How would fusion affect oil?

Dennis E. Taylor · Jan 30, 2015

So, here's the scenario:

Someone invents a cheap source of plentiful energy. Call it nuclear fusion, but the details aren't important. Either it's small enough to install in a car, or the availability of cheap electricity spurs development of better batteries. Either way, the bottom drops out of oil.

What I'm wondering about is how this will affect the middle east politically. Obviously any responses will be speculation. I'm just concerned about writing something that's so far off-beam as to sound ridiculous.

I'm thinking that a lot of rich people are going to become not-rich people. Certain countries that depended on oil revenues are going to have cash flow issues. Do any of the oil exporting countries have other exports that would be able to prevent an economic crash? Are extremist groups likely to evaporate when the western imperialists abruptly pull out, and when their major source of funds dries up?

Anyway, any speculation helpful and appreciated.

Old Hack · Jan 30, 2015

Angry Guy said:
I'm thinking that a lot of rich people are going to become not-rich people.

If they've done what most wealthy people do, and have invested lots of their money well, then this isn't going to happen. Treated well, money makes more money. It's clever like that.

They might not be quite as wealthy as they are now, but it won't be a huge drop.

blacbird · Jan 30, 2015

For starters, regardless of your technology, you need to recognize that not all the oil-rich countries are in the Middle East. You live in Vancouver. Canada is the major source of oil imported into the U.S.

Saudi Arabia has orchestrated the current oil price crash in order to curb the U.S. development of shale oil resources in North Dakota and elsewhere. In doing so, they have significantly damaged Russia, Iran, Venezuela, Nigeria, and other places. Conveniently, the Saudi King just died, and his successor has replaced a bunch of inbred Saudi government officials. What long-term effect this will have on oil output is yet to be seen, but oil prices bounced upward today in a big way. Even the Saudis can't afford to be giving their oil away for very long.

That all said, the rest of your idea is the purest form of speculation. I don't expect to be running my car on a fusion engine any time soon.

caw

Thewitt · Jan 30, 2015

Cheap energy - really cheap - would destroy the economies of dozens of countries around the world. Oil, Coal and Natural gas prices would have to plummet in order to stay competitive.

There are many, many countries who depend on these resources today, and at 1/10th of their value, their economies would simply collapse.

Now that said, emerging nations would benefit from cheap alternative energy, as would the super-powers. All in all, it would be a good thing for the world, though the speed and cost with which it was able to be deployed would impact its effectiveness.

Many things would shift in the world, not just the relative worth of the middle eastern oil producers.

frimble3 · Jan 30, 2015

Angry Guy said:
Are extremist groups likely to evaporate when the western imperialists abruptly pull out, and when their major source of funds dries up?

Anyway, any speculation helpful and appreciated.

Did gangsters 'evaporate' when Prohibition ended?

If you're an extremist, I imagine 'When the going gets tough, the tough get going' is the mark of a true believer. No, you just switch to an alternate funding model: step up the extortion, the kidnappings-for-ransom, the selling of slaves, the selling of drugs. Cyber-crime might increase - tricking the enemy out of their money with stolen IDs and various scams might be seen as virtuous activities. 'You, too, can fight for the Great Cause, even if you are a lard-like couch-potato.'
It's not as easy as having your supporters hand you money, but an extremist's gotta do what an extremist's gotta do.

King Neptune · Jan 31, 2015

Angry Guy said:
So, here's the scenario:

Someone invents a cheap source of plentiful energy. Call it nuclear fusion, but the details aren't important. Either it's small enough to install in a car, or the availability of cheap electricity spurs development of better batteries. Either way, the bottom drops out of oil.

Even with cheaper electricity and better batteries, an electric car is still and electric car. They aren't very good, and the weight and/or range will remain problems. Liquid fuels are convenient in many ways.

What I'm wondering about is how this will affect the middle east politically. Obviously any responses will be speculation. I'm just concerned about writing something that's so far off-beam as to sound ridiculous.

