Now, when it comes to setting up the prices, which would normally be called anti-competitive, the rules do not apply when you are large and important enough. We also kind of grandfathered in the situation, it's been running for over half a century now.
If these were coalition of almost anything else, there would definitely be an outcry.
People do need to be reminded that the way the world works is whole lot different from idealistic notions. The rules we set are not and cannot be objective, they are just an optimization from constant blundering through reality.
It seems the problem is not with the costs of production but rather maturity of the country that wields the power over the resource, whether it understands that a) they are largely dependant on it, b) it is not given that tomorrow the prices will be the same, c) it will run out some day and d) it is easy to spend money now but actually you have to be frugal to save them for when it runs out.
Their huge savings is the combination of saving but also very high cost of living & taxation. The state provides a lot but also places high taxes on everything.
I live in Alberta where we have relatively low taxes and no oil savings. We've been boom/bust for our entire existence, but one huge difference - we've subsidized huge parts of the entire country during those good times. Those transfer payments add up to an incredible amount of money.
Im pretty sure the word oligarchy existed before humans relied on petroleum.
[0] https://en.wiktionary.org/wiki/%E1%BD%80%CE%BB%CE%B9%CE%B3%C... [1] https://en.wikipedia.org/wiki/Oligarchy
Could also be that I'm reading it too favorably, but I guess that's better than the opposite.
The word has been in use for 500 years. According to the Oxford dictionary it derives from the Greek oligarkhia, from oligoi "few" and arkhein "to rule":
On the other hand I can imagine the US government subsidize at least part of their fracking/shale oil capacity - access to oil is a national security question.
Another factor is that fossil fuels in general have high external costs not paid for by the user (like for pollution, health, and defense). Some estimates suggest these extra costs for oil add more than $100 a barrel for oil for US defense of long oil supply lines to the Middle East and a bunch in respiratory health costs (and also acid rain) for coal. When you factor in these external costs, renewables and energy efficiency have been cheaper than fossil fuels since the 1970s (see Amory Lovins' writings for example). This true cost advantage of renewables is true even if fossil fuels are free of charge or even negative in cost. If someone pays you $30 to take a barrel of oil, there is still this extra $100 or whatever of externalities per barrel that society pays. That is even ignoring any cost of climate change.
The only reason this uneconomic situation persists is extensive lobbying by the fossil fuel industry for subsidies and exemptions, so that they can socialize costs and privatize gains. If the fossil fuel industry becomes weaker financially, then its lobbying efforts will presumably also weaken. Then there will be more effective public calls for the true price of fossil fuels to be paid up front. And that will level the playing field -- and on a level playing field, renewables and energy efficiency will win big.
This is tangential, but it has been estimated (perhaps controversially: http://evnut.com/gasoline_oil.htm ) that more energy from electricity and natural gas goes into refining oil into gasoline than the gasoline delivers to cars. Thus gasoline is mainly being used as an energy carrier. Liquid fuels are actually good at that -- but you don't need a liquid fuel to be a fossil fuel. Or even a agriculturally-derived fuel. In theory liquid fuels can be produced from the atmosphere. And in any case, battery technologies continue to improve, and electric cars in most cases (except maybe cold climates) are better experiences to drive than liquid-fuel-powered cars regardless of fuel cost savings. If fossil fuels become unprofitable to produce and distribute, what happens to the gasoline station infrastructure required for gasoline powered cars? That would put a new meaning to "range anxiety" when a car driver could plug in to recharge anywhere but gas stations were few and far between. What is going on now is just accelerating ongoing technical trends -- which is perhaps why Tesla stock is still flying high (even with the recent tweet by Musk on it being overpriced).
Crude oil is more a battery than an energy source really given the energy needed to invest in refining it. Usually coal was the source historically for refining with some niche situationals like hydroelectric to save on power cost. Using "green" energy to export oil is older. Ironically if you have a refinery powering it by wind and solar isn't a bad idea given current power costs by source and can help reduce inputs required.
Are you saying that low oil prices are good for "green energy" since low oil prices motivates the use of renewable sources in the refinement of oil? First result on Google [0] says refineries "may use about 1.5% to 8% of feed as fuel". While a large emission source, in the grand scheme of things, converting refineries to use renewable sources seems less prioritised compared to replacing oil derived fules at the end user.
That shift however, will of course be less attractive in a world with low oil-prices. So in the end I think it's still hard to conclude that low oil prices are good for renewables?
[0]: https://pdf.sciencedirectassets.com/277910/1-s2.0-S187661020...
What this means for producers in the US, that are increasingly relying on more expensive sources of oil is that Russia can collapse the prices to below their break even point any time they want. Same for the Saudi's. That used to be the nuclear option when Opec controlled the prices. This is also where the word oligarchy comes from. Once oligarchies stop fixing prices they are suddenly competing for cost per barrel. And the simple truth is that when it comes to fracking, the cost is too high.
What that means in turn is that oil related investments suddenly got a lot more risky than they already were. All the easy sources have long been invested in and the remaining sources are increasingly difficult to exploit. Institutional investors have already been divesting away from oil for a few years. Price fluctuations like we've seen in the past decade ranging from negative to above 100$ per barrel means it's a highly risky investment as you simply can't know if you get back your money.
So, shutting down right now may get a permanent nature for a lot of companies as they'll have a hard time getting investors to back bringing their plants online. The longer this lasts, the worse it gets. I expect a lot of recent investments to be written off completely. Also things like the Keystone pipeline are probably dead in the water as it is debatable whether the thing will ever be profitable.
IMHO that's actually good news and will force people to look at alternative technologies and accelerate the agenda on e.g. switching to electrical vehicles, battery technology, alternative energy etc.