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Earth Businesses Government The Almighty Buck Technology

Why We Have To Kiss Off Big Carbon Now 441

mdsolar writes When the fossil-fuel divestment movement first stirred on college campuses three years ago, you could almost hear Big Oil and Wall Street laughing. Crude prices were flirting with $100 a barrel, and domestic oil production, from Texas to North Dakota, was in the midst of a historic boom. But the quixotic campus campaign suddenly has the smell of smart money.

One of the biggest names in the history of Big Oil – the Rockefellers – announced last September that they would be purging the portfolio of the Rockefeller Brothers Fund of 'risky' oil investments. And that risk has been underscored by the sudden collapse of the oil market. After cresting at more than $107 in mid-June, the price of a barrel of West Texas Intermediate dipped below $50 a barrel in early January. The crash carries big costs: Goldman Sachs warned that nearly $1 trillion in planned oil-field investments would be unprofitable – even if oil were to stabilize at $70 per barrel.
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Why We Have To Kiss Off Big Carbon Now

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  • only an idiot thinks prices will stay this low.
    seriously, this happened in 2008 as well.

    • Solar and wind weren't this far along in 2008.
    • by LQ ( 188043 )

      only an idiot thinks prices will stay this low. seriously, this happened in 2008 as well.

      Just until the Saudis decide they've screwed the Iranians enough and cut their production again. This dip is entirely political and nothing to do with long term trends in energy supply and demand.

      • The increased yearly capacity in US oil production since Bush's second term is, itself, bigger than the yearly capacity of all OPEC countries combined. The Keystone XL pipeline will vastly scale that up, dwarfing OPEC; but Keystone is now questionable, since oil needs to cost at least $80-$90/barrel for it to be profitable.
  • by Anonymous Coward on Thursday January 15, 2015 @08:40PM (#48825675)
    ...and put all my money into bitcoin! Oh wait...
  • by Anonymous Coward on Thursday January 15, 2015 @08:41PM (#48825683)

    And here's the problem with free market capitalism. Now we have abandoned wellsites that nobody wants to cleanup, unemployed oil workers & related fields, and bankrupt communities that were struggling to build infrastructure during the boom now have empty roads & schools. Give it 10-15 years and we'll start the cycle all over again. This carries across to other markets, we've seen it before with the steel belt turning into the rust belt.

    Yes, the free market fixes it, but not until the damage is done. You end up with an economic system where capital is rushing from one end to other at the expense of labor. It's like some new era of hunter/gathering nomads; you have people following the buffalo around.

  • How quaint. (Score:5, Insightful)

    by Anonymous Coward on Thursday January 15, 2015 @08:44PM (#48825721)

    Greed breeds myopia. Always has. Did people investing heavily in oil really think it would either keep going up, or sustain at the price peaks it was at for years? At those prices, it's all but strangling the economy. It started to actually effect just how much people drove!

    And there's the problem. Oil is still king of the economy. From home energy, to the dinner table. Oil is still king. I think a good many investors forgot who just has the real power in the world. Guess the Saudis thought they should remind them.

    The frustrating thing with this though, is that we still won't see the prices drop at the grocery or market, even though it's cheaper to ship goods and produce. Why pass savings onto the consumer, when you can pad the profit margin for the quarter, and stock-holders. I think a lot of people forget that, milk, bread, fruit, etc... should all be a little cheaper at the moment. It won't be.

    • The trickle down of savings for the shipment of goods to your local store may take a moment, but they will come. The grocery market is fairly competitive.

      And how about that gasoline? $1.91 a gallon at this morning's fill up! That's going to help a lot of folks instantly.

      • Shipping costs are typically about 1% of the cost of finished goods.

        Granting they may be a bigger % of some of the inputs, the total isn't going to be huge.

        Same discussion comes up whenever truckers claim they are running the economy. Even if everything went to higher cost modes it wouldn't amount to much.

    • The frustrating thing with this though, is that we still won't see the prices drop at the grocery or market, even though it's cheaper to ship goods and produce.

