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Page added on February 23, 2015

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Is Oil Becoming Obsolete?

Consumption

 

The big oil price crash is a question that seems to be front and center on the mind of financial markets these past few months, but, not to worry, it’ll come back up, it always does! So goes the reasoning of oil analysts and investors, but what if something other than supply temporarily overriding demand is at work on a longer-term basis, then what?

Sure, American fracking has upped the competitive stakes by producing fossil fuels from tight shale formations that were previously too difficult, too expensive. Thereby, effectively constricting import demand by one of the Middle East’s biggest customers, the United States, whilst adding a whole new source of supply on top of the excesses produced by the sheiks. As follows, supply outstrips demand and prices fall (reference material: trading commodities, 101.)

Notwithstanding, there may be something much more profound at work behind oil’s slippery slope, beyond the supply and demand equation. The “market” in all of its purported wisdom may be recognizing a disruptive future for hydrocarbons, a quasi-carbon-free world. Then, what of oil prices and what of Saudi Arabia, the kingdom built on sand dunes?

A narrow answer to that provocative question is found by following in the footsteps of those who know fossil fuels well. For example, John D. Rockefeller built an enormous fortune on oil, but today his heirs are selling their fossil fuel investments: “The Rockefeller Brothers Fund is joining a coalition of philanthropists pledging to rid themselves of more than $50bn in fossil fuel assets,” Rockefellers to Switch Investments to ‘Clean Energy,’” BBC News, Sept. 22, 2014.

So, how about that $50bn in assets?

According to Stephen Heintz, director of the Rockefeller Brothers Fund: “We are quite convinced that if he [John D. Rockefeller] were alive today, as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy,” Ibid.

Furthermore, and potentially adding considerable fuel to the fire of falling oil prices, as of a week ago, Elon Musk inadvertently stepped into the cascading oil price scenario while holding a conference call with Wall Street analysts following release of earnings for his electric car company, Tesla. During the interview, and “merely in passing,” Mr. Musk announced his intention to start producing a “stationary battery” for powering homes within the next few months. Yes, this year!

Respectively, whether oil futures ticked down the moment Musk dropped that “game changer” is not known, frankly unlikely, but, as far as it goes for long-term investors, concern about oil pricing should be paramount. Musk’s stationary battery concept is the “the game changer of all game changers,” similar to the impact cell phones have/had on landlines, and that game changer happened well within a short decade.

Musk’s stationary battery to store solar energy is categorically disruptive for large portions of America’s traditional industries, for example, the utility industry, and the oil & gas industry. In fact, Musk’s stationary battery is the kind of stuff economic revolutions are built upon, thus, making oil & gas production look more than ever like an old prizefighter beyond his prime.

Not only that, but according to Mr. Musk’s analysis, solar energy combined with stand-alone battery systems will supply power at lower costs than natural gas. Indubitably, that upsets the apple cart for all things labeled fossil fuel, pretty much across the board.

Along those lines, Elon Musk is currently building a gigafactory in Nevada; it’s a $5 billion partnership with Panasonic Corporation to manufacture batteries for cars and for homes. The factory will be primarily powered by wind and solar.

Meanwhile, Tesla will soon hit the market with stand alone battery systems for smart energy consumers, whether mom & pop at home or big commercial enterprises. In fact, the company has already begun installing Tesla batteries on commercial buildings, like Wal-Mart stores, saving Wal-Mart stores 20-30% off energy bills. What responsible business wouldn’t do that?

As well, 500 homes in California are part of a pilot project, using the Tesla battery 10-kilowatt battery packs, when required, to power their homes for up to two days w/o sunlight.

Along those lines, as far back as 2013, the Edison Electric Institute issued a warning to utilities: “One can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent,” Josh Dzieza, Why Tesla’s Battery for Your Home Should Terrify Utilities, The Verge, Feb. 13, 2015.

