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This crisis will not be solved unless oil prices go up. Demand will decrease only when cheaper alternatives are available. But I agree that Norway not extracti

This crisis will not be solved unless oil prices go up. Demand will decrease only when cheaper alternatives are available. But I agree that Norway not extracting oil doesn't solve anything. The only way to solve this IMO is to tax carbon emissions and do so in a way as to make the burning of fossil fuels very expensive. And also restrict imports from countries that don't have similar policies. And I don't see that happening any time soon.

ZeroGravitas 7y ago
A carbon tax putting up oil prices will help, oil prices rising themselves won't help as there's far more oil than we can afford to burn and the higher the price goes the more motivated we are to extract it. Lots of other things that help e.g. electric cars, more public transport and (ironically) a carbon tax will lead to demand for oil lessening and so drop the price till it balances with demand.
bryanlarsen 7y ago
> This crisis will not be solved unless oil prices go up Then we're well and truly screwed without a carbon tax or equivalent. Cheap oil is here to stay. The price of a commodity is the cost of the marginal unit. IOW, if the world production is about 100 million barrels per day, with the cheapest barrel being $10 Saudi Oil and the most expensive barrel being $60 Canadian Tar Sands oil, and there's demand for 100 million barrels per day at a price of at least $60, then the price is $60. Canadians make no profit, Saudi's rake it in. And looking at the production curve for oil indicates that Canada and Venezuela have massive reserves of tar sands, so there's a very effective price cap on oil at around $60. It fluctuates because demand can shift faster than production can be ramped up, but the long term cap is $60. Given the above supply curve, there are two very likely sources of drops: 1. technology could make oil sands production cheaper. This has happened regularly before so is likely to continue. 2. substitutes could suppress demand. Wind power is at 3c/kWh and dropping, and batteries are steadily getting cheaper too. Obviously electricity won't and can't replace all uses for oil, but it can and is replacing marginal uses.
- soperj 7y ago
  >1. technology could make oil sands production cheaper. This has happened regularly before so is likely to continue. Already happened. Oil sands is profitable at $40 or under, depending on the development.
  - bryanlarsen 7y ago
    True. And that's the price of Alberta heavy oil in Alberta. The difference between that and the benchmark West Texas Intermediate price is mostly shipping.

ZeroGravitas 7y ago

A carbon tax putting up oil prices will help, oil prices rising themselves won't help as there's far more oil than we can afford to burn and the higher the price goes the more motivated we are to extract it. Lots of other things that help e.g. electric cars, more public transport and (ironically) a carbon tax will lead to demand for oil lessening and so drop the price till it balances with demand.

bryanlarsen 7y ago

> This crisis will not be solved unless oil prices go up Then we're well and truly screwed without a carbon tax or equivalent. Cheap oil is here to stay. The price of a commodity is the cost of the marginal unit. IOW, if the world production is about 100 million barrels per day, with the cheapest barrel being $10 Saudi Oil and the most expensive barrel being $60 Canadian Tar Sands oil, and there's demand for 100 million barrels per day at a price of at least $60, then the price is $60. Canadians make no profit, Saudi's rake it in. And looking at the production curve for oil indicates that Canada and Venezuela have massive reserves of tar sands, so there's a very effective price cap on oil at around $60. It fluctuates because demand can shift faster than production can be ramped up, but the long term cap is $60. Given the above supply curve, there are two very likely sources of drops: 1. technology could make oil sands production cheaper. This has happened regularly before so is likely to continue. 2. substitutes could suppress demand. Wind power is at 3c/kWh and dropping, and batteries are steadily getting cheaper too. Obviously electricity won't and can't replace all uses for oil, but it can and is replacing marginal uses.

soperj 7y ago
>1. technology could make oil sands production cheaper. This has happened regularly before so is likely to continue. Already happened. Oil sands is profitable at $40 or under, depending on the development.
- bryanlarsen 7y ago
  True. And that's the price of Alberta heavy oil in Alberta. The difference between that and the benchmark West Texas Intermediate price is mostly shipping.