      Shipping is only a small percentage of the cost of a product. It costs more in gas for you to pick up a toothbrush at Safeway than to ship the toothbrush from China to Safeway.

    • by fyngyrz ( 762201 )

      And there's the problem. Oil is still king of the economy.

      You put your finger right on it. And re TFS, no one's going to be "kissing off big carbon" until they get smart enough to "kiss on big nuclear" or a local energy storage technology comes along that doesn't present the critical downsides of batteries.

      I wouldn't advise holding your breath. The number of people who have asserted informed positions about nuclear power is miniscule, big-picture-wise, and ultracaps, the one hope we seemed to have for a wh

  • by lorinc ( 2470890 ) on Thursday January 15, 2015 @08:45PM (#48825725) Homepage Journal

    In the long run, it will fade away because most of the grouwth has already been consumed. That being said, trade is chaotic in nature, and short term prediction is difficult ("especially when it's about the future"), but in the long run, the trend is well known.

    Sometimes, I like to think that the "Limits to growth" report will be regarded in some distant future as our epoch's Eratosthenes calculations.

  • by rmdingler ( 1955220 ) on Thursday January 15, 2015 @08:47PM (#48825733) Journal
    The drilling of wells from what has come to be known as shale oil will trickle to a halt as operators cannot make hole in profitable fashion at $40 to $50 per barrel of crude. Fracturing, the necessary evil to produce in tight oil formations, makes the recovery significantly more expensive than traditional vertical wells. All the easy to get oil has been largely exploited in the U.S. and other older oil fields.

    The many thousands of wells that are/were planned for completion will simply be postponed until the market responds more favorably, but don't kid yourself, they will become feasible again at some point.

    Lower energy costs will fuel the self same economic recovery that will drive World prices back into the realm of profitability.

  • by TrollstonButterbeans ( 2914995 ) on Thursday January 15, 2015 @08:47PM (#48825741)
    1) By definition, there is a finite supply of non-renewable energy.
    2) And we use tons of it.
    3) And for the good of humanity you want the price to be HIGH

    Reasons you want the price to be high for fossil fuels:

    1) Conversation of the resource. Airplanes must use fossil fuels the way they are designed now. Cars = no. You can have electric cars.
    2) When the price of fossil fuels is low, they get wasted. Your neighbor who drives alone and isn't a farmer buying a huge truck is NOT how non-renewable energy should be used.
    3) Complacency about alternative energy because the price of gas is low isn't a positive.

    I am sure there are a lot of "lefty partisans" who are enjoying this because they dislike Big Oil -- and to that extent, it more proves that it isn't about results with partisans, it is about their "team". If the price of oil drops like a rock, there is a bit of financial relief but what really happens is consumption sky-rockets.
    • by halivar ( 535827 )

      I am sure there are a lot of "lefty partisans" who are enjoying this because they dislike Big Oil -- and to that extent, it more proves that it isn't about results with partisans, it is about their "team".

      Schadenfreude is a hell of a drug. Many men will cut off their own nose to spite their face.

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      It doesn't fucking matter, one way or another. We will burn it all, whether it takes 25, 50 or 100 years. Who cares exactly when in the bigger scope of things?

      Second, the China Axiom renders saving-energy arguments, like yours, useless:
      Every unit of energy you save, will be bought by the Chinese for a better price due to the lower demand (thank you).

    • by SuperKendall ( 25149 ) on Friday January 16, 2015 @12:57AM (#48827131)

      3) And for the good of humanity you want the price to be HIGH Z

      Well someone sure is ignoring history!!

      Because the cheaper energy of any form has been cheap, the better lives people led. That includes environmentally...

      With more power you have more education, more industry, more jobs, more success period. With all that comes more leisure time which means more free time to devote to a healthy Earth.

      If you want the best for "humanity" you want cheap energy - from any source.

      Renewables will come along, but you can increase viability only so quickly. Until then don't screw people over my artificially limiting their access to energy.

