As we fast approach Paris COP21 (which yours truly is cycling to with TEARFUND) the latest IEA WEO 2015 is out. Is peak oil going to mean low oil prices and not high ones? This is one of the suggestions in the latest IEA WEO 2015. The theory goes like this; renewables are now so cheap or will become so the oil, coal and gas prices will stay low. That and a surfeit of oil with both unconventional and conventional producers competing could keep the oil price low into the 2020’s. Other findings from WEO 2015.
- Renewables account for around half of all electricity production by 2040.
- US shale oil needs a price of $65/barrel.
- Whilst oil and gas prices have fallen in price these price falls are undercut by the more expensive production costs as all the easy to extract fields have been used up.
- The cost of energy efficiency has also plunged.
WEO 2015 also sees dangers, we will still be fairly dependent on oil and gas even in 2040. Low prices mean no exploration or production for unconventional sources. This and increased demand in particular mean there could be a rebound in oil prices at some unspecified point. Another danger is that low oil prices will lead to less renewables investment. All in all as we go towards COP21 an encouragement. The future is renewable although as we have written in our book this is only part of our oil dependency issue.