Evolution Shift
A Future Look at Today
January 20th, 2015

A New Energy Era is Beginning

 

As many of you who have read my writings over the years know, I have written quite a bit about energy, sources of energy and the price of oil. In fact one of the first forecasts that gave me widespread recognition was made in the Spring of 2006 when I suggested that by 2008 the price of oil would top $125 a barrel. At the time oil was in the $50-55 range and my forecast was ridiculed. It of course reached $147 that year.

I had based that oil price forecast in part on a belief that humanity might be indeed passing through peak oil, that geopolitics would affect price and that the explosive growth of China and other emerging economically growing nation states would press hard on the demand side. Ever since, I have been correct through the end of 2013 about the price range of oil being consistently between $90-120 barrel. Only once or twice did the price dip below $90 and that was for short periods of time.

In early 2014 I forecast that for the first time in years the price of oil would drop below $90, perhaps down to $80 or below. Well I was right in the direction but obviously wrong in how low! We are now in a fundamental supply/demand oil market that will last well into next year.   There will not be a decrease in oil production and except for some major geopolitical event, the over supply will keep prices down. The price will come up from the $40-50 barrel range it is now in but will not approach the $90-110 range until perhaps 2016 if then.

The collapse of the price of oil is part of a much larger global energy trend.

We may well be seeing the beginning of a new era of energy. Clearly the dramatic increase in oil production in the United States has been a major factor on the current downward spiral in oil prices. Combined with Saudi Arabia wanting to maintain its global market share and a new level of disagreement amongst the OPEC members, along with a no growth Euro zone and a slowing of growth in China and the reality of these lower oil prices today is understood. However I think that this current market condition may in fact be ushering in a new global era of energy and energy costs that could become the new landscape in the years ahead.

In the past eight years solar energy has moved out of its initial phase into a more mature, much lower cost phase. The same is true for wind energy. During this same time there has been a dramatic increase in miles per gallon efficiency in new automobiles. The Great Recession created habits of thrift and conservation that have stayed in place. Public transportation in the United States and other developed countries has seen levels of passengers not seen in decades. The cause and effect connection between the burning of fossil fuels and extreme weather and climate change is being more widely understood and accepted. All of these different points may be suggesting that we are entering a less volatile time of gradually lowering global energy costs.

I recently wrote my monthly column in the Sarasota Herald-Tribune on this topic, which you can read here.

As those of you who are regular readers of my blog know, I have been thinking and writing about the beginning of the second stage of the global economy. If you haven’t read those columns you can click on the links to the first, second and third columns.

It could well be that a defining part of at least the beginning of this new second stage of the global economy will be an ongoing recasting of the global energy landscape. One with expectations of gradually lowering costs across the board.

[This column was largely first published in the Shift Age Newsletter #32]

 

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