  • The best reason to stop burning oil is because it's so useful for other things. Very little oil is needed to make the dashboard in your car, or the case for your phone, or lubricants, etc.

    • well, in truth about 10% of crude is used for chemical feedstocks (more things than just plastics), half of that is for plastic

    • by rmdingler ( 1955220 ) on Thursday January 15, 2015 @09:17PM (#48826007) Journal
      Yes. As mentioned intelligently above, cheap oil will indeed lead to more waste, as we are collectively a wasteful species when money is no object.

      The best reason I can imagine for conserving our not infinite petroleum reserve is the future... we don't know what it holds in store for us, and we do not have a viable alternative for petroleum products worked out as yet for every variable.

      Imagine our grandchildren with the tech to go universe-hopping, lacking only the fuel.

  • by Mike Van Pelt ( 32582 ) on Thursday January 15, 2015 @09:01PM (#48825837)
    Saudi Arabia is trying to bankrupt the oil shale producers to get rid of potential serious competition. (Remember the stories of more oil than Saudi Arabia being found in the Dakotas?)
    • Re: (Score:3, Insightful)

      by Anonymous Coward

      I doubt that is true. I think the Obama administration and Saudi Arabia are colluding to inflict economic harm on Russia and Iran. That it hurts the US domestic oil industry is simply a nice side effect for Saudi Arabia and a political win for some of Obama's constituency. While it may seriously slow or eliminate fracking in the short term it will also increase consumption so I also doubt there were any environmental considerations here.

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        It's a little of everything, but I really don't think there's that much subterfuge in it. The US and Canada (and some others) have massively increased oil supply through harnessing shale oil deposits. Saudi Arabia isn't just going to pump less oil out of the ground because we are pumping more. They have bills and lifestyles to maintain so they're going to keep their production levels up. If everyone has combined to increase supply, prices will go down. The prices will equalize at a level that shuts dow

  • by Anonymous Coward

    Don't kid yourself. We may not all be pool-in-backyard-trip-to-Europe-every-year rich, but most readers of Slashdot are very firmly rooted in the middle class. This has little effect on us at all, we're neither investors, nor are we so destitute that the fuel bills are threatening to throw us to the curb. The smug, conceited "welp, I drive a Tesla S and think everyone should" is completely uncalled for, the poor drive shitwagons, all of which *gasp* run on petroleum. This will very much work in their favour

  • by bobbied ( 2522392 ) on Thursday January 15, 2015 @09:08PM (#48825895)

    I wondered when Saudi Arabia decided not to cut production, dooming OPEC to low prices and ticking off the likes of Russia and other producers with marginal economies, if they where not actually working a long term strategy here. Why are they not cutting production?

    First, they repress many of the world's trouble makers by dropping prices to 1/3rd their original. Yes, they hurt some emerging producers who are good guys, but these are pretty small. Russia's economy is in free fall due to this and this will greatly diminish their military and economic ability world wide. Other "bad guys" are getting hurt too.

    Second, The will succeed in jumpstarting their largest consumer's economy. The USA has suffered under the burden of higher taxes and higher fuel prices (which amounts to a tax on just about everything.) Yea, there will be segments that suffer, energy production companies and those who own the production facilities will be hurt, but over all your average consumer will have more to spend and moving goods will be cheaper as fuel prices drop.

    Third, energy production companies who where looking at $100+ oil for as far as the eye could see just 6 months ago, are now looking at $45 or less. Much of their production is now netting below production costs so NOBODY will be drilling new wells and a whole bunch of companies will be hurting. For the most speculative of them they will go bankrupt in fairly short time. This will greatly depress the USA's ability to develop these resources and reduce future supplies and take years to rebuild the industry.

    I'm not saying this is what the Saudi's are up to, but the theory does fit the pieces I'm seeing fall together..

