What if Saudi is rushing to sell oil before it's worthless?
Last edited Sun Apr 3, 2016, 03:37 PM - Edit history (1)
Possible explanations for Saudis high production that's driving down prices haven't quite made sense.
If they were doing it to help US foreign policy squeeze oil rich countries like Russia and Venezuela that aren't following our orders, that is a pretty big hit to take for the team, given that they have a finite amount of oil.
Putting tar sands and shale oil out of business also doesn't quite make sense for the same reason.
Slowing demand would be a good reason to cut or at least not ramp up production until demand increases.
But what if they realize they are selling whale oil for lanterns when everyone is about to switch to kerosene? Or more on point, they are selling gaslights when everyone else is about to buy their first lightbulb?
Then slowly doling out your product to maximize profits would make no sense. You would want to get whatever you could for it before it's worthless.
That makes more sense than other explanations, and it couldn't happen to a more deserving, medieval, terrorist-supporting royal family.
Heres a simpler hypothesis: Maybe the
Saudis arent cutting production in the face of low prices because huge portions of their oil reserves might eventually become worthless. Thats what James Rowe, an environmental studies professor at the University of Victoria, thinks.
If that happens, todays oil prices wont look low not when theres an overabundance of an asset that cant be sold. But oil prices are the lowest theyve been in 12 years, you say. How could they ever be considered high?
This explanation relies on two related ideas: a carbon bubble and stranded assets. The carbon bubble refers to the fact that energy companies around the world are sitting on five times more fossil fuels than can be burned, the research nonprofit Carbon Tracker estimates. Those assets, worth about $2 trillion, are referred to as stranded assets.
So what does that mean for an oil company that controls a state? It might as well sell as much oil as possible while still can.
http://m.huffpost.com/us/entry/56d868f4e4b0000de4039231
MADem
(135,425 posts)Cheap oil has, to some extent, mitigated the asinine prices of electricity in some areas.
Unrelated to the content of this discussion--is it me or is the formatting "off" on this thread for some reason?
yurbud
(39,405 posts)MADem
(135,425 posts)yurbud
(39,405 posts)Thanks for the head's up.
MADem
(135,425 posts)in.
It makes utter sense to me! Get it while it's hot!
bemildred
(90,061 posts)CentralMass
(15,265 posts)might be an attempt to dampen the politics al will to dampen investment.
yurbud
(39,405 posts)Even people who don't give a rat's ass about the environment know in the back of their heads prices could pop back up at any time.
CanadaexPat
(496 posts)regime change is done.
yurbud
(39,405 posts)CanadaexPat
(496 posts)Oil doesn't go bad.
yurbud
(39,405 posts)there's a price point for everyone that will make them think more seriously about electric cars or other alternatives to oil, and the Saudis probably know that better than anyone else.
yurbud
(39,405 posts)since it is not in their interests to sell oil cheap.
MADem
(135,425 posts)Perfect for energy farms.
yurbud
(39,405 posts)but nothing like petrodollars.
On the other hand, if they got creative and used that solar resources to power water desalinization, carbon sequestration, or something of the sort, they could still do pretty well for themselves.
MADem
(135,425 posts)judiciously in companies that will give them a good return over the long haul.
I do think if we could ever get to the point where desalinization is done well and is sufficiently cheap, they might consider being a regional bread basket. They've got the weather for it--in fact, they'd probably have to use pergolas to reduce the amount of sunshine their crops get--but they could do it if they wanted to!
yurbud
(39,405 posts)that's probably why they haven't done it already.
The overhead costs and technical requirements of finding and drilling oil means that if it gets to expensive, you or I won't go in our back yard and drill for oil.
But if solar power, or water purified by solar power, becomes too expensive, we could do it ourselves.
And that is why the rich hate alternative energy in general.
MADem
(135,425 posts)"Fast dimes are better than slow dollars." Maybe KSA--and others--will come to that conclusion, too. Rather than try for exclusivity, go for giving the people what they want at a price they can afford. They could become a part of the solution, and use all of that cheap sunlight to establish a manufacturing base to make, I dunno... cheap solar panels, or something?
Heck, if they have robots running the joint, better still, from their POV--they won't talk back! Or demand a raise! Or need a lot of air conditioning, sick days, etc.
Response to yurbud (Original post)
Mudcat This message was self-deleted by its author.
Fast Walker 52
(7,723 posts)I'm sure there are geo-political games at work too.
yurbud
(39,405 posts)open source, broadly based alternatives that can't be monopolized.
At first, I thought the mad scramble for oil and privatization of the Bush regime had something to do with Peak Oil and controlling the world's remaining oil supply.
Now I'm more certain the very wealthy saw the revolution coming well before we did after the internet democratized information. If they could not control our access to news and opinions from other countries or even share the exchange of information between each other, we could see not only that they were lying and withholding from us, but that we don't need them.
The same thing will happen with energy, and probably eventually with other things like food, and somewhere along the line, politics.
They can slow it down in places, but they can't stop it because it isn't one person and it isn't even an ideology, it's the natural flow of history.
NickB79
(19,233 posts)When in reality, there is not, unfortunately. Electric cars, despite the stellar performance of companies like Tesla, are decades in the future before they replace a sizeable fraction of ICE vehicles currently in use in the US, not to mention globally. The demand for personal automobiles is booming in countries like China and India, and the vast majority of those autos hitting the road will be powered by gasoline or diesel for the foreseeable future.
So, while the leading climate scientists are telling us we can't burn all that fossil fuel if we want to leave the planet habitable for future generations, the average person anywhere on Earth is still dependent upon engines powered by oil to keep their standard of living what it is on a day-to-day basis.
And when long-term pushes up against short-term, we all know who usually wins.
Stranded assets due to carbon budget constraints won't become an issue until the pain from climate change becomes so much that nations around the planet wise up and actually take serious measures to change all facets of our society's energy use, not just nibble around the edges as we've been doing so far. And unfortunately, it looks like that day is not here yet
yurbud
(39,405 posts)But in terms of supplying electricity to the grid with renewables, over 50 countries get 50% or more of their energy from renewables, 15 get more than 90% of their energy from clean sources.