3 ms·

Oil-rich Saudis find new help in struggle to delay action on climate change

33 points by pmcpinto 12y ago

steven777400 12y ago
It's not strange that cheaper oil increases miles driven and other transient features, but so quickly impacting the sale of larger crossovers and other gas-heavy vehicles? It seems likely (or at least plausible) that, within 1 to 3 years or less, gas prices could easily spike back up to where they were before. Do people really think such low prices are the "new normal" or is there other factors at play?
- delecti 12y ago
  Everybody is ignorant about something. Many are ignorant about the political issues that factor into their gas prices. I would be very surprised if people aren't expecting this to be the new normal.
- transfire 12y ago
  Yea its strange, b/c its propaganda. People had barely realized the prices were going down before they started saturating the news with "huge demand for trucks and SUV" stories. Its bullocks. They put that fake news out in order to encourage people to go do exactly that.
- mikeash 12y ago
  People have trouble planning beyond the short term. For most people buying a car, if they think about fuel costs at all, it'll be in terms of what they last paid to fill up their tank, and what they saw on gas station signs as they drove to the dealership. These same people will be evaluating the price in terms of the monthly payments, and evaluating options along the lines of, "It's only $20/month, I might as well." Be prepared for a glut of cheap used SUVs on the market in a few years.
- lotsofmangos 12y ago
  I would be fairly amazed if it doesn't spike by the end of the summer. The Saudis may be able to pump a lot of oil, but the delivery chain has limits. However the market has been buying less oil recently since the combination of financial crisis and high prices, so there currently is some slack. Once that gets filled and the price starts going up again it will probably spike immediately as everyone simultaneously thinks it is their last chance to buy low.
transfire 12y ago
It will only buy them a little time, at best. Renewable technology continues to improve. Some estimates put it at an 8% average improvement rate per year. If this is correct, then in 10 years the cost effectiveness will have doubled. And that's about all it will take to push out oil and gas. Renewables are already close to cost parity with oil and gas today. So even $20 per barrel oil will not be able to compete by 2030. But, there are other uses for oil, so don't expect it to ever go away completely.
- rhino369 12y ago
  That is a bit rosey. Wind is close, but solar is far away. Neither have cheap enough to be used as baseline power. But we don't use oil for electricity anyway. It's mostly transportation. The question is not renewable v. fossil, but why type of automobile power plant we will be using. Electric cars will take a while but electric trucks are way far off. We can stave off global warming by fracking the everloving fuck out out of America and using natural gas for electricity and for automobiles.
  - delecti 12y ago
    > We can stave off global warming by fracking the everloving fuck out out of America and using natural gas for electricity and for automobiles. I'd rather live in a warming world than one poisoned by all of the crap that goes into fracking.
datashovel 12y ago
One factor that I don't quite understand is how the lower prices could possibly sway investors to continue to invest heavily in oil industries. I can imagine how it may slow the investment in alternative energy, but to convince savvy investors that the future of energy is in oil seems impossible to me. I read this whole situation as big oil finally realizing what they're up against, and deciding that they just need do everything they can to squeeze every last ounce of cash out of their oil. After the tides finally turn, the oil producing countries will likely have a lot of issues to deal with. Possibly for decades to come.
- rhino369 12y ago
  I've wondered if this is Saudi Arabia acknowledging that oil will be a dying market and trying to cash out now. Saudi's cornered the oil market, but their percentage of the market slips every time someone starts pumping more oil. If the Saudi's think that falling demand and increasing supply in the US will occur, they may just resort to taking a large portion of the market instead of trying to keep the price high.
  - saryant 12y ago
    All of OPEC has been falling for the marketshare scramble for much of the last 30 years, this is a key reason why their ability to maintain pricing power has diminished. Whenever the price of oil falls below OPEC's established floor, Saudi Arabia (in theory) will be the OPEC member to cut their output. Historically Saudi Arabia has served as the world's swing producer. Each OPEC member had a specific quota they were allowed to produce with Saudi Arabia increasing and decreasing supply to maintain their target price. The problem is, as OPEC as a whole has lost marketshare to new reserves elsewhere in the world, individual OPEC members began to ignore their quota and go for marketshare, producing as much as they could. This was largely driven by local politics in the individual nations, since increased marketshare would deliver a short-term cash infusion. The Saudis are now tired of this. With US supplies now on the market, they've abandoned their role as the world's swing producer, leaving that task to America. America's producers are more market-sensitive, since they don't have sovereign reserves to fall back on, and more readily cut supply as projects become uneconomical in the face of falling prices. The great American oil boom of the past ten years has dramatically reshaped the power dynamics of the oil industry. So the Saudis have joined the rest of OPEC in the quest for marketshare, allowing the price of crude to enter a free-fall. They can outlast most of the rest of OPEC with their currency reserves so they're using this moment to slap the rest of them in the face for decades of defying OPEC policy. Oil isn't a dying market, conventional oil is a dying market.
1971genocide 12y ago
I dont understand, this is prolly the most short-sighted move ever in the history of mankind. Don't the saudis realize that that climate change is terrible news for them ? The climate is already unbearable in the middle east. If temperatures rise any further its going to be a disaster for them. Also the saudis seem to not understand basic economics. They are essentially wasting their massive cash reserve to give western consumers a tax break. They could have wasted it on improvnig the state of their society and making individual saudi more productive but nope. Cannot wait for their country to turn into mars. The little environment they have that allows them to grow food would be in danger. Its so depressing.
- peteretep 12y ago
  > that climate change is terrible news for them Terrible news for the House of Saud? Doubtful.
- GFK_of_xmaspast 12y ago
  http://en.wikipedia.org/wiki/Freon http://en.wikipedia.org/wiki/Freon
tn13 12y ago
It is very hard to separate the noise from the information related to climate change. Even the popular media houses are reporting everything in a very biased fashion. True that the Saudis have a personal interest in being climate change skeptic but that does not make their arguments any less relevant.
- mikeash 12y ago
  It's only difficult to separate the noise from the information if you only get your information from the news. If you go straight to the experts then the picture becomes quite clear.
guscost 12y ago
I'll put up $100 that oil and gas prices will continue to fall and then stay low (let's say at most around $50 a barrel) for years and years, no matter what the Saudis do. It's very simple, there is a very large supply and so the resource will be cheap as long as that is the case.

