Oil prices are reported daily in every paper, newscast and radio show just like the NASDAQ was in 2000 before the crash. There is a near hysteria in the public about the price continuing to rise and people are oblivious to the facts. I'm not suggesting an imminent oil price crash nor am I offering financial advice but I'm trying to illustrate a point.
An article titled "The Great Oil Deception" explains how the supply and demand equation is being distorted not in reality but in reporting. This creates price distortions and eventual impacts for the broader economy. Much like the NASDAQ market in 2000.
What is the impact on alternative/renewable energy? If oil prices are grossly distorted then the perceived value of alternative energy is also distorted if it is valued in relation to fossil fuels. Without a carbon tax, or another model to achieve full cost recovery for using and producing fossil fuels, alternative energy will not be able to compete if oil prices decline. For alternative energy to continue to be viable it will need to have continued subsidies. If a broader economic decline follows the oil price spikes these subsidies will not be affordable. Alternative energy is again at the mercy of fossil fuel and conventional energy because these conventional sources are not priced to include their broader impact on the environment and the economy. If conditions continue higher oil prices are the only thing that can save alternative energy.
1 comment:
I fear you might be right on that one. One message we need to hit home, though, is that we have made ourselves totally dependent on the oil price - which can quickly spiral out of control, as we see at the moment. And we need to remember, this is already the third "oil shock" the world is experiencing - and at some stage, we will run out of the stuff, whether it is sooner or later. Renewables give us energy independence that we will not have otherwise. That in itself is a worthwhile goal that we need to promote.
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