Wow, if you told me just 10 years ago the US would become a net exporter of petroleum, I'd have laughed at you. The long-term prospects of oil in the US are poor, however. In the next 2-3 decades, renewables and electric cars will start exerting significant downward pressure on prices. US producers, especially frackers, are high-cost. Fracked oil usually costs $50/barrel or more. For this reason, fracking has only become widespread in the last decade, despite the fact that fracking has was invented in 1947.
Saudi makes oil for less than $10 a barrel. They and other low-cost producers are the only ones that will be able to compete after significant demand destruction occurs.
The main issue with shale oil is that many (most?) refineries in the US can’t refine it, so it has to be exported, basically. Whereas Saudi oil is “sweet” and pretty easy to refine.
We can refine anything, but other places can not, so they pay more than we would for the nicer oil. We used to mainly get oil from Venezuela, which is extremely sour. Saudi Arabia affects our prices due to the world market, but we have never gotten much oil from there because of the long shipping distance.
Saudi may make oil for less than $10, but they need prices to stay about $80 in order to sustain their massive internal subsidies.
Shale breakeven on the other hand has only gotten lower and lower. It’s not long ago that people were predicting break even at $75, now it’s probably $35-$40.
Stop? Probably not, but my point is rather that oil production by Aramco is dependent on the political regime, which imply that there are additional costs that do not apply to US shale.
We will see. Saudi through OPEC keeps cutting supply to increase prices to maintain their margins/profit. I believe they went in a full price war with the US a few years ago which caused oil to reach record lows but then gave up?
I'm not really sure what their long term strategy is considering they keep reducing supply to raise prices while the US is soaking up that supply and their total profits have to be going down since oil prices are not increasing drastically while their production drops while still selling at the presumably the same margin.
People who are curious how we got to this state should read The Prize and The Game by Daniel Yergin. Pretty much all modern oil politics is explained in those two books (the latter covers more energy more generally).
Interesting especially since the first oil production occurred in the US and we played a big role in funding many of the big producers.
US mideast policy had been affected for the as long as I can remember by oil and weapons exports. Especially on oil in the 80's with the Oil Shortages[1]. After 2015 congress voted to remove restrictions on Oil production in the US and the boom began.
Now that US policy is largely only about the weapons export will we see a different/better middle east situation in the next 25-30 years?
According to wikipedia: "Since the 1990s, the [US] oil market has been free of most regulations."[1] My understanding was that the US oil boom was caused by technological advances that enabled better exploitation of shale oil deposits. Also according to this graph[2], the boom really starts around 2011-2012, not 2015.
You are neglecting two other factors a.) American neoconservatives who have a lot of influence on GOP foreign policy and want regime change in Iran (and think we should do this with military force now) and currently are represented by John Bolton, the current National Security Advisor, and American Christian fundamentalists who believe they need to make parts of Revelations come true by among other things, supporting Israel no matter what, and having the capital of Israel be in Jerusalem.
Compact urban settlement is a direct market substitute for the hydrocarbons which would otherwise be required to transport goods and people across longer distances.
The most important thing we can do to transition off of oil and fossil fuels is to maximize the intensity at which we utilize renewable resources which directly substitute for them.
We maximize the intensity at which urban land is utilized by phasing in a 100-1200% national or global land value tax over the next century on the appraised market price which all land is expected to sell for if cleared of improvements.
We can also promote the development of a national, inter-state, zero-emission, passenger & freight rapid-transit market several times faster than automobile highways by allowing private rail and hyper-loop operators to deduct qualified ticket sales from their land value tax liabilities.
I think you're more likely to promote a shift en masse to EV manufacturing before you're able to institute a global land value tax (Tesla is building >200k EVs/year, other manufacturers are following suit, a million EVs are sold every 6 months [1]), with the added benefit that all of that EV manufacturing is going to stoke demand for more battery manufacturing capacity we'll need for utility scale energy storage. We don't stop building solar PV, wind, battery, and EV manufacturing capacity until CO2 emissions are halted (remember, we need to account for current energy usage, the transition of mobility to electricity, electrical growth and the amount of energy we're going to need to sequester existing atmospheric carbon back into the ground).
Urbanizing is a noble goal, but not realistic in the decades timeframe the necessary solutions demand. Build more solar [2], wind [3], energy storage, and electric transportation now, rebuild cities over time. Everything I mention above can be scaled in a massively parallel fashion.
The biggest current roadblock to urbanization is the insanely high cost of living in cities, and your solution to this is to add an up-to-1200% land value tax?
This would be a really quick way to force working class people to live even further away from the city than they already are.
Why we subsidize low density suburbs is beyond me.
We need to stop pretending roads are free and trains/trams are subsidized. Government plays an essential role in transportation. People should pay for the roads they drive, income adjusted. That's healthier capitalism, because the prices are clear and better mobility = better markets.
