Oil has tumbled to $76 per barrel today (three year low), down from over $95 in June of this year. The slide is almost unanimously welcomed by average consumers. However, the big oil companies are signaling a retreat from shale & tar sand plays. Furthermore, this dramatic reduction in energy prices is changing where the global oil market is shopping for oil. The Saudis have used this oil slide to their advantage, propelling the slide by announcing it has no plans to slow production (which would support higher prices). The US has reduced its oil imports by 35% since 2005, thanks to the shale boom; which now at least for the short term will be drastically scaled back until oil prices rise to a more profitable level for US oil shale/fracking companies.
These very low oil prices lead into one more question many clean tech companies are asking, “Will this drop in oil prices, reduce interest in renewable energy?”. In the short term it seems very likely that gasoline prices hovering under $3.00/gallon will reduce peoples concern for energy efficient vehicles. However, with the new harsh EPA regulations on Coal Fired Power plants, that passed in 2014, it is safe to say that growth in renewable electricity production and building energy efficiency will remain strong for the foreseeable future.
In addition, a report published by a Deutsche Bank, suggests that by 2016 solar electricity will be as cheap or cheaper than conventional electricity. This takes into account the current 30% tax credit that is due to expire the same year, however even at only a 10% tax credit, the price of solar will reach a price parity in over half the nation (36 states). By 2050, solar could dominate electricity production worldwide. Needless to say, low oil prices, although will certainly encourage short term squandering, will not affect the shift towards solar. Great news if your hoping for a better environment for our children!