As for fossil fuels, one of the biggest consumers of coal, oil, and gas is the utility industry, powering homes and businesses all across the land with electricity. Just imagine the challenge, the trepidation, the abomination for fossil fuel users, producers, and all those involved in the fossil fuel industry should Mr. Musk’s stand alone batteries become really, really, really popular. It may be reason enough to avoid long-term oil futures.

What, then, happens to the well-oiled, outspoken climate change/global warming denial camp on Capitol Hill?

As for the future, the repercussions of Mr. Musk’s “stand alone battery” are far and wide, including new political maneuvers, maybe a new party, certainly new political faces in Congress, massive losses of campaign contributions abetting fossil fuels, huge campaign war chests with nowhere to go, crumbling fossil fuel infrastructure like the ‘proposed’ XL pipeline, becoming white elephants rusting on the plains, thousands of rail tanker cars setting idle, rusting away, refinery closures, more rusting steel, North Dakota engulfed in a maddening mass of spewing, rusting derelict oil rigs, and chaos throughout the Middle East as kingdoms fail, bereft nomadic masses trudging, wandering across hot sand.

On the other hand, as stated by Sir Nelson M. Lubao, “every negative has a positive side,” the transition from a fossil fuel dependent world to a renewable energy world, while serving as the final nail in the coffin for the 200-year-old smokey industrial revolution, will merge into the current trendsetting technological revolution, bringing in its wake a whole new set of job skills, full employment, massive infrastructure development, on the order of the Marshall Plan rebuild of Europe, and importantly, new politics, a high tech brand of smart politics that favors eco-economics, as emphasized by Apple, Inc., or economics alongside nature rather than the callousness behind today’s neoliberal emphasis on profits, and only profits, which is joined at the hip to today’s old-fashioned energy industry.

counterpunch



57 Comments on "Is Oil Becoming Obsolete?"

  1. GregT on Tue, 24th Feb 2015 1:53 pm 

    Davy,

    PM?

  2. Perk Earl on Tue, 24th Feb 2015 1:56 pm 

    “These conditions are precisely what Ben franklin spoke of when asked how long these new United States would last. He thought roughly 200 years then corruption would destroy the US.”

    That’s fascinating, Davy. I’d never heard that before. It provides incite into what has evidently been a repeating scenario throughout man’s history. Right now we’ve got lobbyists with way more power than ‘The People’ and many of those are ex-politicians; as well as many other forms of corruption, public and private that becomes more pervasive every day.

    “There are still dangers with openness here. I am sure the spooks have me pegged.”

    I’m sure they have all of us on here pegged into one category or another. They found a way to use the fear of terrorism to tune in and determine each person’s persona. I’m sure by my name in the system is; ‘Peak oil doomer’, but fortunately for me I’m most likely in the ‘harmless category’.

    I’ve started to sense something lately -I’m wondering if you are too. Seems like the people I know are on edge, that it doesn’t take much to get them going, i.e. riled up about something, anything, no matter how trivial. It’s like there’s something in the airwaves that is rubbing people the wrong way. Like a flea in a microwave on high, they’re a little jumpy. I’ve got to think it’s because somehow they know things are tweaked a bit weird in the world right now, from odd financial central bank follies to geo-political war, corruption, etc. it’s getting wound up ever tighter, and somehow taking on these attributes in people’s everyday lives. There was a video my wife watched on the news of some guy going berserk and trashing the offices where he works, then one I saw of some guy doing something similar as a disgruntled worker at a McDonald’s.

    I think it’s a sign things are moving closer to towards collapse, but who knows, maybe it can get much, much tighter before all hell breaks loose.

  3. ghung on Tue, 24th Feb 2015 2:04 pm 

    Lawfish, if you’re on the Ochlockonee River in Florida/Georgia, you’re in hog heaven, literally. My son-in-law just came back from that area where they shot a lot of wild hogs and ferrel pigs, but I’m guessing you knew about the wild swine down there. Big problem, one that over-hunting hasn’t done much to solve.

