In the last seven years, the fluctuations of world oil prices remind one of seismograph records during an earthquake. Although unpleasant, this comparison seems to be rather accurate. It is obvious that oil prices have been dropping dramatically since summer 2014, and are currently hovering around 60 US dollars a barrel after falling almost 50 percent since summer. For Russia that has been desperately relying on the “oil needle” for a long time the question of oil prices is as topical as ever, since the value of the ruble against major currencies is slumping alongside oil prices. Such factors as an increase in shale oil production, especially in the United States, a rise in oil production in Libya and Iraq, technological breakthrough in oil production in the North Sea and the Arctic, a drop in China’s oil demand, and even price fixing by OPEC members under US influence have been cited as major reasons for the decline in oil prices.
In their many interviews with the press, Russian officials are trying to reassure the population and market players that everything is all right and the issue is only temporary, that one should just ride out the storm, that prices will rise again and budget revisions will not be required. World oil prices may indeed rise again because they are highly unpredictable, and generally speaking, factors influencing the formation of oil prices cannot be fully taken into account, let alone forecast.
At the same time, one should also consider other reasons for the recent collapse in oil prices that are not directly connected with oil production and demand but can bring about radical changes in the world energy market. In the early 21st century, there was a dramatic surge in innovative scientific and technological activity in the sphere of alternative energy sources, including but not limited to, solar energy, wind energy, biomass fuels, thermonuclear energy, hydrogen, and new technologies in accumulating hydroelectric energy with many of these innovations having already been fully implemented.
According to experts, there has been a breakthrough in the sphere of green energy: in recent years, costs of renewable energy have been going down whereas new power capacities have been introduced. Therefore, since technologies are becoming cheaper, the cost of building new wind turbines and solar batteries is decreasing as well. According to some estimates, solar and wind power plants are currently producing energy at a cost equal to conventional coal- or gas-fired power plants. All-electric Tesla cars in US metropolitan areas hardly surprise anyone, and reports about the development of new types of car engines are coming from all corners of the world. The US company Lockheed Martin with its thermonuclear reactor small enough to fit on the back of a truck, and the Japanese Toyota Motor Corporation with its new Mirai hydrogen fuel-cell sedan lead the field of innovative technologies.
They are being closely followed by developers of new batteries that will soon allow the accumulation, storage and transfer of large volumes of energy. For example, researchers at the American corporation Sandia National Laboratories have developed a brand-new kind of nonaqueous liquid electrolyte-based batteries that allow to increase tri-fold the volume of accumulated energy, a group of scientists and students at the Massachusetts Institute of Technology have developed a revolutionary type of accumulator, the liquid metal battery, and scientists at the Nanyang Technological University in Singapore came up with a new battery that charges to 70 percent in just two minutes.
Scientific and technological progress, the unreliability of suppliers, the world’s hydrocarbon scarcity, the increasing cost of oil production, governments’ environmental concerns and other major factors lead to a decline in oil consumption which cannot but influence its price. 20 years ago, there were no serious alternatives to energy produced by the combustion of different hydrocarbons, whereas today, only aviation has no alternative to kerosene which is also only a matter of time. The Russian authorities should have started thinking about the ways to put an end to Russia’s reliance on the “oil needle” a long time ago. They should have invested the last decade’s excess profits earned by selling oil at high prices to encourage the development of other industrial fields and the implementation of new technologies. Nothing has been done, however, and today, Russians are devastated by the ruble’s catastrophic slide alongside the oil price that came as the result of the Kremlin’s short-sighted policy. Putin’s irremovability and scientific and technological progress turned out to be incompatible.
