The End of OPEC?
David Brin
2015-09-11 00:00:00
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John Mauldin recently ran down a long list of these technologies, and the foolish self-destruction by OPEC that has led to this boom:

"OPEC countries have no one to blame but themselves. Those years when they kept prices at $90 and higher gave the fracking industry, as well as solar and other alternatives, time to develop. They can’t put that genie back in the bottle."  


In other words, it is a GOOD thing that prices were high for a time. It helped drive us toward efficiency and sustainables, till the latter are starting to really ramp up on their own merits.  Still, we will not cross the next ten years to sustainables-heaven without doing the best we can with the best fossil fuels we can.  And did I mention that domestic methane is a lot better, for many reasons, than coal and Middle-Eastern oil?

Do not get me wrong on this!  We must have politics that emphasizes sustainables, getting them online as fast as possible!  Sustainables and efficiency are core to our survival and the political wing that has opposed and obstructed them deserves to roast in hell. They are no less than traitors.

Still. Try to map and negotiate the transition decade with realism and care.  A healthy economy and energy independence will allow us to think rationally and have the wealth to invest in the sustainables push.



Who will feel the pain?

Mauldin continues:

"Saudi Arabia is trapped. If prices go up, US shale producers will uncap some wells and produce more. And if it isn’t the US, it will be Australia, Canada, or even China’s growing shale industry. Argentina has potentially massive shale oil plays. Ditto Mexico. There is oil and natural gas all over Eastern Europe. Oil-producing nations (and not just OPEC members) are losing the ability to subsidize their government spending with oil revenues. Look at this table of the oil price they need in order to balance their budgets."


Mauldin is that rare commodity these days -- a genuinely sane Republican (though delusional in imagining that some of his party's leaders share this trait.) For one thing, he does not deny climate change is urgent, but couches it is safer (for a conservative pundit) terms:

"Does cheap shale mean solar, wind, and other alternative energy sources will lose momentum? I don’t think so. Governments around the world still want to reduce carbon emissions. For that matter, so do I. I prefer not to see the air I am breathing, thank you very much." 


Okay John.  Now convince Rupert and the Elders.

The fight isn't yet won. Coal is still cheapest, though part of that is due to cheating subsidies which should be reversed and turned into harm-taxes.  But my friend (IEET Fellow) Ramez Naam shows that solar costs are plummeting so fast that they will cross natural gas soon... though solar's inherent cycle problems mean we desperately need RandD to smooth that out.  RandD that will not happen, if Republicans have their way.

Finally, John offers the following insight on how solar will change economic calculations: 

“For simplicity sake, let’s say you buy $10,000 worth of electricity a year from your local utility. That is $10,000 of GDP. Now let’s say you spend $40,000 to put in a solar system that allows you to get off the grid. That is a one-time boost to GDP of $40,000. But now you no longer pay $10,000 a year to the utility, so as long as you are on the solar system, you are no longer contributing to GDP. Further, if you buy an electric car and charge it, you are no longer buying gas, and thus the portion of your money previously spent on fuel is no longer contributing to GDP.”


Fascinating times.