Which side will win?

[Workingman]

The BBC's Economics Editor, Robert Peston, reports that BP expects the price of oil will stay below $50 a barrel for at least three years. He claims that BP is persuaded that the Saudis, Emirates and Kuwaitis want to damage US shale gas/oil industry by bankrupting some of its drilling companies. To do that they need to keep pumping to keep prices low, and there is not much the US can do about it.

Meanwhile, over on the Science and Environment pages the BBC's Environment Analyst, Roger Harrabin, and his team, are reporting that a study by UCL indicates that if we, the world, want to keep global warming below 2ºC we will have to leave most of what is left of fossil fuel reserves underground. There is more justification here.

So, place your bets: Who will win? My money is going on the oil barons. They will not give up until they are forced to, and no government is prepared to do that.

[cromwell]

Oil will win.
The Saudis might have a shock coming though. It would be a political disaster for any US President to let shale gas companies go bust. If that happens, the Saudis stop pumping oil as fast as they can, and the price of petrol goes up again... at which point shale gas becomes a viable option again....

It reminds me of a conversation I had with an ex-miner more than 20 years since. He was telling me about his father and their discussion about the first wave of colliery closures in the 1960's.

"The pits have got to shut dad" says the son, "because this oil from the middle east is cheaper than coal".

"It wain't be once they've got the pits shut" says the old boy; and he was right.

[Aggers]

I have thought for some time that this fall in the price of crude oil
is the result of a deliberate plan on the part of certain oil-producing
countries to put other similar countries companies out of business.

[Suff]

Yep, my bet is with the Oil. But I don't think it is just shale. I think they just woke up and realised that the inevitable path from clean energy to replace dirty power stations is clean energy to replace car fuel. Followed by total clean energy. Leaving oil for plastics and lubrication. Which is, after all, nothing like as lucrative as fuel for vehicles.

I can't see that they can keep this up for a decade, but they certainly can try and break the companies. However, if you have noticed, Oil has fallen by 66%, yet fuel prices have fallen by around 33%. This is going to continue in that mould and I would expect governments to make a killing on taxes whilst the going is good. Therefore allowing Governments to fund more shale gas and also more clean tech.

It's going to be a battle royal. But, in the end, Oil is finite. Clean energy, correctly managed, is eternal. In human terms that is.... So whilst Oil will win this round, all they are doing is hastening their final demise. Because when we hit peak oil (50% of all resources used), then the move to clean energy is going to be faster than ever and Oil will rocket in price.