Oil industry on borrowed time as switch to gas and solar accelerates UK Telegraph: The props beneath the global oil industry are slowly decaying. The big traded energy companies resemble the telecom giants of the late 1990s, heavily leveraged to a business model already threatened by fast-moving technology. Citigroup warns - or cheerfully acclaims, depending on your point of view - that world energy markets are entering a period of extreme flux, with oil caught in triple encirclement by cheap natural gas, much more efficient vehicles and breathtaking advances in solar power as scientists crack the secrets. The combined effect is to bend to the curve of global oil use over coming years, eroding the assumptions that have underpinned a threefold rise in Western oil industry debt to $600bn since 2005 The oil intensity of global GDP has already halved since 1980s. Crude prices have decoupled from the global commodity nexus for the past three years, held up by the Arab Spring and disruptions in Africa. This split-level energy market is becoming untenable. The US shale revolution has caused natural gas prices in North America to collapse. With a long delay, and by convoluted means, this effect is spreading to Asia, where liquefied natural gas (LNG) prices have halved this year. In the end, oil must converge towards gas prices since vehicles can be designed to use either source, or both.
Posted on: Mon, 25 Aug 2014 07:05:01 +0000