Ike,
Below is my response to a "Hubbert Peak Oil" (Chicken Little - sky is falling scenario) from another forum. If my assumption of solar power forcing a drastic reduction in oil price comes true, this may create a real world test of 'economic development theory' as discussed in your blog entry about Bhalla's book. There are many historical examples of new technology being very disruptive to certain areas of society...in this case, if/when oil prices radically drop the affect on the ME will be enormous.
The good news is that funding for terrorism will also drop, but of course the bad news is that many of the region's governments who are now existing in large part only because of their oil revenues will be at risk. So it will be a true test for the rest of the developed world...what is the best strategy to use for these displaced citizens??
Will the world follow the lessons of Bhalla, Sen and Yunnus??
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Please take your carbon credits 'fixed' marketplace and stick 'em in the same trash can as your Hubbert theory...and remember, the key to energy prices dropping fast is not when solar reaches those levels that are competitive with oil - it will be when the oil ministers come to the realization that the value of their remaining oil assets are going to be cut in half every 5 to 7 years until eventually they reach the level oil will be no longer worth extracting and processing.
Remember, 'Moore's law' was first postulated way back in '65 (the number of transistors on an integrated circuit for minimum component cost doubles every 24 months) and has held true ever since. And this 'continual productivity growth' phenomena is not unique in electronics, but rather common. It is seen in computer processing power, RAM storage capacity and hard disk storage.
And in looking back half a century at real world market prices for electronics, the transistor radio (late 50's) and the pocket calculator (early 70's) both entered the US mass market at over $200 cost. By about 10 years later, each were priced under $10, and another 10 years after that both were available at under a dollar.
Solar power (and the storage devices that will enable 24 hour per day solar power availability like batteries and flywheels) are now at the same stage as the transistor radio's were back in the late '50's...just starting to appeal to the mass market. This mass market demand will result in the same increasing R&D and production 'economies of scale' growth that fueled the ever lowering cost per unit of power seen with transistor radios, pocket calculators, computers, camcorders...virtually every electronic device with mass market appeal.
After a few more years of market acceptance, this 'handwriting on the wall' will be evident for all to see - that solar panels are following the same course as all other mass market electronics in terms of quickly falling costs per unit of power. It is then that the 'power' of the oil cartel will quickly start to work in reverse as the oil ministers realize they are sitting on assets that are in the process of becoming obsolete...the 'panic to pump' will start within a few short years and will drive oil back down to under $15 a barrel.
Hubbert has it exactly backwards, we will never, ever come close to using even half of the current oil reserves:
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Cheap solar power poised to undercut oil and gas by half
"Within five years, solar power will be cheap enough to compete with carbon-generated electricity, even in Britain, Scandinavia or upper Siberia. In a decade, the cost may have fallen so dramatically that solar cells could undercut oil, gas, coal and nuclear power by up to half. Technology is leaping ahead of a stale political debate about fossil fuels...
...Mr Rogol said he was struck by the way solar use had increased dramatically in Japan and above all Germany...
...The tipping point in Germany and Japan came once households twigged that they could undercut their unloved utilities. Credit Lyonnais believes the rest of the world will soon join the stampede...
...Mike Splinter, chief executive of the US semiconductor group Applied Materials, told me his company is two years away from a solar product that reaches the magic level of $1 a watt.
Cell conversion efficiency and economies of scale are galloping ahead so fast that the cost will be down to 70 US cents by 2010, with a target of 30 or 40 cents in a decade...
...Villages across Asia and Africa that have never seen electricity may soon leapfrog directly into the solar age, replicating the jump to mobile phones seen in countries that never had a network of fixed lines. As a by-product, India's rural poor will stop blanketing the subcontinent with soot from tens of millions of open stoves...
telegraph.co.uk
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