Environment & Energy
Related: About this forumThe Real Reason Behind the Oil Price Collapse
The Nation
This article originally appeared at TomDispatch.com. To stay on top of important articles like these, sign up to receive the latest updates from TomDispatch.com.
Many reasons have been provided for the dramatic plunge in the price of oil to about $60 per barrel (nearly half of what it was a year ago): ... There is, however, one reason that's not being discussed, and yet it could be the most important of all: the complete collapse of Big Oil's production-maximizing business model.
Until last fall, when the price decline gathered momentum, the oil giants were operating at full throttle, pumping out more petroleum every day. They did so, of course, in part to profit from the high prices. ... operating according to a business model that assumed an ever-increasing demand for its products, however costly they might be to produce and refine. This meant that no fossil fuel reserves, no potential source of supplyno matter how remote or hard to reach, how far offshore or deeply buried, how encased in rockwas deemed untouchable in the mad scramble to increase output and profits.
In recent years, this output-maximizing strategy had, in turn, generated historic wealth for the giant oil companies. ...
... very strategy that had generated record-breaking profits has suddenly become hopelessly dysfunctional.
To fully appreciate the nature of the energy industry's predicament, it's necessary to go back a decade to 2005, when the production-maximizing strategy was first adopted. At that time, Big Oil faced a critical juncture. On the one hand, many existing oil fields were being depleted at a torrid pace, leading experts to predict an imminent "peak" in global oil production, followed by an irreversible decline; on the other, rapid economic growth in China, India and other developing nations was pushing demand for fossil fuels into the stratosphere. In those same years, concern over climate change was also beginning to gather momentum, threatening the future of Big Oil and generating pressures to invest in alternative forms of energy.
More
http://m.thenation.com/article/201249-real-reason-behind-oil-price-collapse
misterhighwasted
(9,148 posts)Explains why I am suddenly seeing a few big energy companies investing in alternatives.
Not much hoopla about it so far. More like a quiet tiptoe out of one energy type and into another.
Think I read it on DU today somewhere about one US co buying a solar co in Mexico ..I have to find that one.
I have just noticed bits of this investment going on.
Will try to find some references in the morning to post here.
Good OP.
misterhighwasted
(9,148 posts)Oil barons must own those 47 fools.
Demeter
(85,373 posts)Nobody can afford to buy--they (we) have no money. It's all been hoarded by the 1%ers.
The 99% will long remember the high cost of oil and continue the steps we have taken to reduce our dependence.