Influence of Renewable Transition on Oil Prices

That’s a question Zachary Shahan just discussed on Cleantechnica under the headline “What Are Clean Energy & Energy Efficiency Doing To Oil Prices?”

I just entered the following comment to that:

All things equal, more renewable energy in the mix will reduce demand for oil. Reduced demand means pricesĀ go down.

All things equal, putting caps on fossil fuel because of global warming concerns will reduce supply of oil. Reduced supply means prices go up.

Therefore, it is in the interest of the holders of oil reserves and the fossil fuel industry to have regulatory caps on supply, and to have those come down faster than demand is reduced by the transition to renewable.

I call this “Phaseout Profit Theory”. If true, it would be not without influence on policy in jurisdictions where lobbyist money buys political results. Shell would become an ally of 350.org instead of their opposition.

Published by kflenz

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

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