifts, barbecues, remote residential, mining, and forestry applications, trucking, job site, datacenter, and medical generators, legacy power plants, and countless other sources of demand for petroleum products. Plus some that probably don't even exist yet (many of which may well be carbon-neutral, unlike fuel applications). The notion that $150 oil's modest pinching of SUV drivers' wallets will magically make all of the above go away is lunacy.
This is great for all the shale and other high-cost producers, at least for those with patient investors. The Saudis are setting things up so that the folks with shale will be the last people with accessible oil. The sooner the shale producers shut down, the more oil they'll have available to sell later at prices vastly higher than any ever seen. Meanwhile, the Saudis will have pumped their fields dry at rock bottom prices, minimizing their total return. Economically speaking, this is the biggest gift to the US and Canada that the Saudis could possibly make. All that's left is for investors in shale to sit tight, or failing that to sell out to wiser ones at fire-sale prices. Keep careful watch on who buys up the leases from bankrupt shale producers over the next year or two; if they have the right attitude they will be worth a dozen fortunes a few decades down the road.
The Nissan Leaf demonstrates the real future of electric vehicles, not Tesla.
>The notion that $150 oil's modest pinching of SUV drivers' wallets will magically make all of the above go away is lunacy.
Running your car on electricity is already way cheaper than gasoline and has been for some time. The only thing needed to get most people to switch is a slightly cheaper and hardier battery. A more expensive electric car is often still cheaper in the long run.
The Saudis can see this, which is why they're worried, and that is the main reason why oil is so cheap right now and will remain so, possibly indefinitely.
Demand destruction does not mean what you think it means. It does not mean that people will magically stop wanting cars because petrol is expensive. Rather, it means that because petrol is expensive, 95% of the market will suck it up and pay whatever prices is at the pump, but the poorer and most vulnerable 5% will face a financial crisis (on the personal dimension) because they simply cannot do so. So, they end up loosing their cars, their jobs and a bunch of other side effects. It's all simple microeconomics, allocation of a scarce good goes to the higher bidders.
In the short term this mechanism makes prices to self correct. If they rise so much that people cannot afford petrol and there's petrol to be sold, the price will have to go down and find another point of equilibrium.
The problem is that markets are rarely linear processes, and there are inherent delays between causes and effects. So signals take a non negligible time to move through the markets, and in practice this causes instability. And if the delays takes long enough, a business or industry can and do erode its own customer base.
The diplomatic bond between the U.S. and Saudi Arabia is really something to ponder. Both nations are making bad deals to support a seemingly incoherent political policy.
Does a documentary or any in-depth information exist for the King Abdullah University of Science and Technology? I found the details of this university fascinating.
FTA:
Heavily armed guards on land and at sea protect the facility, where unveiled women study and work side by side with men, undisturbed by the religious police who patrol Saudi cities. Research there is aimed at scientific and commercial breakthroughs using those things Saudi Arabia has in abundance, such as sun, sand, and saltwater.
I recently attended a conference at KAUST. It's a microcosm, and a very interesting one. They have absolutely world class facilities for science. The campus amenities are very nice. Housing is provided, and is probably 2x what you would get yourself. The hotel room (if you can call it that) that I stayed in was a 1300 sq.ft. two bedroom, two bath. The campus is a designed town, so everything is walkable and there are lots of greenways. There is schooling for elementary through high school, though I was told there are very few high school aged kids. However, there were many elementary aged children, and they seemed to lead a free-er life than their US contemporaries. I suppose there is no need to be a helicopter parent when you are in such a community. They have two recreational facilities which rival large state schools facilities in size and rival large private schools in quality. They pay their grad students, postdocs, and faculty on about a 2-3x multiplier.
However, the campus is small, it's circumference is only ~5 miles, after a week, I was feeling content, but somewhat trapped. I feel it would be a very good place to do work for a few years, but life would be difficult to compare to a "normal" US lifestyle.
Seems that nobody is getting peak oil right. The rise of the North Dakota shale is the confirmation of that theory.
