I read an article, I think in Forbes, detailing how OPEC is maintaining output even though oil reserves are extremely high and climbing.
The point is that they are trying to drive the price of oil down. That makes US domestic production less lucrative. They may maintain current output levels until oil reaches less than $20 a barrel. (Currently a little over $48 a barrel.) Current production is sending 2 million barrels a day into reserve.
They've done this before, in the 80's and 90's. However, the world has changed and they are not counting on certain things.
More people have gained an ethical view which leans toward renewable energy. More vehicles are on the road which get more than 30 mpg. Government standards in the US have mandated higher mileage. More people want to drive more efficient vehicles because of lower environmental impact, not just cost of driving. Look at how much people are willing to pay more for electric vehicles than standard vehicles. Huge vehicles are no longer the status symbol they once were. Instead more people see them as wasteful, frivolous and toxic.
Many products require less energy today than 20 years ago. Light bulbs may seem benign until you calculate billions of light bulbs across the country burning less energy than they did. Plus newer light bulbs last much longer and produce less waste going to landfills. Again, people are willing to pay considerably more for cutting edge LED bulbs rather than even CFC bulbs. I haven't gone that way yet because I don't like the lumen output. That is improving. Even with CFC bulbs, you can pretty much light your entire house for the energy it once took to light one room. TV's use less energy. Computers. More tablets being used then full PC's. More people use speakers hooked to computers or tablets, requiring less energy than stereo systems once did.
More investment has been made to graduate toward renewable and cleaner energy sources. Wind, solar, natural gas and clean coal plants.
Billions of dollars have been spent on infrastructure and billions more already committed on natural gas production. Plus many processes have been automated. Once the systems are in place, it takes very little investment to keep them going.
Billions more have been and will continue to be spent on individuals and companies for solar and wind power. Partly for public image and partly because (no matter how low oil goes) it makes sense to pay one time for system which will produce power at no cost at all once installed. In some cases, those systems can actually produce a profit by selling excess power back to the utility companies.
I cannot say that the tactics being used by OPEC will have no effect at all. However, definitely not the effect they are counting on. They are using tactics which did work when they were competing with the US simply trying to produce oil. It also worked when people were addicted to large vehicles and cheap oil.
If the US government is wise, they will invest money to build massive reserves as the oil prices decrease. Use that as a buffer.
For one thing, as oil prices decrease, profit margins rise. The less consumers spend on gas and oil, the more they spend on other things. The less oil being used for vehicles, the more can be used for other products, like plastics. The end result will be improved economies across the globe. Nobody is going to want to go backward.
Once oil reserves reach a certain point, the only tactic OPEC would be able to use would be to destroy their reserves to drive prices back up. Doing that would bring first political and then military action from other countries because of the global environmental effects.
End result is that the UAE is signing their death warrant. At least, economically. Personally, I'm okay with that. They've had a good run of around 40 years. They have failed to read the signs, plan ahead and adapt to change. Their fall will be of their own doing and their own choice. Rather than changing and keeping up, they are trying to force the world to remain dependent on them, on increasingly outdated technologies. Blind to the fact that the world is moving on without them.
It's far past time for this to occur.
The point is that they are trying to drive the price of oil down. That makes US domestic production less lucrative. They may maintain current output levels until oil reaches less than $20 a barrel. (Currently a little over $48 a barrel.) Current production is sending 2 million barrels a day into reserve.
They've done this before, in the 80's and 90's. However, the world has changed and they are not counting on certain things.
More people have gained an ethical view which leans toward renewable energy. More vehicles are on the road which get more than 30 mpg. Government standards in the US have mandated higher mileage. More people want to drive more efficient vehicles because of lower environmental impact, not just cost of driving. Look at how much people are willing to pay more for electric vehicles than standard vehicles. Huge vehicles are no longer the status symbol they once were. Instead more people see them as wasteful, frivolous and toxic.
Many products require less energy today than 20 years ago. Light bulbs may seem benign until you calculate billions of light bulbs across the country burning less energy than they did. Plus newer light bulbs last much longer and produce less waste going to landfills. Again, people are willing to pay considerably more for cutting edge LED bulbs rather than even CFC bulbs. I haven't gone that way yet because I don't like the lumen output. That is improving. Even with CFC bulbs, you can pretty much light your entire house for the energy it once took to light one room. TV's use less energy. Computers. More tablets being used then full PC's. More people use speakers hooked to computers or tablets, requiring less energy than stereo systems once did.
More investment has been made to graduate toward renewable and cleaner energy sources. Wind, solar, natural gas and clean coal plants.
Billions of dollars have been spent on infrastructure and billions more already committed on natural gas production. Plus many processes have been automated. Once the systems are in place, it takes very little investment to keep them going.
Billions more have been and will continue to be spent on individuals and companies for solar and wind power. Partly for public image and partly because (no matter how low oil goes) it makes sense to pay one time for system which will produce power at no cost at all once installed. In some cases, those systems can actually produce a profit by selling excess power back to the utility companies.
I cannot say that the tactics being used by OPEC will have no effect at all. However, definitely not the effect they are counting on. They are using tactics which did work when they were competing with the US simply trying to produce oil. It also worked when people were addicted to large vehicles and cheap oil.
If the US government is wise, they will invest money to build massive reserves as the oil prices decrease. Use that as a buffer.
For one thing, as oil prices decrease, profit margins rise. The less consumers spend on gas and oil, the more they spend on other things. The less oil being used for vehicles, the more can be used for other products, like plastics. The end result will be improved economies across the globe. Nobody is going to want to go backward.
Once oil reserves reach a certain point, the only tactic OPEC would be able to use would be to destroy their reserves to drive prices back up. Doing that would bring first political and then military action from other countries because of the global environmental effects.
End result is that the UAE is signing their death warrant. At least, economically. Personally, I'm okay with that. They've had a good run of around 40 years. They have failed to read the signs, plan ahead and adapt to change. Their fall will be of their own doing and their own choice. Rather than changing and keeping up, they are trying to force the world to remain dependent on them, on increasingly outdated technologies. Blind to the fact that the world is moving on without them.
It's far past time for this to occur.
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