The only thing happening is a drastic drop in oil prices right now along with an increase in supply and a decrease in demand due to economic conditions around the world. Good news is this may extend the "peak oil" projections up to another 25 years into the future. Only downside to all this as far as I can see is there will be a tight squeeze on domestic
oil producers and they are already working on very tight margins because of the higher cost to get this shale oil out of the ground. We may be witnessing a good old fashioned shakeout play as we speak. Remember when all the offshore
oil platforms closed down when the price of oil was so cheap?
Remember - we are still consuming 19 million barrels a day in the US and only producing a little over 10 million barrels a day. This isn't much of an improvement since 1970 when we were producing about the same amount.
The other problem I see with all this cheap oil is it also puts a squeeze on alternative energy technologies. They also have to compete with cheap fossil fuels. With higher oil prices, the demand for alternatives increases. Biodiesel
fell out of favor back when everybody found out they were cutting down rainforests to plant oil producing trees like coconut trees. What they should have done was plant jatropha in unused semi-arid areas where the jatropha
Solar panel prices have been dropping like a rock lately. You can now buy solar panels around 70 cents a watt retail. Solar is now officially comparable in price to traditional grid electricity. A shakeout may be going
on here too as cheaper foreign panels squeeze out more expensive domestic manufacturers.
It should be interesting to see how this all plays out in the next few years. I suspect domestic producers will take a hit and struggle to survive while prices creep slowly up over the course of 5 years or so. They may even go
down a little further before going up. All this may be good for the consumer in the short term and bad for producers and governments that rely on tax revenue. But the government will find other ways to get their tax dollars.
Producers can just file for bankruptcy and wait for prices to rise and start all over again. The consumer always pays in the end!