33 points by pmcpinto 12y ago

It's not strange that cheaper oil increases miles driven and other transient features, but so quickly impacting the sale of larger crossovers and other gas-heavy vehicles? It seems likely (or at least plausible) that, within 1 to 3 years or less, gas prices could easily spike back up to where they were before. Do people really think such low prices are the "new normal" or is there other factors at play?

delecti 12y ago
Everybody is ignorant about something. Many are ignorant about the political issues that factor into their gas prices. I would be very surprised if people aren't expecting this to be the new normal.
transfire 12y ago
Yea its strange, b/c its propaganda. People had barely realized the prices were going down before they started saturating the news with "huge demand for trucks and SUV" stories. Its bullocks. They put that fake news out in order to encourage people to go do exactly that.
mikeash 12y ago
People have trouble planning beyond the short term. For most people buying a car, if they think about fuel costs at all, it'll be in terms of what they last paid to fill up their tank, and what they saw on gas station signs as they drove to the dealership. These same people will be evaluating the price in terms of the monthly payments, and evaluating options along the lines of, "It's only $20/month, I might as well." Be prepared for a glut of cheap used SUVs on the market in a few years.
lotsofmangos 12y ago
I would be fairly amazed if it doesn't spike by the end of the summer. The Saudis may be able to pump a lot of oil, but the delivery chain has limits. However the market has been buying less oil recently since the combination of financial crisis and high prices, so there currently is some slack. Once that gets filled and the price starts going up again it will probably spike immediately as everyone simultaneously thinks it is their last chance to buy low.

transfire 12y ago

It will only buy them a little time, at best. Renewable technology continues to improve. Some estimates put it at an 8% average improvement rate per year. If this is correct, then in 10 years the cost effectiveness will have doubled. And that's about all it will take to push out oil and gas. Renewables are already close to cost parity with oil and gas today. So even $20 per barrel oil will not be able to compete by 2030. But, there are other uses for oil, so don't expect it to ever go away completely.