    • Way back in the 80s, the Saudis knew that Iraq was going to invade Kuwait long before it ever happened. As a result, they spent a lot of money on arms. Over the past couple of years, they have been spending a lot of money on military training. So has the UAE and Jordan. Now the Saudis are building a 600-mile long border "fence" on the Iraqi border and buying even more arms. These guys know FAR more about what's going on with their neighbors than we in the West do or more likely care to admit. By tanki

  • Wrong reasons (Score:4, Interesting)

    by SoftwareArtist ( 1472499 ) on Thursday January 15, 2015 @09:34PM (#48826127)

    We understand way less about economics than about climate change. Predicting what the price of anything will do in the future is really, really hard. A few years ago it seemed like oil prices would keep going up forever. Now they're going down and someone immediately says, "They'll keep going down forever!". But really we have no idea.

    But we have a very good idea about what burning oil will do to the climate. If you want to argue for phasing out fossil fuels, do it based on the good arguments: they're destroying the planet. Don't bring in bad arguments based on wild guesses about what might or might not happen to oil prices over the next few years. That just weakens your position.

  • ...damn, we all better stop using computers!

    Seriously, though, cheap energy (in absolute terms, not massaged by the heavy hand of regulation), is a good thing. Great, so we don't invest in more oil drilling...until consumption goes up, prices go up, and it becomes profitable. This is a *feature* not a bug.

    Prices are momentary signals, not eternal mandates.

  • summary... (Score:4, Funny)

    by silfen ( 3720385 ) on Thursday January 15, 2015 @10:37PM (#48826521)

    I guess the summary is "nobody can afford oil anymore, it's getting too cheap and there is too much of it around"!

    • Yeah. Oil prices go up for a while because of new demand, people figure out new techniques and start putting into production more wells, so oil prices go down and keep going down until some of the wells aren't profitable at the new prices, so they stop producing and the prices start going up, then the well and oil rights owners start producing more again and the prices goes back down again, and so on and so forth.

      It's all just basic supply and demand curves, tied into a little technology and some lag times

  • by Luckyo ( 1726890 ) on Friday January 16, 2015 @01:02AM (#48827143)

    http://www.project-syndicate.o... [project-syndicate.org]

    A very interesting long term analysis on relationship of oil prices and costs of production. Essentially the argument is that we're now off the monopolist market which oil was for last decade and a half due to growth of China and back to the competitive market where the ceiling of the costs is the costs of shale extraction operations + reasonable profit margins while floor is the extraction costs in conventional oil fields in more expensive points of extraction like Siberia and Arctic Sea.

  • by MrL0G1C ( 867445 ) on Friday January 16, 2015 @07:49AM (#48828193) Journal

    The summary, most of the article and most of the posts here are completely missing the point.

    In November, when the U.S. and China announced a historic agreement to curb carbon emissions in coming decades, it sent a strong, if vastly overdue, message to the world's carbon kingpins: Global governments are mobilizing to meet the threat of climate change. If they're going to take that message seriously, more than two-thirds of established fossil-fuel reserves will have to stay in the ground.

    The oil, coal and natural gas need to stay in the ground, regardless of what we are paying for it, $50, $150 per barrel, people still pay for it.

    Is civilisation going to end when we stop using fossil fuels? Of course not.

    Far better article about global warming:Global Warming's Terrifying New Math [rollingstone.com]

    June broke or tied 3,215 high-temperature records across the United States. That followed the warmest May on record for the Northern Hemisphere â" the 327th consecutive month in which the temperature of the entire globe exceeded the 20th-century average, the odds of which occurring by simple chance were 3.7 x 10-99, a number considerably larger than the number of stars in the universe.

    So far, we've raised the average temperature of the planet just under 0.8 degrees Celsius, and that has caused far more damage than most scientists expected. (A third of summer sea ice in the Arctic is gone, the oceans are 30 percent more acidic, and since warm air holds more water vapor than cold, the atmosphere over the oceans is a shocking five percent wetter, loading the dice for devastating floods.)

And it should be the law: If you use the word `paradigm' without knowing what the dictionary says it means, you go to jail. No exceptions. -- David Jones

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