2015: Tough Times Ahead for Big Oil

http://www.commondreams.org/views/2015/01/05/2015-tough-times-ahead-big-oil

The economics:

Even before the precipitous fall of oil prices in late 2014, fossil fuel projects were being cancelled in places like the tar sands and the Arctic Ocean. It is quite simply not great economics to bet the farm on high cost, high risk, and high carbon projects. Even with oil prices over 100$ per barrel in early 2014, three major tar sands projects were mothballed due to uncertain economics (driven in large part by public concern and transportation constraints).

Now, with oil prices a shadow of what they were kicking off 2014, analysts say at least $59 billion dollars of capital is on the brink of deferral in the tar sands over the coming 3 years, with the potential of knocking off 650,000 barrels of oil per day. Bad news for big oil, great news for the climate. Countries and regions that made the high risk bet to balance their budgets based on high oil prices are scrambling, and everyone is absorbing the harsh reminder that oil prices are unstable, unpredictable, and uncertain.

The concepts of stranded assets and unburnable carbon gained even more traction over the past year, with the Governor of the Bank of England saying in no uncertain terms that the majority of fossil fuel reserves are unburnable. This echoed messages from the likes of the International Energy Agency and the World Bank – not exactly environmental activists. The mainstream economic chatter is changing.

On top of this are the people-powered movements calling for divestment from fossil fuels. These campaigns are moving billions; not enough to topple the industry, but enough to command attention and prove that this conversation has the moral magnitude of other historic successful divestment campaigns.