An OPEC working group failed to agree on a five-year plan that was to be presented to the members at the organization’s Dec. 4th meeting in Vienna. There is simply too much animosity among members over the failure of Saudi Arabia to cut crude oil production enough to drive prices back up and make the other OPEC countries whole again.

Investment banker Goldman Sachs says the increasing glut of crude oil on the global market could soon send prices plummeting to $20 a barrel. As has been reported here previously, the world is running out of storage facilities and much of the oil is being stored on dormant oil tankers in the world’s oceans. The result could mean a violent plunge in crude prices over coming weeks. The price of oil has fallen from $110 a barrel early last year and is now hovering around $40 for US crude, and $44 for Brent crude in Europe.

It is estimated that at least 100 million barrels of crude oil are now being stored on tankers offshore, waiting for better prices. A queue of 39 vessels carrying 28 million barrels is laid up outside the US port of Galveston, Texas, while the Iranians have a further 30 million barrels offshore ready to sell as soon as sanctions are lifted. For the past year China has been buying 200,000 to 300,000 barrels a day  for the Asian country’s strategic oil reserve.  It is not known how much more storage space the Chinese have. US land based storage facilities are 70% full, in theory leaving room for another 150 million barrels. But this is already tight enough to create regional bottlenecks. It will not be sufficient if OPEC continues to flood the global market with cheap oil.

The Organization of Economic Co-operation and Development (OECD) announced it has reached an agreement among its members to restrict government financing for inefficient coal-fired power plants. The world’s richest countries will no longer provide financial support for large coal-fired plants that do not employ the most efficient technology. The goal is to encourage coal exporters and buyers to transition away from low-efficiency technology to reduce CO2 emissions.

Oil company BP has published an 82-page BP Technology Outlook report that details the firm’s global energy projections over the next 35 years. The report’s key theme is that the world has abundant reserves of oil and gas, and predicts that increasingly sophisticated extraction techniques will ensure that fossil fuels remain the dominant power source over the next couple of decades. However, the report expects the world’s energy mix to change due to a variety of pressures, not least political and cultural aversion to rising carbon dioxide (CO2) emissions; a preference in the developing world to adopt ‘leapfrop’ technologies such as solar and wind; increasing efficiencies in solar PV technology, and the growing prevalence of viable and reliable energy storage. This transition will  be underpinned by falling costs for renewable energy and battery technology, allied to political action that will likely curb the supply of fossil fuels.

BP predicts the price of a solar module will reach as low as $0.21/Watt by 2040 . It also forecasts solar panels to break through the 30% efficiency rate between 2030 and 2040, based on the current pace of innovation. The cost of residential stationary electricity storage will fall from around $1,600/kWh currently to $260/kWh by 2040, thus making solar+storage a more viable option. A longer-term solution will be smart grids and storage-backed demand response software.

With respect to transportation, BP sees the cost per kilometer for a standard electric car in the US falling from $0.26 to $0.14 by 2050. Over the same period, standard gasoline vehicles will become more expensive, rising from $0.11/km currently to $0.12/km by 2050.

 

 

with h/t Tom Whipple

Tags: , , , , , , , , , , , , , , , , ,