There was oversupply, the price dropped and so the marginal players will get squeezed out. Saudi Arabia recognized that they can have a large part of the market at lower prices or small part of the market at higher prices. They also see that higher prices will just indirectly lower demand through efficiency and alternatives. It's not that petroleum will ever become worthless, due to other uses, but that the price ceiling will continue to fall closer to production costs, so they might as well get the money now, and invest it.
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Saudi Arabia sees End of Oil Age coming and opens valves on the carbon bubble.
- Thread starter Benz
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TheTalkingMule
Distributed Energy Enthusiast
Plus they need the global economy to boom in order to maximize profit and that can't happen with oil at $160 and renewables still in their relative infancy. All the shale producers will lay off 50%, capacity will come back to Earth and then the global economy will boom and prices will skyrocket once again. The net effect being the slowing of NA production capacity in the short term.
In fairness to the Saudi's, they're not the ones who are taking action per se, they haven't moved production at all. We are the ones driving this price plummet, the Saudi's just aren't doing anything to help the frackers and tar sands boilers.
In fairness to the Saudi's, they're not the ones who are taking action per se, they haven't moved production at all. We are the ones driving this price plummet, the Saudi's just aren't doing anything to help the frackers and tar sands boilers.
DrGuest
Member
Saudi Arabia is making the move to become the solar kingdom, moving away from oil.
http://cleantechnica.com/2014/09/04/saudi-arabia-solar-powergrows/
http://cleantechnica.com/2014/09/04/saudi-arabia-solar-powergrows/
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