140 comments on Saudi Arabia - opening the tap?
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140 comments on Saudi Arabia - opening the tap?
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Fixing the oil price brings us peak oil sooner.
If you fix the oil price, then either the oil producers make losses on the difficult fields like Brazil's Tupi, or else they decide they don't want to give charity to the West and just stop producing.
So then you have a fixed price with a declining supply. Every day becomes a race to the pump to use your coupons before the pump goes dry.
Fixing the oil price means many fields will never be developed, and the peak comes sooner. Since I'm concerned about climate change, I'm fine with that - but you might not be.
I fail to see where oil production becomes uneconomic when the price is $150/bbl and indexed to inflation. There only "becomes a race to the pump" if efficiency gains combined with lessened demand lag the declining supply. Fundamentaly, the idea of the Protocol is to provide a cushion to economies over-reliant on oil and others from becoming completely priced out of the market. I don't think it will do much to mitigate Climate Change, as all the fossil fuels there are to burn will be burned, perhaps spread over a few more decades.
Fixing the price acknowledges that there is no point in producing stupid oil such as tar sands. Given the EROEI of renewable aleternatives, any oil that costs more than about $15/barrel to produce is stupid oil.
In order to fix the price, we pretty much have to control demand. That means that issuing more coupons than supply makes no sense. Thus, gas pumps will have gas. They will just be used less.
Chris