There is an enormous threat developing to the War Against Oil we all need to conduct in order to save the planet.
Low oil prices.
The price of crude on world markets has been cut in half over the last few months, as the recession we started with our Confederate Money spreads around the world. While the U.S. has responded appropriately, injecting new liquidity to partly make up for what has been lost, the world has yet to respond. The dollar is up against the Euro as a result.
Why is a lower oil price bad? If you spent the last year working on a plan to develop solar or geothermal or hydrogen energy, based on a price equivalent of $100/barrel oil, your project is now dead in the water. Your investors have pulled out and that energy won't be produced.
So long as energy prices are subject to the instant fluctuations of hedge funds and day traders, it is impossible to plan for new supplies.
The solution is simple, and it's time we went for it. As I have stated here many times, that solution is to set a floor price for oil.
A floor price for oil assures suppliers of alternative energy that, so
long as they can get their supplies in below that price, they can find
both a market and a profit.
A floor price also assures all buyers of energy that they will have price stability for their inputs, which is essential if they're to plan a year or more ahead.
Now is the ideal time to negotiate such a price with OPEC. They are losing money hand-over-fist. They need a floor price so they can plan. They need it so they can reassure their own constituents that prices won't fall to zero.
It's OK if, later, oil prices rise above the floor. This makes oil even-less competitive with solar and wind and geothermal than it would be at the floor, because there are substitution costs to take into account.
Now, when it's in the interests of both sides to get an agreement, we should negotiate a global floor price for oil, which becomes a global floor under all energy prices.
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