CNBC is reporting:
Oil prices will remain below the psychologically important $100-a-barrel
mark until at least 2025, according to a draft report by the
Organization of the Petroleum Exporting Countries (OPEC), seen by The Wall Street Journal.
In its most optimistic
scenario, OPEC, which represents 12 oil-producing countries, forecast
that oil will sell for around $76 per barrel in 10 years' time,
according to the report.
However, it warned that crude oil could cost as little as $40 per barrel in 2025.
"$100 is not in any of the scenarios," said a delegate at an OPEC presentation last week in Vienna, according to The Wall Street Journal.
Pretty much ends all that talk that solar and wind energy will make much headway. This is not to say that there won't be a lot of solar and wind initiatives, and that there won't be a lot of niches for wind and solar energy, but cheap crude oil is a blessing for consumers.
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Update
May 12, 2015:
Let's ask the question, google "how will low oil prices affect renewables".
Won't affect renewables, Citi -- March 31, 2015 (a "green" site); lots of words; few facts
Won't affect renewables at all, The Guardian -- November, November 10, 2014
“As far as solar and wind go, the [impact] from lower oil prices is
zero in North America and Europe, where power prices do not have any
link to oil,” said Pavel Molchanov, a senior research analyst at Raymond
James Financia.
In some emerging markets for wind and solar, however, such as the
Middle East and North Africa, and even in a few established markets such
as Japan, diesel does still play a bigger role in power supply – but
not big enough to matter much considering current renewable energy
prices, according to Molchanov. [What?]
“In the Middle East, and to a lesser extent post-Fukushima Japan,
there is some relevance,” he said. But even at prices below today’s
forecasts, “solar can compete effectively with diesel-fired generation”. [So, we'll see.]
California-based SunPower, which is majority-owned by French oil
giant Total SA, agrees. “The price of oil has almost nothing to do with
future demand, even in [the Middle East],” according to Tom Werner, SunPower’s chief
executive.
Without question, perhaps the best article on the subject in a quick glance at the top stories returned by Google. This was
written by a contributor to OilPrice. I agree with the writer: without government mandates, tax breaks or subsidies, renewables will have a "tough go of it" as natural gas gets cheaper.
How that linked article began:
Is a solar supply glut on hand? Not exactly, but oil’s multi-month
slide has largely overshadowed the sector’s emergent capacity. Nowhere
is that more apparent than in the state of California, where the world’s
largest photovoltaic power station is now online. Still, renewables did
not emerge unscathed from the aftermath of OPEC’s decision to stand
firm on production. Formerly rosy outlooks now take on an air of
uncertainty as renewables growth looks to avoid becoming a casualty of
an era of cheap oil and gas.
That article's conclusion:
The IEA expects solar
to be the top source of electricity by 2050, but in the more immediate
future the agency foresees a slowdown in renewables growth amid mounting
policy uncertainty. With the United States’ solar investment tax credit
set to expire in 2016, states taking matters into their own hands, and the EU’s own unclear renewable policy future post-2020, investors will have trouble guaranteeing an equitable and predictable return.
But renewable energy needs tax breaks, subsidies, and/or government mandates to compete:
Prices on Henry Hub are expected to be down approximately 14 percent in 2015 and as a result the Energy Information Administration predicts natural gas consumption in the power sector will increase by three percent. Over the same period however, renewables are up nearly six percent. The prevailing notion that renewables are not cost competitive is increasingly old-fashioned.
Since 2012, the average price of a completed commercial photovoltaic project fell 45 percent and continues to fall faster than expected. In the US, Deutsche Bank reports that solar will reach price parity with conventional electricity in 47 states by 2016. By 2020, utility-scale solar will be competitive with
gas-fired power at a wide range of natural gas prices and in all key
markets, including low-insolation regions. Wind power is already there. The total LCOE for onshore wind is cheaper than
that of conventional coal as well as natural gas-fired plants with
carbon capture and storage. The biggest threat to renewables growth is
not the price of oil or gas, but instead policy and regulatory measures.
And that's where one can lie with statistics: natural gas consumption up 3 percent vs renewable energy up 6 percent over same period of time. The amount of solar energy consumed by Americans rounds to zero zero; a 6 percent increase is trivial. Really, really, trivial, and yet 6 percent is double the growth rate of natural gas at 3 percent. And the success of contingent energy is contingent upon government policy. Period. Dot.
For the archives. It will be interesting to take another look at this issue in 2020, where we will ALL have the benefit of 20-20 hindsight. I'll only be five years older.
But either way: no energy shortage for our granddaughters. As more and more electricity is provided by natural gas, coal, and to some extent solar and wind, that will free up more oil for "muscle cars," SUVs, and really nice pick-up trucks.