Also Saudi Arabia is doomed. The kingdom will be collateral damage in the poaching war (its not hot, its not cold) ... to hit russia, the US is doing its best to bring Iran back online. US is self sufficient so they don't fear supply crunch, Europe is moving fast with renewable energy ... and we have nice battery progress lately which is main roadblock.
The U.S. is not self sufficient at current production. The U.S. produces almost 9 million barrels a day and uses almost 19 million. The U.S. could be self sufficient but the permit restrictions on shallow water drilling as well as other political issues make self sufficiency a ways off. As far as Europe and renewables, I think the perception is far more positive than the reality. Windmills and solar provide a very small part of Europe's energy. Russian natural gas is by far the most important energy source. France has had good luck with nuclear but the anti-nuke crowd is rather robust, limiting expansion.
Interesting throughout. As I understand it, this policy is a tool for buying the Saudi ruling class time to reshape the society into somthing that is compatible with and competitive in the future, yet saudi-arabic.
Such Top-to-Bottom approaches are often loathed upon but I'd say good for them. Still, at some point the money spent on its citizens well-being will have to exceed the money spent on mistreating them. How many educated Saudis does it take to stand up for the whip-lashed ones?
Betting that transformation-process on the oil-market seems like a risky business to me.
I think this is the real underlying issue. SA is looking at all this oil inventory, and if their oil ends up going unsold, they lose money in the long run. This may end up being a clearance sale. My guess is that they'll try to seek a maximum price without reigniting the US shale insustry over the next year. That price might be $60/$70.
tl;dr: SA is lowering prizes not only to kill shale, but also to prolong the age of oil and buy time in order for the country to find other sources of income.
We should be pushing legislators to dump massive amounts of money into alternative energy and (anther issue that is grossly overlooked) alternative materials research and policy changes.
Even if we were able to sever the ties to oil for energy, it still does nothing for all the various products that are made from oil. I don't most people quite realize how much of basically everything around them is made primarily from oil based products. Heck, you even eat and drink oil based products.
Here is my brother's pet theory on why the price of oil fell.
Saudi Arabia wanted the USA to intervene against ISIS. The USA wanted the price of oil the fall to hamper Russia and Venezuela. Russia because they are getting aggressive and doing things in the Ukraine and Syria that we don't like. Venezuela because they are the center of anti-Americanism in South and Central America.
Which is exactly what happened. We bombed ISIS. The price of oil fell. Russia and Venezuela have been hurting.
There will likely never be proof whether this theory is correct. But leadership in both Venezuela and Russia have come out with the same theory. Articles like http://www.nytimes.com/2015/02/04/world/middleeast/saudi-ara... make it clear that the USA and Saudi Arabia are playing the geopolitical angle with Russia. And our current efforts to normalize relations with Cuba sure looks to me like an attempt to strip Venezuela's closest ally away from them.
No. The price has fallen as demand has waned, or at least did not match expectations as global GDP expectations fell.
Normally Saudi would reduce supply to keep the price up. But they've taken the opportunity to attack their biggest threat: US Shale oil. By keeping production up, the price has dropped and that is pushing shale oil extractors out of business: these guys need ~$60/barrel to be profitable. It's having a real impact - just look at the US High Yield sector. Firms are going bust, credit spreads are blowing wider and investment in the sector is dropping.
So when enough investment in Shale is killed off, the Saudis will reduce supply... jacking up the price and happy days for them.
I tend to think that there is some connection between the lack of production cuts from Saudi Arabia and ISIS/Russia politics, but it can also be the case that they can't afford to cut roughly 1/3 of their production.
So the good news is that their intentions seem to be to keep oil prices low for a prolonged period. Was wondering how long they'd keep prices at current levels. Should be a lot of carnage and opportunity for finding bargains once a lot of these over leveraged oil companies start defaulting.
This whole thing is silly. They have no choice but to pump and get as much revenue as they possibly can. They are starved for cash.
OPEC does not really set enforceable quotas and nobody in Saudi plans out oil prices. OPEC is about flying around to five star hotels and taking credit when the oil price is up.
[+] [-] beat|11 years ago|reply
That time is here.
