The Oil Price Roller Coaster

[Oscar]

The Oil Price Roller Coaster

[ https://medium.com/solutions-journal-su ... afecb1ffb9 ]


Published in Solutions Journal Summer 2015
[ https://medium.com/solutions-journal-summer-2015 ]

EXCERPT:

Conclusions

BNEF ( Bloomberg New Energy Finance ) Advisory Board Chairman Michael Liebreich said: “The orthodox view of unlimited oil demand growth simply does not hold in a world of superefficient engines, electric vehicles, desperate air pollution problems, and action on climate. The U.S. economy has grown by 8.9 percent since 2007, while demand for finished petroleum products has dropped by 10.5 percent. Improvements in gas mileage and reduction in miles driven per person have had more impact on cutting U.S. oil imports than unconventional production. The story should not be how falling oil prices will impact the shift to clean energy, it should be how the shift to clean energy is impacting the oil price.”

Further, as efficiency and renewables take over global energy markets — because they work better, cost less, deploy faster and more flexibly, and incur less risk — oil and coal companies will own ever more carbon that’s unburnable for climate reasons, but they’ll own still more carbon that’s unsellable because it can’t compete. These firms are more at risk from market competition than from climate regulation.

Investors increasingly understand these differences and value their ability to deploy capital with more granularity, speed, transparency, and risk avoidance — not least in geopolitical stability, national security, and fairer global development. Oil companies’ varying abilities to repurpose their capabilities and assets to thrive in this new energy world will ultimately divide the quick from the dead.

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Written by Amory Lovins, the cofounder, chief scientist, and chairman emeritus of Rocky Mountain Institute. He wrote about energy efficiency’s ‘secret revolution’ in the Summer 2014 issue of Solutions Journal.