Are falling oil prices good or bad?
Posted 24 June 2012 - 05:24 PM
I forgot one of the prime rules of economics, that when prices rise, demand drops, It happened in the 1980’s and 1990’s. Now oil prices are dropping again. Light sweet crude- an oxymoron if I ever heard one, is down to $78.20 and Brent oil futures, the European benchmark, also declined sharply, dropping $3.46, or 3.7%, to $89.23 a barrel. Both are great news for the economy and affect consumer prices, and therefore jobs, but what affect will this have on alternative energy and the environment.
My gut is telling me it means two wins and one loss. For the environment, falling oil prices mean things like tar sands and shale become too expensive to drill, mine and refine, meaning the arctic oil fields and other areas can breathe a sigh of relief until prices spike again and big oil is once on the prowl for more resources. This is good for environmental resources and water.
As for the upcoming presidential election falling oil prices are likely to stimulate the economy and therefore jobs and may help President Obama win a second term, for myself personally I believe this is a good thing, because I feel he has done more for energy, the environment, and education than his predecessor and I really feel Governor Romney would return to the Bush agenda and decimate these areas if elected. I try to stay away from politics in my posting and feel everyone has the right to their own beliefs, so if you disagree I understand this is just my view. So those are the two wins.
The loss may be to alternative energy as a whole. After prices tumbled in the 1980’s and 1990’s alternative energy was not as enticing economically and we saw them lose momentum. Does anyone else remember President Reagan taking the solar panels off the white house? Yet I am hopeful that because of the increase that has occurred in alternative energy manufacturing in this country and other places that wind, solar and others will continue to grow. Wind is still cheaper per kilowatt than oil, the breaking even point is 70 dollars a barrel and solar prices continue to fall.
So here is my question to all of you. What do you think, will we see alternative energy suffer from falling oil prices or will we continue to see individuals and utilities working for energy independence? Tell me what you think and remember all opinions are welcome.
Jeff for E3 Wise
Posted 24 June 2012 - 05:42 PM
My question would be will the drop in petroleum prices make that big of difference it some parts of the country? In the states will low gas taxes, the people are going to be pleased with the price of gas. It could spur economic growth in those states because it will become cheaper to transport people and things. But states like California will probably never see $3 a gallon gas because of our high gas tax. We will be lucky to get somewhere around $3.40.
If you live in Texas where gas is close to $3, you probably have no incentive to think about fuel economy or alternative energy. But, if you live in state like California or New York, gas is going to be high no matter what happens with the market. States such as these will probably find a bigger incentive to push towards public transportation and alternative energy projects.
It would be a plus for the country if shale and tar sands oil production became unfeasible because of lower petroleum prices. I'm not sure if the "Drill, Baby Drill" crowd cares though.
Posted 24 June 2012 - 06:02 PM
Also with California’s budget shortfall I wonder if falling prices may cause them to add more tax’s to gas to help make up revenue as prices fall. I travel to California a lot, so I understand your pain at the pump. Also your right, the drill baby drill crowd don't care.
Thanks for the impute and questions.
Posted 25 June 2012 - 12:32 AM
Posted 25 June 2012 - 03:09 AM
are still pushing forward, because they know this is just a temporary lull in pricing.
Alternatives will rule the day.
Posted 25 June 2012 - 11:33 AM
Posted 25 June 2012 - 01:18 PM
In contrast Obama wasted billions on failed green investments and wants a huge tariff on China solar panels.
I'll take Romney.
Posted 25 June 2012 - 05:49 PM
I really appreciate the contrasting view. One of the things that I really wish people could do is to discuss their differences. I would much rather know what a person thinks than being locked into a mutual admiration society. I also feel that we have to take in to account the role Congress has on laws, I mean we both know that the president sets policy, but Congress is the one who actually passes the laws.
Now with that said, let me give some credit where credit is due. I am a huge Hydrogen advocate, I have been since the early 1970’s. I am one of those people who believes that hydrogen will be a better storage medium than batteries for alternative energy, although I fully support all battery and every other storage method. It was President Bush that increased the DOE hydrogen programs and supported its full integration into the transportation sector.
Were as Secretary Chu under President Obama has significantly fought hydrogen even though every milestone has been meet including price and power densities. It was only after much lobbying that the hydrogen programs have been getting their funding back. Why you may ask, well because Secretary Chu is a battery guy.
My point is that there is good and bad on both sides, and as long as people like you and I and everyone else can work together for the greater good that change will come about. I applaud your convictions, and I also believe in your right to choose as you see fit.
Thanks for the posting.
Posted 26 June 2012 - 04:32 AM
Posted 26 June 2012 - 04:48 PM
I'm glad hydrogen is coming along. It may become an intresting race to see if it overtakes battery technology. If hydrogen is good to go in a decade what will batteries be like by then? If you could get a 350 mile charge in five minutes that may be enough to scuttle hydrogen. Not saying it will happen, just a thought from a disinterested observer. I'd buy either one but since I already have solar panels I'd probably be better off with batteries. Now if I could get a cheap efficient hydrogen generator for my house....
As a parting thought, the president proposes, the congess disposes, and the bureaucrats screw it all up!
Posted 26 June 2012 - 04:52 PM
Posted 26 June 2012 - 05:19 PM
Posted 27 June 2012 - 04:17 AM
the only big benefit we would have of falling oil prices is if governments would take the lead on using renewable resources which would make those falling oil prices definite or long lasting.
Posted 27 June 2012 - 07:32 AM
Posted 27 June 2012 - 12:52 PM
Expensive oil kills economies, it's tough to pay for green energy resources under those conditions.
Posted 27 June 2012 - 04:43 PM
That said my business is alternative energy and water design and integration, if energy gets cheaper because of falling prices, then one big reason to shift to them becomes less. Don’t get me wrong, clean air, water, environment and climate change are all huge issues but to most businesses it’s all about which energy provider is cheaper.
I agree it is cyclical and all it takes is a crisis in the middle east and up the price goes again. Likewise with the number of new cars being sold in China, India, and South America, supply will diminish again. I am just torn between the good and bad of rising oil prices and its good to see other peoples perspective to help judge the world around us.
Posted 27 June 2012 - 10:37 PM
The only solution is to make alternative energy cost competitive.To my mind that means drill baby drill AND continue green subsidies and research credits, at least until BEV's/HEV's can stand on their own. That way our economy won't keep taking these hits and we can better afford subsidies/incentives. As mentioned, keeping the price low will also discourage tar sand and shale oil exploitation.
Considering the state of our economy it's tough to argue with N Dakota's 3% unemployment. The unemployed and under employed are not going to run out and buy a Leaf and a majority of those that are employed are on too shakey ground to make that investment either. Even when BEV's are viable, if the economy isn't strong, nobody will want to buy any car. That makes cheap gas an imperitive for at least five to ten years, more likely 25.
As solar continues to double capacity year over year, wind energy contiues to expand, and low nat gas prices edge out coal I think our infrastructure side will handle itself.
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