Greasing the Shaft
What most people don’t know about oil is that since about 2006, there has been a tectonic, global shift in the market. Previously, OPEC and its most important member, Saudi Arabia, were top dogs. They set prices, production levels. Everybody ate from their hands.
Round about 2007 or so American ingenuity kicked in. You see, if you keep oil prices high enough, Americans will figure out how to profit from them. Oh, look, and we did. Fracking was invented, which basically squeezes out the little amount of oil that’s under every ground. North Dakota, America’s Siberia (and I say that from experience), became a boom state. Over the course of about a decade, the United States went from a secondary afterthought in the global oil market to one of the top producers, rivaling Saudi Arabia itself.
Traditionally, when oil prices get low, Saudi Arabia props them up by cutting back on production. Not anymore. American oil has made them blink. When a giant nation like the U.S. suddenly becomes energy independent, it makes the energy providers blink.
Saudi Arabia decided, and OPEC with it (reluctantly), to pump oil full blast, the plan being to drive the price of oil into the basement. American producers, they hoped, would then be driven out of business.
But a funny thing happened on the way to the bank. American producers didn’t fold, but got leaner, more efficient. Some of them have folded, sure, some have been cannibalized by larger companies, and more will happen in 2016, but the fact remains: American oil is here to stay. The minute there’s an uptick in prices, BOOM.
Personally, I think the real conspiracy theory is that there are no conspiracy theories. But let’s pretend. Oil is now cheaper than green forms of energy. I saw on Tumblr how Germany was the greenest Western nation, having more power generated by solar than any other nation. I looked into it, and it’s true. Germany is indeed the greenest nation. Also, though, the average German has the highest electric bill in the world. With oil this cheap, solar and wind has competition.
In sum, with America coming on stage as a major producer, plus a general perceived threat from green energy sources, we will probably never see really high oil prices again. Green energy, in this market, will require the force of government to come to true fruition. Countries, though, which do that will run high costs and put themselves at a global disadvantage.
My opinion is that forcing green energy on people purely for political reasons is a terrible idea. It does a disservice to the people, forcing them to pay higher than market prices for their energy, and it does a disservice to green energy itself. If American oil producers can trim down and cut costs in this low price oil environment, so can the greens.
I believe that one day we will wean ourselves off dirty energy, and the best and most real way to do that is through a fair and open market. People have a lot of ideas and beliefs, but when it comes to their bank account, they have one idea and belief: MORE MONEY.
Saudi Arabia may be in an oil price war with U.S., but overall, dirty energy is in a price war with green energy. If green energy is to win, it has to be cheaper than oil.
Full stop and amen.