(Originally published at http://communitysoul.net/2015/03/the-fall-of-oil-price-and-the-possibility-for-change/)
As we continue to see the price of oil hover around$40 and $50 per barrel for the last couple months, many people are wondering when the next shift is going to happen. Some have gone as far as to claim the winners and losers. Do we need confirmation to know that Big Oil always wins in the end? That might not be the case this time and we might be given an opportunity to change the way we approach the next step for our economy, environment, and our democracy.
Oil is not going away. In fact, by most counts, it’s cutting its production and development, ripping up contracts, and laying off workers in order to keep a profit with the sudden drop in price in the last months of 2014 and its continued low price into 2015. As we continue to witness depressed prices and an overabundant supply of oil, what can we do to alter our direction and dependence away from oil and onto processes that will benefit not only the environment, but allow us to maintain a working and more equal economy?
Well, for starters, to properly judge the situation, it’s good to acknowledge the fact that oil production and consumption has increased over the last few decades. China being at the forefront with an increase in consumption of 7 million barrels a day in 2005 to 11 million barrels in 2014 and countries like India, Indonesia, and Saudi Arabia following suit.
So where did the sudden drop in prices occur? With the continued effects being felt from the economic recession, Europe, Japan, and China have been seeing sluggish economic growth. The demand for oil slowed down a bit as production continued.
The US and Canada, with their booming investments into Bakken crude, shale, and tar sands production throughout the last couple years, saw a dramatic increase in oil and gas available for the public to consume. Under most circumstances, OPEC (Organization of the Petroleum Exporting Countries) and Saudi Arabia, the largest player in OPEC, would cut their production and wait for prices to increase before they started production again, that way they wouldn’t lose profit. This time, Saudi Arabia, going against most members in OPEC, is deciding to wait it out and continuing production regardless of the drop in prices. Their goal being to retrieve a majority control of the oil market again. Even if they do lose some profit, they can hold out longer than US oil producers, who have a more expensive process of retrieving oil.
It seems that Saudi Arabia may be able to attain its goal. Although most oil producers need $70-$90 per barrel to break even or pull in some sort of profit, the $40-$50 is hurting US oil producers in the same manner it’s hurting other OPEC countries like Venezuela, or even Russia. The two biggest producers in the US, Texas and North Dakota, who saw a dramatic boom just months earlier, are cutting production back. In what many predicted to be a year of growing production of shale, we’re already seeing a cut of its production by 30%.
The irony being that as we see oil companies lose money and lay off workers, the US consumer is actually seeing a break. The consumer is able to save $750 annually, money that would otherwise be spent at the pump. By being able to save money, consumers are able to use it for other commodities, which can help the economy grow. Corporations and other businesses are also seeing an increase in savings as they spend less on gas to transport their products around the country and world.
The lower cost at the pump is beneficial to the consumer and businesses, but it’s also making us continue to rely on oil and its production. In some cases, people are resorting back to purchasing gas guzzling cars again, since their prices have dropped due to the lack of demand over the years.
And if we continue the process of hydraulic fracturing shale and tar sands oil, we’ll continue to see the destruction of towns, water supply, and people’s health. By mid-February, we saw four train derailments, These trains were transporting the heavily combustible Bakken crude. At this rate, it seems it’s only a matter of time until we witness another La Magnatec incident, which ended with over 40 people dead and the destruction of several city blocks and businesses.
Where does this put us? How do we move from oil consumption to something better? Is it possible? Well, moving to renewable energies and moving away from our dependence on oil and gas is possible. In fact, many companies and countries are starting to make the dramatic move. Even countries like China, who is always condemned for their horrid pollution. We tend to ignore the fact that 48% of their pollution is created because of our consumption.
Solar and wind energy are becoming cheaper and booming. The price of solar has dropped by47% since 2011, as the US has provided more subsidies. If we could force our government to take the subsidies that we give oil, gas, and coal and instead provide it to clean energy the prices could be even lower and provide an easier opportunity to transition to clean energy.
If we want to further decrease the price of clean energy productions, we could force the government to use more of it. As Christian Parenti suggests in his book Tropics of Chaos, the government is the number one consumer of energy (oil), whether that be with government cars, buildings, and military. So, if they switch those cars over to electric or even hybrids, we would see a dramatic decrease in their prices, which would make it more affordable for average consumers to purchase.
Another option is to democratize municipalities by making municipalities public operated and work for the people. By bringing energy grids or electric and power companies back into public hands, we will see tax revenue go back to the public and could use that money to invest into clean energy and further push for the development of wind and solar.
The last and most basic thing anyone can do, is support the political movements speaking on all these fronts. By supporting, sharing, and spreading the world about events like the XL pipeline protests, the Climate March, or even standing with workers who are protesting being laid off at the oil plants, we’re supporting the public. By standing with the people on the front lines, through social media, we’re hopefully making others take a second look at movement without enough public attention. And by aligning climate activists with workers in the oil industry, we’re setting up the continuation of a democratic movement when we do make the transition into clean energy away from the oil industry.
It’s what we do next that will be remembered by future generations. The future of our world is relying on whether we can alter our path, otherwise there will be little left of to call home with our continued degradation of ripping up the world in hopes of maintaining our addiction to oil.