rhino369 12y ago
That is a bit rosey. Wind is close, but solar is far away. Neither have cheap enough to be used as baseline power. But we don't use oil for electricity anyway. It's mostly transportation. The question is not renewable v. fossil, but why type of automobile power plant we will be using. Electric cars will take a while but electric trucks are way far off. We can stave off global warming by fracking the everloving fuck out out of America and using natural gas for electricity and for automobiles.
- delecti 12y ago
  > We can stave off global warming by fracking the everloving fuck out out of America and using natural gas for electricity and for automobiles. I'd rather live in a warming world than one poisoned by all of the crap that goes into fracking.

datashovel 12y ago

One factor that I don't quite understand is how the lower prices could possibly sway investors to continue to invest heavily in oil industries. I can imagine how it may slow the investment in alternative energy, but to convince savvy investors that the future of energy is in oil seems impossible to me. I read this whole situation as big oil finally realizing what they're up against, and deciding that they just need do everything they can to squeeze every last ounce of cash out of their oil. After the tides finally turn, the oil producing countries will likely have a lot of issues to deal with. Possibly for decades to come.

rhino369 12y ago
I've wondered if this is Saudi Arabia acknowledging that oil will be a dying market and trying to cash out now. Saudi's cornered the oil market, but their percentage of the market slips every time someone starts pumping more oil. If the Saudi's think that falling demand and increasing supply in the US will occur, they may just resort to taking a large portion of the market instead of trying to keep the price high.
- saryant 12y ago
  All of OPEC has been falling for the marketshare scramble for much of the last 30 years, this is a key reason why their ability to maintain pricing power has diminished. Whenever the price of oil falls below OPEC's established floor, Saudi Arabia (in theory) will be the OPEC member to cut their output. Historically Saudi Arabia has served as the world's swing producer. Each OPEC member had a specific quota they were allowed to produce with Saudi Arabia increasing and decreasing supply to maintain their target price. The problem is, as OPEC as a whole has lost marketshare to new reserves elsewhere in the world, individual OPEC members began to ignore their quota and go for marketshare, producing as much as they could. This was largely driven by local politics in the individual nations, since increased marketshare would deliver a short-term cash infusion. The Saudis are now tired of this. With US supplies now on the market, they've abandoned their role as the world's swing producer, leaving that task to America. America's producers are more market-sensitive, since they don't have sovereign reserves to fall back on, and more readily cut supply as projects become uneconomical in the face of falling prices. The great American oil boom of the past ten years has dramatically reshaped the power dynamics of the oil industry. So the Saudis have joined the rest of OPEC in the quest for marketshare, allowing the price of crude to enter a free-fall. They can outlast most of the rest of OPEC with their currency reserves so they're using this moment to slap the rest of them in the face for decades of defying OPEC policy. Oil isn't a dying market, conventional oil is a dying market.

1971genocide 12y ago

I dont understand, this is prolly the most short-sighted move ever in the history of mankind. Don't the saudis realize that that climate change is terrible news for them ? The climate is already unbearable in the middle east. If temperatures rise any further its going to be a disaster for them. Also the saudis seem to not understand basic economics. They are essentially wasting their massive cash reserve to give western consumers a tax break. They could have wasted it on improvnig the state of their society and making individual saudi more productive but nope. Cannot wait for their country to turn into mars. The little environment they have that allows them to grow food would be in danger. Its so depressing.

peteretep 12y ago
> that climate change is terrible news for them Terrible news for the House of Saud? Doubtful.
GFK_of_xmaspast 12y ago
http://en.wikipedia.org/wiki/Freon http://en.wikipedia.org/wiki/Freon

tn13 12y ago

It is very hard to separate the noise from the information related to climate change. Even the popular media houses are reporting everything in a very biased fashion. True that the Saudis have a personal interest in being climate change skeptic but that does not make their arguments any less relevant.

mikeash 12y ago
It's only difficult to separate the noise from the information if you only get your information from the news. If you go straight to the experts then the picture becomes quite clear.

guscost 12y ago

I'll put up $100 that oil and gas prices will continue to fall and then stay low (let's say at most around $50 a barrel) for years and years, no matter what the Saudis do. It's very simple, there is a very large supply and so the resource will be cheap as long as that is the case.