New era of cheaper energy … and it's not just oil prices

Published: Monday, December 22, 2014 at 1:00 a.m. Last Modified: Saturday, December 20, 2014 at 4:38 p.m.

WE MAY WELL HAVE ENTERED a new era of lower energy costs.

This coincides with having entered the second stage of the global economy I wrote about in my October column.

Ever since I started writing and speaking about the future back in 2006, I have focused a lot on energy. The reason is simple and obvious: The energy sources, models, structures and infrastructures of the 19th and 20th century will have to change in the 21st century. So I have paid a good bit of attention to new forms of energy, new ways to distribute energy and emerging technologies, and also looked deeply into the landscape of global energy.

In fact, one of the things that put me on the map as a credible futurist was that in 2006, when oil was around $50 a barrel, I suggested that oil might well cross $125 a barrel in 2008. I fondly remember going on a syndicated business TV program in the second half of 2007 to talk about the price of oil. There was me, the futurist, and some oil analyst. The reporter asked me what I thought the price of oil might be in a year (at the time it was around $55 a barrel), I answered that it would very likely be above $100 in 2008. With ridicule dripping from her voice, the reporter then said something like "Well, we have heard from a futurist, now let's get the facts from an oil analyst" who then said oil would range between $50 and $60 a barrel for the next few years. You may remember that the price of oil topped out in 2008 at $147 a barrel. Ah, sweet victory!

In the last two to three years, I have been correct in forecasting that the price of oil would largely stay in the $90-$120 per barrel range. Coming into 2014, I thought there might be some softness due to several dynamics and suggested that it might well drop into the low $80s. Well, I was right that the price would soften this year, but was I wrong on how soft! As of this writing, West Texas Intermediate oil is around $56 and Brent crude is $61.

The dynamics for this price collapse have been widely reported: the technological revolution of fracking in the U.S., the softening demand in China and the commitment of Saudi Arabia to keep market share within the group of oil exporting nations and to put stress on the U.S. oil industry, which has moved the U.S. the closest it has ever been to energy independence.

The price will go up over the next year. In the meantime, low prices will cause geo-political havoc, because many of the oil-exporting countries, such as Russia, Iran and Venezuela, have break-even production levels well above $80.

That is for another column. This column is about more than oil; it is about the real possibility that we have entered into a decade-long era of generally lower energy costs. Several simultaneous developments point to this. So, in addition to lower oil prices, here are some dynamics that should lower energy costs in the years ahead:

Incredible efficiencies in the internal combustion engine, dramatically increasing the miles that cars can travel per gallon. In 2000, it would have been almost unimaginable that one could choose from dozens of cars that average more than 30 mpg.

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New era of cheaper energy ... and it's not just oil prices