I'm thinking that a lot of rich people are going to become not-rich people. Certain countries that depended on oil revenues are going to have cash flow issues. Do any of the oil exporting countries have other exports that would be able to prevent an economic crash? Are extremist groups likely to evaporate when the western imperialists abruptly pull out, and when their major source of funds dries up?

Anyway, any speculation helpful and appreciated.

Even assuming that electricity becomes so cheap that it won't be worth the trouble of metering it, oil will remain useful as a fuel, a lubricant, and as a feedstock for various chemicals. I haven't seen the wellhead cost of production in Saudi Arabia, but it probably is still under $10/ brl, so even free electricity won't destroy that industry. The Saud family is dominated by rather intelligent people, and they have changed how things worked when the economics of oil demanded changed. Other countries would have more trouble; for example, Venezuela probably would have to stop producing oil, and the tar sands of Alberta would become a source for bitumen only, because cracking wouldn't be worth the cost.

As for extremists, it would be difficult to predicte what they would do. Some would blame the new poverty on Christianity and strike back.

With speculation like this your guess is as good as most and better than some guesses.

Dennis E. Taylor · Jan 31, 2015

blacbird said:
For starters, regardless of your technology, you need to recognize that not all the oil-rich countries are in the Middle East. You live in Vancouver. Canada is the major source of oil imported into the U.S.

I guess I should have been more clear on that. While I realize that this would affect a lot of countries, I'm specifically interested in the effect on the middle east.

Neegh · Jan 31, 2015

Oil is voluble for far more than just for making g gasoline: In fact, we only use 50% of the petroleum we pump out of the ground for making gasoline.

waylander · Jan 31, 2015

The likes of Qatar and UAE have already diversified hugely. Their investment funds own, for example, a lot of commercial property in London. Even if they never sold another barrel of oil they would remain wealthy.

Drachen Jager · Jan 31, 2015

I'm sure there would be a lot of conflict for a while, then things would settle down.

I saw a chart some time back of the African nations, ranked by their mineral wealth and cross-referenced with the level of civil unrest/war. With only a few exceptions, the richer the country, the more likely they were to have problems.

King Neptune · Jan 31, 2015

Drachen Jager said:
I'm sure there would be a lot of conflict for a while, then things would settle down.

I saw a chart some time back of the African nations, ranked by their mineral wealth and cross-referenced with the level of civil unrest/war. With only a few exceptions, the richer the country, the more likely they were to have problems.

And Nigeria is at or very near the top of the list on all counts. It is the most populous country in Africa in addition to having the most oil, and right now it has the most active internal conflict with Boko Haram.

Becky Black · Feb 2, 2015

Thing is, how fast is the bottom going to drop out of oil? There are a hell of a lot of cars, motorbikes, buses, lorries, trains, planes, boats, generators, lawnmowers and who knows what else in the world using petrol, diesel, aviation fuel etc. They aren't all going to be replaced overnight or even in a year. It would probably take a couple of decades at least to move over entirely to the new fuel source, which would give oil producing countries lots of time to adjust. As others have mentioned oil isn't only used for fuel either. Lubricants, plastics, all sorts of industries will still have a use for oil, so it's not as if the Middle East will suddenly be sitting on top of a load of oil it can't shift.

It's certainly a scenario in which there could be an initial strong reaction. Maybe the oil price will crash for a while and some countries will think they'll try to sell as much of it as possible now before it's in less demand. But once everyone settles down and realises they've got years to figure this out, then things will likely continue as before for a long time. In the long term the countries that get on with the changes needed will do better than the ones who don't, and that could lead to some populations getting tired of their leaders for their slow action. But I wouldn't think any of that will happen very quickly.

King Neptune · Feb 2, 2015

Becky Black said:
Thing is, how fast is the bottom going to drop out of oil? There are a hell of a lot of cars, motorbikes, buses, lorries, trains, planes, boats, generators, lawnmowers and who knows what else in the world using petrol, diesel, aviation fuel etc. They aren't all going to be replaced overnight or even in a year. It would probably take a couple of decades at least to move over entirely to the new fuel source, which would give oil producing countries lots of time to adjust. As others have mentioned oil isn't only used for fuel either. Lubricants, plastics, all sorts of industries will still have a use for oil, so it's not as if the Middle East will suddenly be sitting on top of a load of oil it can't shift.

