This will obviously cause tremendous disruption, market volatility, geopolitical upheavals, collapse of entire industry sectors, and profound changes in society.   It will be one of the most massive instances of creative destruction in history. Since fossil fuels, starting with coal, have powered human endeavor for two centuries, there is no one alive who has experienced what is about to happen. This transition will therefore be hard for most people to comprehend.  It will be close to impossible for economists, pundits and anyone in the fossil fuel industries to fully understand and forecast what is occurring.  Momentous times like these only gain general understanding after they have occurred.

The signs are everywhere that this has already begun.  The collapse of the price of oil, which I forecast two years ago, with no resultant increase in demand is significant.  Supply is outstripping demand.  Excess oil is increasing every day as super tankers are now being utilized as storage and strategic reserves everywhere are over flowing.  This is not inexpensive.  If all oil extraction were to stop, there is at least a six-month global reserve already in storage. 

The last time anything like this occurred was the first two years of the Great Recession.  Then it was simply a rapid global economic contraction that caused demand to plummet.  The oil exporting countries cut supply and in a couple of years the price went back up.  In the eight years since then, a number of trends have dramatically changed the landscape.

First, the cost of renewable and alternative energy has dropped dramatically so that it costs the same price to use for electricity as fossil fuels. Second, energy efficiency has increased everywhere due to technology.  The cars we drive have much higher mpg numbers than a decade ago. Electric and hybrid cars are being sold in ever increasing numbers. More people are using public transportation and services such as Uber and Lyft, creating greater per capita decline in oil usage in the area of transportation.  Third, the acceptance that climate change is real and is caused by fossil fuels is now fully in the global consciousness.  This makes fossil fuel use a bad thing to move away from or to lower the amount used. Fourth, the Middle East has been totally disrupted and OPEC has completely lost its coordinated ability to dictate levels of output and thus pricing.

Currently oil-exporting countries are continuing to pump at high levels.  Saudi Arabia has committed to both maintaining market share and to drive out higher priced competitors.  There are only four countries -- Saudi Arabia, Iran, Iraq and Kuwait -- that can make a profit with oil at $30 a barrel. Saudi Arabia and Kuwait can make a profit at any price over $15 a barrel. This means that the longer the barrel price stays in the $30-40 range the competitors to these countries will be selling at a loss.  This will create economic and geo-political havoc for such countries as Russia, Nigeria Canada and Venezuela and of course the fracking industry in the U.S.  All of these entities produce between $50-70 per barrel.

Nigeria and Venezuela are already in economic and social meltdown.  The Russian economy is contracting and as open wells drop in output, the U.S. fracking industry will see continued bankruptcies.  The Canadian oils sands will never be fully utilized.  The easy money for fossil fuel extraction economies is over, at least for the next two years if not for good.  All of this will lead to great economic losses and increasing amounts of bad energy debt.  It is this, along with declining economic growth in China that will create significant drag on the global economy, cutting need for fossil fuels even more.

I believe that Saudi Arabia has accepted the inevitability of the end of the fossil fuel era in the decades ahead.  Why else would they float the idea of taking Aramco public at this time of low prices?  The other part of this long-term tactic is to successfully drive higher cost producers from the market.  Then toward the end of this decade when scarcity starts to kick again in the oil markets, much of the world will have largely started to wean itself from fossil fuels.  Saudi Arabia will control the price and the supply. 

When it becomes clear around 2020 that the fossil fuel era is indeed in full out decline, the large energy companies will face a completely new reality.  They will be perceived as short-term investments.  This means they will have to increase dividends, which will be hard, or to invest in the only energy sector experiencing double-digit growth; alternative and renewable energy.  They will use the scale and financial resources they still have to move deeply into new forms of energy.

It is now clearly documented that fossil fuels are causing Climate Change and are the single greatest cause of poor health and death for humanity and thousands of other species.  More people die from air pollution than all the cancers combined.  It is estimated that a person dies from a health problem related to air pollution every four seconds.

For the last ten years I have been saying that alternative and renewable energy represents the single greatest wealth opportunity in human history.  For the first time ever, a product that six billion people use -- fossil fuels -- will have to be replaced over the course of two to three decades.  The wealth creation will go beyond that as all kinds of businesses developed around alternative and renewable energy will be developed.  Electric cars, charging stations, battery and other storage technologies, the clearing of carbon from the atmosphere (atmospheric cleansing technology) will all create massive wealth and employment.

Currently there are approximately one trillion dollars of fossil fuel subsidies or clean up costs paid by governments around the world.  When reality and intelligence finally trumps in place of vested interests, simply moving that amount of money to subsidize 21st century energy will dramatically accelerate the continued decline in fossil fuel use.  Certainly there will be fossil fuels still used in 2050, but they will be about the same percentage of energy then that alternative and renewable energy sector is now.

These years, 2015-2017, are and will be looked back upon as the beginning of the end of the era of fossil fuels.  This is a truly historic moment in the history of energy.

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