Oil Price Crash

Thanks to J.L. Morin for writing about the oil price at Huffington Post. That’s a good occasion for me to break my recent silence on this blog.

Morin explains the recent downward trend in oil prices with the fact that fossil fuel will be phased out because of global warming policy concerns.

All things equal, less demand for fossil fuel means lower prices. Therefore a scenario where fossil fuel prices go down because of global warming concerns is quite possible.

But the opposite may happen as well. Prices may go up because of global warming concerns.

Obviously, the oil companies should be interested in having this happen, instead of seeing the price crash like in recent months.

The way to make it happen is simple. Just reduce production faster than demand is going down anyway. Never mind antitrust concerns. These have to stand back behind the noble goal of avoiding global warming.

If the oil companies understand this, they will be able to boost the value of their oil reserves (which is tied to the price of oil sold now). And they will be able to make large extra profits.

J.L. Morin has written a global warming novel. I have reviewed it on this blog (I didn’t like the book).

So have I. The basic idea of this post is developed in a novel format in my book “Last Week”. It shows that our little global warming problem is easily solved in a week with time to spare once the fossil fuel companies get the basic idea of “phaseout profit”.



Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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