But as Ghandi said, first they ignore you, then they laugh at you, then they fight you, then you win. They've gone from laughing at alternative energy to fighting it.
[+] [-] emodendroket|11 years ago|reply
[+] [-] danieltillett|11 years ago|reply
[+] [-] ams6110|11 years ago|reply
[+] [-] myared|11 years ago|reply
[+] [-] dmarg|11 years ago|reply
[+] [-] melling|11 years ago|reply
[+] [-] TomGullen|11 years ago|reply
[+] [-] codingdave|11 years ago|reply
[+] [-] at-fates-hands|11 years ago|reply
That's just as bad as oil, and in some cases worse.
This type of manufacturing process requires tremendous inputs of energy, particularly the forging of materials like steel, aluminum, glass and plastic. Interestingly, lightweight vehicles can sometimes be more energy-intensive to build than heavier cars because lighter metals like aluminum are harder to forge than stainless steel [source: Moon]. Experts estimate that 10 to 20 percent of a vehicle's total lifetime greenhouse gas emissions are released during the manufacturing stage alone
Unfortunately, both nickel-hydride batteries and the newer lithium-ion batteries rely on the mining of nickel, copper and so-called rare earth metals. The production of lithium-ion batteries account for 2 to 5 percent of total lifetime hybrid emissions and nickel-hydride batteries are responsible for higher sulfur oxide emissions, roughly 22 pounds (10 kilograms) per hybrid compared with 2.2 pounds (about 1 kilogram) for a conventional vehicle [sources: Samaras and Burnham et al].
source: http://science.howstuffworks.com/science-vs-myth/everyday-my...
[+] [-] fredkbloggs|11 years ago|reply
This is great for all the shale and other high-cost producers, at least for those with patient investors. The Saudis are setting things up so that the folks with shale will be the last people with accessible oil. The sooner the shale producers shut down, the more oil they'll have available to sell later at prices vastly higher than any ever seen. Meanwhile, the Saudis will have pumped their fields dry at rock bottom prices, minimizing their total return. Economically speaking, this is the biggest gift to the US and Canada that the Saudis could possibly make. All that's left is for investors in shale to sit tight, or failing that to sell out to wiser ones at fire-sale prices. Keep careful watch on who buys up the leases from bankrupt shale producers over the next year or two; if they have the right attitude they will be worth a dozen fortunes a few decades down the road.
Thanks, Naimi!
[+] [-] crdoconnor|11 years ago|reply
The Nissan Leaf demonstrates the real future of electric vehicles, not Tesla.
>The notion that $150 oil's modest pinching of SUV drivers' wallets will magically make all of the above go away is lunacy.
Running your car on electricity is already way cheaper than gasoline and has been for some time. The only thing needed to get most people to switch is a slightly cheaper and hardier battery. A more expensive electric car is often still cheaper in the long run.
The Saudis can see this, which is why they're worried, and that is the main reason why oil is so cheap right now and will remain so, possibly indefinitely.
[+] [-] crpatino|11 years ago|reply
In the short term this mechanism makes prices to self correct. If they rise so much that people cannot afford petrol and there's petrol to be sold, the price will have to go down and find another point of equilibrium.
The problem is that markets are rarely linear processes, and there are inherent delays between causes and effects. So signals take a non negligible time to move through the markets, and in practice this causes instability. And if the delays takes long enough, a business or industry can and do erode its own customer base.
[+] [-] Spooky23|11 years ago|reply
Should be interesting reading in a few decades.
[+] [-] josefresco|11 years ago|reply
FTA:
Heavily armed guards on land and at sea protect the facility, where unveiled women study and work side by side with men, undisturbed by the religious police who patrol Saudi cities. Research there is aimed at scientific and commercial breakthroughs using those things Saudi Arabia has in abundance, such as sun, sand, and saltwater.
[+] [-] jrock08|11 years ago|reply
However, the campus is small, it's circumference is only ~5 miles, after a week, I was feeling content, but somewhat trapped. I feel it would be a very good place to do work for a few years, but life would be difficult to compare to a "normal" US lifestyle.
