Shale gas plantThanks to the U.S.-led revolution in fracking, oil is abundant. It will be for decades, if not centuries, because there is shale everywhere in the world. And unlike the megaprojects that have dominated the oil industry over the past several decades, shale can be tapped by smaller companies with less capital. The oil market, as OPEC has learned to its sorrow, is now much more difficult to control. This is capitalist creative destruction. But nowadays it happens on Internet-time, so it’s also “disruptive innovation.” Fracking is to the global oil industry what Uber is to taxi medallion owners: great for consumers who enjoy the sudden abundance, deadly for incumbents whose business models were built on exploiting scarcity. —Donald L. Luskin, The Wall Street Journal, 8 January 2016
Saudi Arabia is mulling the sale of shares in Aramco, believed to be the world’s most valuable company, as part of plans to repair its finances and open up its economy. The announcement was made by the country’s deputy crown prince as Saudi’s secretive, state-owned oil firm grapples with the effects of oil prices nearing 12-year lows. When asked if the country was planning a “Thatcherite revolution”, he replied “Most certainly”. —Sky News, 8 January 2016
There has never been a recession caused by low oil prices, so there is no playbook for how this one might evolve. It is critically dependent on how the global consumer responds. If the rigors of recession reduce demand for oil—as happens in a typical recession—then we’d have a vicious cycle in which further oil price declines would make the recession worse. But there is also cause for optimism. Low oil prices make the global consumer very resilient, which buffers the recession’s severity and duration. The best news is that, thanks to fracking, recessions caused by high oil prices are a thing of the past. —Donald L. Luskin, The Wall Street Journal, 8 January 2016
Germany’s Green Party has launched a frontal attack on petrol and diesel engines: According to their plan, there will be no newly registered vehicles with combustion engines by 2036. Vehicles with environmentally harmful petrol or diesel engines are to disappear in the next 20 years from large parts of Germany’s roads. This climate policy has emerged from a plan that the parliamentary Green Party in the Bundestag intends to adopt at its meeting in Weimar. The aim of the eco-party is to ban fuels oil from the Germany after the coal phase-out. —Der Spiegel, 8 January 2016
In 2015, Americans bought a record 17.5 million passenger vehicles in the United States, of which116,548 — 0.67 percent — were either plug-in hybrids or all-electrics, according to insideevs.com. That was about 6,500 fewer than in 2014. Two-dollar-a-gallon gas isn’t doing anything to help the EV value proposition. But what about Tesla? Surely chief executive Elon Musk’s high-tech product, priced north of $100,000, will pave the way to all-electric nirvana, even if gas prices are, for now, heading down and interest rates are heading up. Tesla owes its survival to subsidies from taxpayers, who are usually less well-heeled than its plutocratic customers; this Silicon Valley start-up has gotten $4.9 billion in state and federal support over the past decade, according to a May 30 Los Angeles Times report. –Charles Lane, The Washington Post, 6 January 2016
Keystone XL was thrown under the bus of Obama’s egotistical climate “legacy,” as the man who single-handedly rolled back the oceans and healed the earth. The problem for Obama was that Keystone XL could have had no effect on climate, as the State Department pointed out numerous times. So his decision was purely political. Indeed TransCanada’s notice to submit a claim under NAFTA leads with the words of Obama’s own press secretary: “I would venture to say that there’s probably no infrastructure project in the history of the United States that’s been as politicized as this one.” The NAFTA arbitration, which would not begin for six months and could drag on for years, will be fascinating not just for its size and scope, but for the fact that it might lead to an airing of the state of climate science, which is looking more and more like that Soviet tractor every day. –Peter Foster, Financial Post, 8 January 2016