    I take a couple of wild hogs each year, here in NC. Nice addition to the freezer. I use a trap when they come through, baited with cabbage and Honey Buns. They can’t resist.

  4. Mike989 on Tue, 24th Feb 2015 9:07 pm 

    James Tipper,
    The EV market is heading for a auto solution that will be CHEAPER then an ICE car. EV component prices are dropping rapidly.

    There are already electric motors that don’t need Chinese precious metals.

    You guys talk, and talk and talk, but peakoil must have the laziest posters on the planet. Don’t you even read about EV, solar and wind progress?

    Listening to some right wing dumbass is a sure way to go into investment bankruptcy. This is why most Republicans are and will Never be rich.

    Sorry, I can’t waste my time here.

  5. GregT on Tue, 24th Feb 2015 10:46 pm 

    Mike,

    I deal with AltE, conservation, environmental issues, EVs, and EV infrastructure in my day to day. I don’t need to read about this stuff, I live it, and I promote it.

    You are in a complete state of denial, if you believe that we are heading for a techno-utopian future.

  6. Apneaman on Tue, 24th Feb 2015 11:27 pm 

    Mike989 Promise?

  7. Davy on Wed, 25th Feb 2015 6:23 am 

    Mikie, you are trapped in BAUtopia of hopium and exceptionalism. You believe technology and innovation will save us humans from the energy and complexity trap we are in. Sorry, BAU is now in the last descent that will finish out her days. BAU has two foundational predicaments one energy the other its financial system. One is the power that drives here complexity the other the confidence that allows humans all over the planet to work together in the common pursuit of growth.

    Every one of us has to grow or else entropic decay overcomes us. The important thing to realize with doom and prep is accepting decay but adapting and mitigating the results. In doom and prep we still have to grow but we have to grow with a relationship closer and closer over time to the natural manifestations of our solar source. If we arrange our lives with less and expect less we can degrowth from BAU into a lower growth scenario of natural solar power. BAU can’t degrowth but we individually and in small communities can. We will still need BAU to transition out of BAU nonetheless. This of course will be a hybrid affair in the beginning maybe for a generation. The new and the old will have to be utilized.

    We will have to be a part of the largest die off in human history that will ever occur. Mathematically to get to get to our stable carrying capacity in a natural solar fueled world and a human destroyed world we will likely need to reduce our population to 1BIL. The combination of the depletion of our foundational commodity oil and the systematic bifurcation from population and complexity loss will do in BAU. There is no way to tell the severity and the time frame. These could be all over the place like a modulating frequency. The first brick wall is oil depletion effects. A train wreck is possible anytime with the financial system and or geopolitical strife. The longer term brick wall is AGW. AGW may mean an even smaller carrying capacity let’s say possibly 100MIL near the poles? Who knows?

    So Mikie until you leave your denial stage there is no hope for exceptionalist like you. The spectrum of politics and ideology is primarily BAUtopian growth based with exceptionalism of technology, markets, and ever expanding substitution. All this is going to be done by more knowledge and complexity. This is a farce and delusions of grandeur of a species that was able to transcend her place in Nature only briefly but at the cost of destroying the world. This is nothing more than nature’s tool of extinction and evolution.

    In our personal lives in our delocalized locals we are dependent on a system with a shelf life. How long we have is critical for each of us. A human time frame of 10 years which is little more than a Presidential two term is significant. I feel that is our BAU shelf life. Humans are time value species so until descent and all her chaotic conditions begin the descent crisis will not be big enough to focus us to reality at the top. BAU is a short term reality. Longer term it will be a generational descent and with that descent population, complexity, and energy intensity decline.

    Mikie, your AltE is so important but the right kind in the right applications. The top down should be promoting end user lite AltE to cover the basics. At the bottom in our families and communities we should be going seasonal with food and lifestyles. Going variable with our energy sources. All this in preparations for that day very soon when complexity of BAU is over and the energy intensity of oil has ground to a halt and population plummets.

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