As we continue to see the price of oil hover around$40 and $50 per barrel for the last couple months, many people are wondering when the next shift is going to happen. Some have gone as far as to claim the winners and losers. Do we need confirmation to know that Big Oil always wins in the end? That might not be the case this time and we might be given an opportunity to change the way we approach the next step for our economy, environment, and our democracy.
Oil is not going away. In fact, by most counts, it’s cutting its production and development, ripping up contracts, and laying off workers in order to keep a profit with the sudden drop in price in the last months of 2014 and its continued low price into 2015. As we continue to witness depressed prices and an overabundant supply of oil, what can we do to alter our direction and dependence away from oil and onto processes that will benefit not only the environment, but allow us to maintain a working and more equal economy?
Well, for starters, to properly judge the situation, it’s good to acknowledge the fact that oil production and consumption has increased over the last few decades. China being at the forefront with an increase in consumption of 7 million barrels a day in 2005 to 11 million barrels in 2014 and countries like India, Indonesia, and Saudi Arabia following suit.
So where did the sudden drop in prices occur? With the continued effects being felt from the economic recession, Europe, Japan, and China have been seeing sluggish economic growth. The demand for oil slowed down a bit as production continued.
The US and Canada, with their booming investments into Bakken crude, shale, and tar sands production throughout the last couple years, saw a dramatic increase in oil and gas available for the public to consume. Under most circumstances, OPEC (Organization of the Petroleum Exporting Countries) and Saudi Arabia, the largest player in OPEC, would cut their production and wait for prices to increase before they started production again, that way they wouldn’t lose profit. This time, Saudi Arabia, going against most members in OPEC, is deciding to wait it out and continuing production regardless of the drop in prices. Their goal being to retrieve a majority control of the oil market again. Even if they do lose some profit, they can hold out longer than US oil producers, who have a more expensive process of retrieving oil.
It seems that Saudi Arabia may be able to attain its goal. Although most oil producers need $70-$90 per barrel to break even or pull in some sort of profit, the $40-$50 is hurting US oil producers in the same manner it’s hurting other OPEC countries like Venezuela, or even Russia. The two biggest producers in the US, Texas and North Dakota, who saw a dramatic boom just months earlier, are cutting production back. In what many predicted to be a year of growing production of shale, we’re already seeing a cut of its production by 30%.
The irony being that as we see oil companies lose money and lay off workers, the US consumer is actually seeing a break. The consumer is able to save $750 annually, money that would otherwise be spent at the pump. By being able to save money, consumers are able to use it for other commodities, which can help the economy grow. Corporations and other businesses are also seeing an increase in savings as they spend less on gas to transport their products around the country and world.
The lower cost at the pump is beneficial to the consumer and businesses, but it’s also making us continue to rely on oil and its production. In some cases, people are resorting back to purchasing gas guzzling cars again, since their prices have dropped due to the lack of demand over the years.
And if we continue the process of hydraulic fracturing shale and tar sands oil, we’ll continue to see the destruction of towns, water supply, and people’s health. By mid-February, we saw four train derailments, These trains were transporting the heavily combustible Bakken crude. At this rate, it seems it’s only a matter of time until we witness another La Magnatec incident, which ended with over 40 people dead and the destruction of several city blocks and businesses.
Where does this put us? How do we move from oil consumption to something better? Is it possible? Well, moving to renewable energies and moving away from our dependence on oil and gas is possible. In fact, many companies and countries are starting to make the dramatic move. Even countries like China, who is always condemned for their horrid pollution. We tend to ignore the fact that 48% of their pollution is created because of our consumption.
Solar and wind energy are becoming cheaper and booming. The price of solar has dropped by47% since 2011, as the US has provided more subsidies. If we could force our government to take the subsidies that we give oil, gas, and coal and instead provide it to clean energy the prices could be even lower and provide an easier opportunity to transition to clean energy.
If we want to further decrease the price of clean energy productions, we could force the government to use more of it. As Christian Parenti suggests in his book Tropics of Chaos, the government is the number one consumer of energy (oil), whether that be with government cars, buildings, and military. So, if they switch those cars over to electric or even hybrids, we would see a dramatic decrease in their prices, which would make it more affordable for average consumers to purchase.
Another option is to democratize municipalities by making municipalities public operated and work for the people. By bringing energy grids or electric and power companies back into public hands, we will see tax revenue go back to the public and could use that money to invest into clean energy and further push for the development of wind and solar.
The last and most basic thing anyone can do, is support the political movements speaking on all these fronts. By supporting, sharing, and spreading the world about events like the XL pipeline protests, the Climate March, or even standing with workers who are protesting being laid off at the oil plants, we’re supporting the public. By standing with the people on the front lines, through social media, we’re hopefully making others take a second look at movement without enough public attention. And by aligning climate activists with workers in the oil industry, we’re setting up the continuation of a democratic movement when we do make the transition into clean energy away from the oil industry.
It’s what we do next that will be remembered by future generations. The future of our world is relying on whether we can alter our path, otherwise there will be little left of to call home with our continued degradation of ripping up the world in hopes of maintaining our addiction to oil.
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