The collapsing oil price that is reshaping the global economy could derail the green energy revolution by making renewable power sources prohibitively bad value, experts have warned. A new “era of cheap oil” would be good news for consumers and motorists – but analysts say the consequences for politics, industry and the climate could be even more radical. The ripple effects could help the Conservatives to remain in power at next year’s general election by making voters feel richer as bills fall – while hurting Scotland’s oil-reliant economy and setting back its campaign for independence. --Tim Bawden,
The Independent, 12 December 2014
The biggest threat posed by falling oil and gas prices – in the UK and globally – is to the renewable energy industry dominated by wind-, solar- and hydro-power, experts say. “Renewable energy subsidies have been mostly sold to the public on the basis of the economic benefits,” said Peter Atherton, an energy analyst with Liberum Capital. “But the economic arguments hinged on the idea that fossil fuel prices would get more expensive, while expensive renewable subsidies would be able to come down over time. That’s looking doubtful now.” --Tim Bawden,
The Independent, 12 December 2014
The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned. Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated. --Steve Connor,
The Independent, 3 August 2009
Suddenly the world is awash with oil. A surprise surge in production and weaker than expected global demand for crude have sent oil reserves soaring and prices tumbling. The scale of the current oil shock is difficult to exaggerate. While financial markets and commentators were obsessed by rising geopolitical tensions and the latest twists in central banks’ policies in the US, Europe and Japan, even larger forces in oil markets went largely unnoticed. --Chris Giles,
Financial Times, 16 December 2014
Russia has lost control of its economy and may be forced to impose Soviet-style exchange controls after "shock and awe" action by the central bank failed to stem the collapse of the rouble. “The situation is critical,” said the central bank’s vice-chairman, Sergei Shvetsov. “What is happening is a nightmare that we could not even have imagined a year ago." --Ambrose Evans-Pritchard,
The Daily Telegraph, 16 December 2014
Vladimir Putin is surely receiving his long-awaited comeuppance, as his country struggles to deal with a full-blown currency rout, driven by plunging oil prices. For if the US and Saudi Arabia are indeed in cahoots to drive down the price of oil to smite their Russian enemy, one must admit they are good; very, very, good. But the Saudis – economically powerful as they are – could not put the squeeze on the Kremlin alone. America’s shale revolution has given the US yet another geopolitical weapon. By the end of November 2014, US oil production had expanded to 9.08m barrels per day, the fastest rate the country has seen since 1983, at the height of the Reagan boom. By coming from nowhere to emerge as a co-equal of the Saudis in terms of production, the Americans have triggered the saturation of the oil market, just as the Saudis have refused to mitigate these effects. It is this one-two punch that now threatens the very survival of the Kremlin. --John Hulsman,
City A.M., 17 December 2014
US energy giant Chevron has told Ukraine that it will pull out of a $10bn shale gas exploration project agreed last year, officials said, in a further blow to the country’s war-torn economy and its hopes for an alternative to Russian gas imports. The cancellation comes months after Royal Dutch Shell, which also signed a multibillion-dollar production sharing agreement last year, froze shale gas exploration in eastern Ukraine amid fighting between government forces and Russian-backed separatists. The cancellation of the shale gas projects is “darkening an already dark picture,” said Ukrainian economist Andriy Novak. --Roman Olearchyk, Financial Times[Subscription Required], 15 October 2014
The timeline of the collapse of the Soviet Union can be traced to September 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices, and Saudi Arabia quickly regained its share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed by approximately the same amount in real terms. As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive. --Yegor Gaidar, Russia’s former Prime Minister,
AEI, 13 November 2006
