With Energy Alternatives, a Major Transition Has Begun

This will obviously cause tremendous disruption market volatility geopolitical upheavals collapse of entire industry sectors and profound changes in societyamp160 amp160It 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 comprehendamp160 It will be close to impossible for economists pundits and anyone in the fossil fuel industries to fully understand and forecast what is occurringamp160 Momentous times like these only gain general understanding after they have occurredThe signs are everywhere that this has already begunamp160 The collapse of the price of oil which I forecast two years ago with no resultant increase in demand is significantamp160 Supply is outstripping demandamp160 Excess oil is increasing every day as super tankers are now being utilized as storage and strategic reserves everywhere are over flowingamp160 This is not inexpensiveamp160 If all oil extraction were to stop there is at least a sixmonth global reserve already in storageamp160The last time anything like this occurred was the first two years of the Great Recessionamp160 Then it was simply a rapid global economic contraction that caused demand to plummetamp160 The oil exporting countries cut supply and in a couple of years the price went back upamp160 In the eight years since then a number of trends have dramatically changed the landscapeFirst 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 technologyamp160 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 transportationamp160 Third the acceptance that climate change is real and is caused by fossil fuels is now fully in the global consciousnessamp160 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 pricingCurrently oilexporting countries are continuing to pump at high levelsamp160 Saudi Arabia has committed to both maintaining market share and to drive out higher priced competitorsamp160 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 3040 range the competitors to these countries will be selling at a lossamp160 This will create economic and geopolitical havoc for such countries as Russia Nigeria Canada and Venezuela and of course the fracking industry in the USamp160 All of these entities produce between 5070 per barrelNigeria and Venezuela are already in economic and social meltdownamp160 The Russian economy is contracting and as open wells drop in output the US fracking industry will see continued bankruptciesamp160 The Canadian oils sands will never be fully utilizedamp160 The easy money for fossil fuel extraction economies is over at least for the next two years if not for goodamp160 All of this will lead to great economic losses and increasing amounts of bad energy debtamp160 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 moreI believe that Saudi Arabia has accepted the inevitability of the end of the fossil fuel era in the decades aheadamp160 Why else would they float the idea of taking Aramco public at this time of low pricesamp160 The other part of this longterm tactic is to successfully drive higher cost producers from the marketamp160 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 fuelsamp160 Saudi Arabia will control the price and the supplyamp160When 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 realityamp160 They will be perceived as shortterm investmentsamp160 This means they will have to increase dividends which will be hard or to invest in the only energy sector experiencing doubledigit growth alternative and renewable energyamp160 They will use the scale and financial resources they still have to move deeply into new forms of energyIt 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 speciesamp160 More people die from air pollution than all the cancers combinedamp160 It is estimated that a person dies from a health problem related to air pollution every four secondsFor the last ten years I have been saying that alternative and renewable energy represents the single greatest wealth opportunity in human historyamp160 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 decadesamp160 The wealth creation will go beyond that as all kinds of businesses developed around alternative and renewable energy will be developedamp160 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 employmentCurrently there are approximately one trillion dollars of fossil fuel subsidies or clean up costs paid by governments around the worldamp160 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 useamp160 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 nowThese years 20152017 are and will be looked back upon as the beginning of the end of the era of fossil fuelsamp160 This is a truly historic moment in the history of energyThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillageMyersBizNet management or associated bloggers

Click to Make Your 2025 Contribution to Support the MediaVillage Education Foundation

With Energy Alternatives, a Major Transition Has Begun

Author

Publish date

Channel

David Houle

Empowering Women in Media: Insights from Industry Leaders (Video) - By E.B. Moss

More Videos:

Click to Make Your 2025 Contribution to Support the MediaVillage Education Foundation

With Energy Alternatives, a Major Transition Has Begun

Enjoying This Commentary? There's More to Love

David Houle

Empowering Women in Media: Insights from Industry Leaders (Video) - By E.B. Moss

The payment was successful

Cookies