Energy Politics and Resources
There have been a step change in the global energy policies in recent times. It is driven by human induced climate change, and an intent by most major government to act towards it. This policy change over the last few years have done a variety of different things to energy business and therefore price. Not too long ago, March 2020, a particular 'active' oil future traded negative. It was talked about a lot, but honestly the price at that time on that contract was meaningless. Without getting into details, let us say that oil prices were dramatically low during the March - April 2020, as can be seen from the chart below.
However, the prices bounced back rapidly and since the 'pandemic low' never looked back and currently trading at $90/bbl. This is an unprecedented rally on a cyclical commodity that most politicians think that 'we do not need' and world is 'phasing out' of it. That is all nice, but a globally traded commodity, over an extended period of time, trade on the basis of supply-demand (and not 'talk'). Also there is no way to hide the price and the price reflects supply and demand (production and consumption).
Above is the global supply-demand curve and forecast of world crude oil market. Numbers do not lie. Before the pandemic we were producing and consuming just above 100 MMBBL/day, from the 'pandemic low' we are back to the same levels on both curves.
The next two sets of plots are the monthly history of consumption and production with annual average and its forecast (to the best of EIA's ability). The rising average consumption is clear, and as lot of the exploration projects globally are off the table, there will be an eventual 'keel-over' of the production curve by the end of 2023. That is a certainty. So if production keels over (drops) and consumption keep of rising at a steady rate, what happens then to the price? No, you don't need a PhD to figure that out!
Look, its fairly basic. Crude oil is a volatile and cyclical commodity. It goes up and it comes down. If you look at the average return of oil and gas in the chart above it is fairly evident. So, it will continue to do what it does irrespective of what policymakers say or do.
Alternatives: How far away are they?
Well, alternatives to oil and gas are already here. There have been a steady growth of their use case more and more. That being said, lot of the rate of growth of alternatives that are projected on paper by policy makers are mostly pipe-dreams. However, major companies are changing/re-directing their policies based on the these national politics.
This is what Shell says at their website:
Shell's target is to become a net-zero emissions energy business by 2050, in step with society's progress in achieving the goal of the UN Paris Agreement on climate change.
They also said that their oil production as a company has peaked (mind you, it is by choice) and Shell will produced 1-2% HC less every year from now on: Again as per their corporate webpage
BP's message is very similar as per their corporate webpage
They are two of the major exploration production company in Europe, and they have made a choice to 'transition' into alternative energy right now. This is a direct reflection to the energy policy of Europe.
The rub is, 2030 is only 8 years away. UK is not building any new Natural Gas storage facilities and they are basically exiting exploration all together and also declining to build any new infrastructure. So it will be difficult for the alternatives to catch up quickly to meet the demand. It is almost a certainty that the growth of alternatives will be slower than expected and that will not only impact the price but also significant social unrest. I expect lot of the current policy makers to lose their respective support because what they are promising to the public is simply impossible to achieve in the near term.
Several green parties (not all) are definitely covered by your sentence above. They constantly make rough claims against this or that (nuclear power to mention one particular case), without thinking too much on the long term and how their various claims (especially relative to climate change) contradict each other. I am so annoyed by politics....
PS: I have nothing against ecology. It is even the contrary. I however cannot understand why we still need green parties when ecology should be the concern of every single political party.
Policy and Science are often disjointed.
I am a climate scientist as well. I have lived witnessing global warming that is human induced. However, the solution that are proposed and the rate at which they are proposed, are simply moronic.
There is a finite amount of pace in growth of any new energy, after a certain threshold, you can't increase the rate of adoption. This is a fact, but policy makers don't understand it.
North Sea, still has some of the largest Natural Gas resources, with infrastructre in place, but UK won't produce and explore for it in their backyard. Nat Gas is clean (I mean as clean as it gets). You can produce and use your own, but you decide to buy from the Russians! How stupid can you get??
Unfortunately, I totally agree with what you said.
Note that I have a preference for nuclear power plants over natural gas ones, as I am convinced that they are way better in terms of climate. There is of course the issue with nuclear waste, the associated research being also something under-funded...
Have a good week!
I like Nuclear myself, especially in northern Europe, where solar is impractical. However, permitting a new Nuclear Power Plant is a major issue. The recent accident in Japan got people rattled for good.
Also the waste as you mentioned, and mining. They are non-renewable as well.
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You nailed it.
The numbers do not lie so that is where we are heading. We know that demand is not going to wane. Even the most optimistic of forecasts by the EIA has our need for oil going up into the mid 2040s. There simply is no way to meet the the growing needs by renewables. While I can agree those are the future, it is a long way down the road.
Of course, we cannot overlook the need for plastics which go into computers, phones and soda bottles. As of now, there is no reasonable alternative.
So yes we are going to see things come to ahead as prices increase. We knew that oil production is going to slow based upon CAPEX over the past 4 years. It went down even before the pandemic.
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The policies are blanket and therefore will impact certain nation more harshly than others. There is absolute need for renewables, but we can't force the pace of their growth arbitrarily. If we do, which is the direction we are heading, then it will impact the price and society will pay for it.
So, we got a pending train wreck to have popcorn over in several years?
Nice.
Yes. In theory. Also you will pay higher prices at the pump while you wait
I know that feeling.
The plan now seems to be hope for fusion or better and cheaper fission. And hope for cheap carbon capture and green energy storage - the hydrogen economy. You are right 2030 is insanely optimistic, even for only electricity.
Currently both methods for large scale global commercial adoptions are 20 + years away
Human induced climate change, smdh.
They lie to us about everything simply to increase their control over us.
These two video links explain the state of 'the science' in no uncertain terms.
https://invidious.kavin.rocks/watch?v=b9vIKU_OS6E&local=true&dark_mode=true https://www.youtube.com/playlist?list=PLHSoxioQtwZcqdt3LK6d66tMreI4gqIC-
They can but I don't. Don't forget that I am a climate scientist as well. I am telling you that there is human induced climate change and this is fact.
I don't doubt that putting the amount of btu's into the air that burning 'fossil' fuels does has some impact, as does clear cutting the forests, but I'm not convinced that the energy the sun puts into the ecosystem doesn't dwarf it.
Do you have some evidence you can point me towards to support your claim?
Lol. Yes,
If I were you I’d start with google.
Then look into UN.
That will direct you to IPCC…
Come back after several years :)
https://www.ipcc.ch/data/
PS. I don't have any claim. Earth is a sphere is NOT a claim, it's a fact.
Also, I am not here to convince you or anyone. I don't have the time or ability. There are schools and universities for that, lots of them are online now. Harvard and MIT both have online programs that you can look into
So, I see you place your faith in sources controlled by the power elites, forgive me if I maintain my distance from such sources.
The ipcc has updated somewhat, but they still don't fully account for climate forcing.
Here is a response to detractors:
https://invidious.snopyta.org/watch?v=aHBDF_3Dk_k&local=true&dark_mode=true
The main source: https://www.suspicious0bservers.org/
I can't really speak authoritatively, I haven't taken the time to study the subject intensively, but the sources I cited have.
IF you care to look at them, I'd like your input on them.
You wanted my input. Here it is.
It’s GARBAGE.
Yes, I watched the first vid. It’s garbage
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