>More important is (a) taxing oil consumption to offset the negative environmental effects
And do what with the money raised with those taxes? I don't trust the people in charge to do what's needed to be done. The only positive thing from taxing oil consumption, would be to make it so expensive that people seek alternatives. When US gas prices were near $5/gallon, people sold their gas guzzlers and switched to fuel efficient choices. Once gas went back down, cars were sold off and guzzlers became the choice again. If Americans paid the similar prices to EU prices, things would be a lot different.
Usually, Pigouvian taxes like the one OP was proposing are calculated to cover the complete externalized costs of the item being taxed. So in this case, it would include the costs of adjusting to climate change. This would make alternatives relatively cheaper, as well as raising revenue to support research and construction of new energy infrastructure, as well as point addressing of specific projects identified to reduce the impacts of climate change. Of course, this is all if you believe that the current political climate (not only in the US, but in large middle income economies as well) can support such taxes. And then you have to decide what the tax should be! Ultimately, cap and trade turn out to be far easier.
one benefit of pigovian taxes is increased revenue to ameliorate the externality, but it's not the main goal of the tax. the cost itself reduces demand to the socially optimal level. the government could well burn the tax revenue (or in this case, recycle the paper) and still achieve the objectives of the tax.
If you can convince politicians to make the tax, it's trivial in comparison to earmark all the money for carbon capture and carbon capture research. (And it won't matter if existing funding gets cancelled because the influx would be a thousand times bigger.)
What? Are you fking serious? We have to invest tens of trillions in scalable carbon sequestration right now or there's no future for anyone except to starve or be part of another world war.
I don't think taxing oil consumption is the answer. I think what happens is that any taxes on carbon / fossil fuels just get passed down to the consumer, who are basically forced to pay it and can do very little to change their energy consumption. Sure, they can buy an electric car, but they still need to power and heat their home. Energy companies make the same profits, families are left holding the tax bill.
Taxing consumption of anything like this is normally done combined with something to try to give back the exact same number of dollars to the same people in the same ratio, at least initially. Then nobody is worse off from the tax.
Then, anyone who can reduce their usage will end up paying less tax, but still getting back nearly the same amount, and therefore profiting from their reduction.
That ideal is hard to achieve, but tends to be done roughly. For example, putting a tax on gas, but then equally subsidising something else related to cars, like car insurance, or the purchase price of new cars, would hit mostly the same people.
Sure let's stop consuming fossil fuels and go back to the stone age. All for a scientific theory that has zero evidence (save for computer models that are always wrong).
The the surface of the earth has temperature X. We can measure measure X with some degree of precision.
Any theory of physics that makes a prediction about the earth's temperature can be checked against the measured value of X.
All widely accepted theories that predict a temperature near X rely on the role of greenhouse gases and CO2 in particular to yield that temperature. And they all agree, more or less, that every doubling of the atmospheric CO2 concentration will result in an equal additive increase in our equilibrium temperature (so equilibrium temp grows as the log of the CO2 content).
Granted, to make _very precise_ predictions, you need to add forcing factors and feedback mechanisms that are hard to measure and hard to model and that's where computer simulations run into trouble. But the theory is sound and widely accepted.
The same thing that always happens. People make extrapolations assuming that something will continue to grow at it's current rate. They forget that there are dynamic systems and feedback mechanisms at play.
"Ebola is spreading at an exponential rate. There will be 200 million deaths by next year."
"Soviet GDP is growing 10% per year. Their economy will be the largest in the world in 15 years."
"Japanese GDP is growing 7% per year. Their economy will be the largest in the world in 20 years."
"The world's population increases at 2% per year. We'll have 50 billion people in 2100."
Feedback loops aren't always negative, and even if there is a small chance for a positive feedback loop with respect to increasing temperatures, we should take action now and attempt to reduce carbon emissions.
I also think that if there is a reinforcing temperature feedback loop, this isn't likely to happen to happen fast enough--at least through behavior changes. So we should focus most of our resources on developing better methods of energy production, increasing energy efficiency, and developing technology/methods to mitigate the damage of rising temperatures to human civilization.
Nobody knowledgeable in geology ever thought peak oil was an issue. Simply put, prices rose quickly in those days because there wasn't enough oil being drilled for the demand. Oil prices are highly inelastic, so prices rose considerably until more supply came in through new conventional and non-conventional drilling. There's loads of oil in the ground for the right price (but for God's sake, we should leave as much there as possible).
As you indirectly allude to, peak oil is an economic issue, not a geological one.
Due to a combination of technological ingenuity and externalities in the form of current and future environmental degradation, we've been able to so far avoid the point where oil cannot be profitably produced for a price that consumers can afford to pay.
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Saudi makes oil for less than $10 a barrel. They and other low-cost producers are the only ones that will be able to compete after significant demand destruction occurs.