nuclear-news

The market price of oil has dipped below $50 a barrel – an event that few anticipated. So low is this price collapse, that it is endangering the profitability of the entire oil industry.

The immediate cause of the price collapse is the US-Saudi strategy of interfering in the oil market. The duo is using oil prices to wage economic warfare by sustaining unusually high levels of production.

With the global economy still limping along in the context of weak demand and slow growth, the supply glut has tumbled the market price of oil with the precise aim of undercutting the state revenues of US-Saudi mutual geopolitical rivals, especially Russia, Iran, Syria, and Venezuela.

Despite the apparent low price of oil on international markets, costs of production remain high. Since the peak of cheap, conventional oil around 2005, production has fluctuated on a plateau as the industry has turned increasingly to more expensive, dirtier and difficult-to-extract forms of unconventional oil and gas, especially shale.

That is why as levels of investment in production have dramatically increased in the last decade, the quantity of oil being produced has dramatically declined. As a result, oil companies are finding that the price is too low to cover their production costs, let alone maintain reasonable levels of profit.

Economy held hostage

The global economy, whose health is heavily tied to availability of cheap energy, is now caught between a rock and a hard place. With production costs approaching around $70 a barrel, the lower oil price makes the business models of the industry obsolete.

For this reason, majors like BP and Shell have been forced to cease new investments in production this year, simply to stave off the looming threat of bankruptcy.

But it would be a mistake to assume that the price collapse could continue indefinitely. As the industry cuts back production investments to avoid business failure, the scarcity of supply will eventually hit the forces of demand, pushing oil prices back up…….

There is, of course, a way out, and it lies in recognizing the growing efficacy and efficiency of renewable energy sources, especially solar, wind and geothermal, where combinations of these technologies combined with smart grids and battery storage innovation could meet our needs in more sustainable and less consumeristic communities.

But currently, the US and British governments are leading the way in attempting to use state power to interfere with the meteoric rise and potential of renewable energy markets, instead promoting legislation to defend the interests of traditional fossil fuel and nuclear sources………

New leadership

Now, more than ever, the world needs real leadership on our energy future. Unfortunately, that leadership is sorely lacking. Last week, the International Energy Agency (IEA) issued a new report calling for global nuclear energy capacity to be more than doubled by 2050, to meet the world’s projected energy needs, while keeping emissions reductions on target for 2 degree Celsius.

Yet this recommendation comes at a time when questions about the costs, competitiveness and safety of nuclear power compared to renewables are mounting. In fact, the pace of nuclear power development in recent years has been unable to keep up with the meteoric exponential growth, and cost reductions, in solar and wind power.

Last year’s World Nuclear Industry Status Report found that nuclear’s share of world power had fallen to its lowest in 30 years despite new plants coming online, and billion dollar government subsidies and loans.

It appears likely that nuclear power is now in terminal decline, having peaked around 1996 at 18% of global energy production, dropping steadily since then to 11%. Much of the reason is the massive costs of nuclear power, and the long lead-times for installations, compared to the diminishing costs of solar and wind.

Report lead author Mycle Schneider, a Paris-based nuclear energy consultant forecasted the inevitable decline of the nuclear industry in no uncertain terms:

“The nuclear industry, their product is basically a 1,000-megawatt plant, more or less, that takes 10 years to build. In 10 years, this energy world is going to be a radically different one. To propose today that model in a landscape which is small-scale, decentralized, super-efficient defies logic.”

So why is the IEA defying logic by proposing nuclear power as a viable solution for the world’s energy needs?

This is by no means the first time the IEA has appeared to remain beholden to the outmoded industry mindset of traditional energy utilities. For decades, according to IEA insiders, the agency has buckled under political and industry pressure to suppress conclusions confirming the peak of conventional oil, and its long-lasting economic fallout.

This year, the agency will appoint a new executive director replacing incumbent IEA chief Maria van der Hoeven. Who will fill that role may play a big role in determining the political direction of the global energy sector……….http://www.theecologist.org/News/news_analysis/2741146/energy_market_madness_is_the_death_spasm_of_the_oil_age_renewables_now.html