[+] [-] seivan|11 years ago|reply
[+] [-] berkut|11 years ago|reply
[+] [-] unknown|11 years ago|reply
[deleted]
[+] [-] venomsnake|11 years ago|reply
Also Saudi Arabia is doomed. The kingdom will be collateral damage in the poaching war (its not hot, its not cold) ... to hit russia, the US is doing its best to bring Iran back online. US is self sufficient so they don't fear supply crunch, Europe is moving fast with renewable energy ... and we have nice battery progress lately which is main roadblock.
[+] [-] wcoenen|11 years ago|reply
The USA is a net importer of crude oil and petroleum products. At a level of 5 million barrels per day.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mt...
[+] [-] briandear|11 years ago|reply
[+] [-] bkeroack|11 years ago|reply
[+] [-] woodpanel|11 years ago|reply
Such Top-to-Bottom approaches are often loathed upon but I'd say good for them. Still, at some point the money spent on its citizens well-being will have to exceed the money spent on mistreating them. How many educated Saudis does it take to stand up for the whip-lashed ones?
Betting that transformation-process on the oil-market seems like a risky business to me.
[+] [-] crdoconnor|11 years ago|reply
http://www.nytimes.com/2009/10/14/business/energy-environmen...
[+] [-] altcognito|11 years ago|reply
[+] [-] tormeh|11 years ago|reply
[+] [-] wahsd|11 years ago|reply
Even if we were able to sever the ties to oil for energy, it still does nothing for all the various products that are made from oil. I don't most people quite realize how much of basically everything around them is made primarily from oil based products. Heck, you even eat and drink oil based products.
[+] [-] btilly|11 years ago|reply
Saudi Arabia wanted the USA to intervene against ISIS. The USA wanted the price of oil the fall to hamper Russia and Venezuela. Russia because they are getting aggressive and doing things in the Ukraine and Syria that we don't like. Venezuela because they are the center of anti-Americanism in South and Central America.
Which is exactly what happened. We bombed ISIS. The price of oil fell. Russia and Venezuela have been hurting.
There will likely never be proof whether this theory is correct. But leadership in both Venezuela and Russia have come out with the same theory. Articles like http://www.nytimes.com/2015/02/04/world/middleeast/saudi-ara... make it clear that the USA and Saudi Arabia are playing the geopolitical angle with Russia. And our current efforts to normalize relations with Cuba sure looks to me like an attempt to strip Venezuela's closest ally away from them.
[+] [-] retube|11 years ago|reply
Normally Saudi would reduce supply to keep the price up. But they've taken the opportunity to attack their biggest threat: US Shale oil. By keeping production up, the price has dropped and that is pushing shale oil extractors out of business: these guys need ~$60/barrel to be profitable. It's having a real impact - just look at the US High Yield sector. Firms are going bust, credit spreads are blowing wider and investment in the sector is dropping.
So when enough investment in Shale is killed off, the Saudis will reduce supply... jacking up the price and happy days for them.
[+] [-] maxerickson|11 years ago|reply
http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=50&p...
I tend to think that there is some connection between the lack of production cuts from Saudi Arabia and ISIS/Russia politics, but it can also be the case that they can't afford to cut roughly 1/3 of their production.
[+] [-] nailer|11 years ago|reply
http://www.independent.co.uk/voices/comment/iraq-crisis-how-...
[+] [-] mason240|11 years ago|reply
[+] [-] steamy|11 years ago|reply
[+] [-] IBM|11 years ago|reply
[+] [-] eternalban|11 years ago|reply
[+] [-] a8da6b0c91d|11 years ago|reply
OPEC does not really set enforceable quotas and nobody in Saudi plans out oil prices. OPEC is about flying around to five star hotels and taking credit when the oil price is up.
[+] [-] ddorian43|11 years ago|reply
Question: If your land/country is a desert, it's very costly to live there, right?
[+] [-] josefresco|11 years ago|reply
[+] [-] thinkmassive|11 years ago|reply
[+] [-] andyl|11 years ago|reply