With oil trading around $48 per barrel, biofuels become relatively expensive but not for long. Research and development efforts will slow. However, all of this is short-term. Oil prices will rise, but unlikely to see over $100 per barrel. Why? Because the global movement supporting clean and green energy is accelerating. As an equity and financial analyst, I like Mosaic Theory, a concept taught in both graduate school and the CFA (chartered financial analyst). It is making sense of bits of disparate data provided across multiple sectors and then developing a theory. I have taken several on-line courses in the last year for different universities and from different parts of the world. The most interesting part of these on-line courses is the global forum that you are required to participate in. You quickly find out how people from numerous countries and numerous socio-economic groups view the world. I also read voraciously, all kinds of subjects (typical of an analyst). The common dialogue from these forums and readings was climate change. Duh! you might say. But I was struggling to find the source of the this global climate change/renewable energy dialogue and how pervasive this message was.
Taking a recently offered online course on Cousera.org, entitled "The Age of Sustainable Development," I believe that I found that source. It began in 2000, when Kofi Annan, then Secretary-General of the United Nations, asked Professor Jeffrey Sachs of Columbia University to head up a project called the Millennial Project. The project is similar to that of the Club of Rome, a global think-tank that wrote the Limits to Growth. That study looked at the global population growth and its impact on resources and development.
The Millennial Project was similar in that the propose was to revisit the population issue as well as looking at disparity between developed and developing countries. This entailed a massive amount of planning, organization and data collection. Most of the data collection was undertaken by groups affiliated with the UN. The UN then distributed the data far and wide and many of the reports became operating plans for governments to implement in their countries. It was disseminated so far that people from all over the world calculated their carbon footprints and could compare and contrast how they got to their carbon footprint with everyone. This was eye-opening to me, especially when I could compare and contrast my carbon footprint with someone else in a small town of Africa. This was made available from a leapfrog in technology of solar panels to generate electricity and cellular telecommunications to log into the internet to take the course. WOW!
With the constant and relentless drumbeat of media (from the multiple sources mentioned above), the recently reached climate accord in Lima, Peru last month and the Pope speaking out on climate change in the Philippines, I believe that we are about to seriously jump-start the clean energy movement. Wind will continue to grow but at a slower rate in the developed countries for all kinds of reasons, but solar will accelerate, especially if storage technology is developed (Elon Musk is doing that as we speak with the construction of the world's largest rechargeable battery factory). Solar energy's growth has be hampered by the elimination of subsidies and its intermittent energy supply problem. The energy storage technology that Elon Musk needed for his Tesla cars, will soon be available on an affordable basis to connect his solar panels to his car, through his energy storage system. This will allow for the seamless transition of electricity between the solar panel to house and battery during the day, the battery to car during the night, and potentially car to grid and residential battery storage to grid during peak power demand. What a solution and what an impact.
This technology will impact the utility sector in ways we are yet to see and feel. It will then impact oil's monopoly on transportation fuel. During this last 10 years of high oil price, hundreds of millions of people globally have transitioned to smaller, more efficient cars, which clearly impacted the demand side of the equation. Increased oil production from shales impacted the supply side of the equation. With supply exceeding demand, oil prices fell. This will slow exploration and development of oil and cause prices to rise but not to point of $100, assuming no major refinery outages.
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