It's certainly a scenario in which there could be an initial strong reaction. Maybe the oil price will crash for a while and some countries will think they'll try to sell as much of it as possible now before it's in less demand. But once everyone settles down and realises they've got years to figure this out, then things will likely continue as before for a long time. In the long term the countries that get on with the changes needed will do better than the ones who don't, and that could lead to some populations getting tired of their leaders for their slow action. But I wouldn't think any of that will happen very quickly.

Sell on the rumor. The bottom would fall out of the price on oil instantly, but the price would recover when people realized what you wrote. The recovery wouldn't bring it back to the price before the announcement of the new energy source.

Dave Williams · Feb 2, 2015

In the near term, not much.

In the longer term, not much more.

Oil is used as a lubricant, as a feedstock for plastics, and there will always be internal combustion vehicles - aircraft, ships, off-road vehicles far from charging sites - where electric power isn't possible or practical. The market for oil isn't going to go away, but it will drop significantly.

A game-changer would be [pulls a card out of the hat] desalination plants. cheap electricity would make it possible. It's not an issue just in the American southwest; you have fat chunks of the planet that aren't really habitable due to lack of water. And the side effect of making *clean* drinkable water out of supplies already on hand; lots of places have plenty of water, but it's infested with bilharzia worms or other parasites, used to dump human or industrial waste, etc. Some places you wouldn't ordinarily think of as "short of water" suffer from that.

Dennis E. Taylor · Feb 2, 2015

Oh, granted, there are a lot of things that would change with cheap cheap clean power. For instance, greenhouse growing is limited by the amount of sunlight available, unless you use expensive lighting. Add cheap power, and you can use subarctic land to grow crops -- or build multi-level growing ops, partly underground.

But there's the practical effects of a development like that, and there are the political effects. For instance (and I'm just throwing this out there) some (?) middle east countries don't have income tax, everything being paid by oil revenues. Take that away, implement an income tax, and the political effect would likely be all out of proportion to the actual practical effect on paycheques.

To be clear, I'm positing a world perhaps 150 years in the future, well after theoretical cheap power source has been invented, and I'm trying to come up with a plausible political landscape. Even given all the comments about oil as a lubricant, I don't think the middle east would have the same strategic value. Assuming the superpowers pull out (a fairly safe bet), what happens from there?

As I and others have said, it's all speculation, but speculation is the first step in coming up with a coherent narrative.

blacbird · Feb 2, 2015

Neegh said:
Oil is voluble for far more than just for making g gasoline: In fact, we only use 50% of the petroleum we pump out of the ground for making gasoline.

True, but that's a hell of a lot. One of the places we could find energy sources other than petroleum is for vehicle motivation. Some of that is already happening. But nothing is without tradeoffs. Electric cars, for example, need something to generate the electricity for the batteries. Guess how we in the U.S. generate half of our electric power?

Still guessing?

COAL.

caw

Neegh · Feb 2, 2015

blacbird said:
True, but that's a hell of a lot. One of the places we could find energy sources other than petroleum is for vehicle motivation. Some of that is already happening. But nothing is without tradeoffs. Electric cars, for example, need something to generate the electricity for the batteries. Guess how we in the U.S. generate half of our electric power?

Still guessing?

COAL.

caw

Angry Guy was wondering how finding another energy source would affect the Middle East politically: I’m assuming that he thought that would throw those countries into turmoil because of the loss of capital. However, they would still make billions from their oil regardless.

How would fusion affect oil?

Dennis E. Taylor

Get it off! It burns!

Old Hack

Such a nasty woman

blacbird

Thewitt

frimble3

Heckuva good sport

King Neptune

Dennis E. Taylor

Get it off! It burns!

Neegh

waylander

Who's going for a beer?

Drachen Jager

Professor of applied misanthropy

King Neptune

Becky Black

Writing my way off the B Ark

King Neptune

Dave Williams

Zappa isn't frank!

Dennis E. Taylor

Get it off! It burns!

blacbird

Neegh