Ignorance is as bliss as you want it to be.

The problem with fossil fuels, more specifically, big oil, is that it affects all of us. Not only does it affect us in the obvious ways of releasing carbon emissions into the sky, but in the abstract. Abstractly, researchers and economists have found that big oil’s outstanding loans and bonds for the oil and gas industry had tripled from 2006 to the year 2014.[1] As oil prices continue to decline dramatically, under the $70/barrel threshold, according to a Goldman Sachs study, it will kill almost a billion dollars in investments on new oil projects. In the short term this will help the average consumer, as the US continues to find more oil through fracking and as OPEC continues to drill, prices will continue to fall. However, according to Kevin Book, a managing director at ClearView Energy Partners LLC, “an all-out price war could take up to 18 months to play out.”[2] This was said in 2014, now it is 2016, and crude price oils are at $46.90 a barrel. First it was the big banks which crashed, and now we are seeing the slow tumble of big oil which could potentially threaten to place us back in a recession. Now that is a big statement to make under normal conditions, however, the signs are everywhere. The Ratings Agency Standard & Poor, what we know as S&P, in April reported that 46 companies had defaulted on their debt that year ~ “the highest levels since the financial crisis in 2009[3].” With half the defaults being accrued in the oil and gas industry.

Now as we know from the previous blog post on the Paris Accord, strict mandates had to be made by the world’s strongest nations in order to avoid catastrophic environmental disasters. According to a study done at Texas A&M, 2 degrees Celsius seems to be the magic number that we can’t rise above. At two degrees Celsius hotter, on average, around the world, we have the doomsday ice caps melting, and sea levels rising. Now, some have criticized the Paris Accord, arguing that it only is for show, to please the doubters. This study argues much the same, saying that on the one hand, renewable usage will fall by 2050 to 50%, but on the other hand, if we are to use over 50% of the oil reserves on hand right now, that we may as well start digging graves because we’ve already doomed ourselves.

In the short term, yes, buy all the oil you want, in fact, get that Hummer you always wanted. Cost is down, so buy, buy, buy. Just remember, in the years leading up to the ’08 crash, people were buying tons of houses and taking tons of loans, and then when the crash happened thousands lost their jobs, and their homes. They say ignorance is bliss, but I’m afraid if we stay ignorant this time the imminent economic crash will end up being the least of our worries.

[1] Ahmed, Nafeez. “Energy: Sun’s Heat Could Cut Fossil-fuel Use.” Nature 523.7561 (2015): 384. Web.

[2] Randall, Tom. “Nearly US$1-trillion in Zombie Projects Stranded in Oil Fields around the Globe, Says Goldman Sachs.” Nearly US$1-trillion in Zombie Projects Stranded in Oil Fields around the Globe, Says Goldman Sachs. Bloomberg News, 19 Dec. 2014. Web. 12 Aug. 2016.

[3] IBID.

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