Renewables: The Next Prize?

The business and geopolitical history of the 20^th century was written in oil…black gold…Texas tea. Indeed, the need to secure abundant energy supplies has been an essential plot line of international relations ever since the Industrial Revolution. Some historians argue, for example, that the expansion of the British Empire was largely driven by the need to secure refueling stations for the British Navy—in that case coal, although admittedly the observation has a certain chicken-and-egg-ness about it. A failing President Franklin Roosevelt returning from the Yalta conference in 1945 met with the King of Saudi Arabia, in large part, because of the looming strategic importance of the Saudi oil reserves.  And indeed, the oil-rich Middle East became one of the most important battlefields in the Cold War between the U.S. and the Soviet Union.

Today, declining oil and natural gas prices are messing with the plans and strategies of several countries such as Russia, Iran, and Venezuela. But those are today’s problems. Oil and natural gas have long been the world’s most volatile commodities, which is to say that clever speculators are already placing long bets on when the price of oil will once again explode upwards. But another more provocative and more significant narrative concerning fossil fuels lurks behind the daily stories of price volatility: The era of fossil fuels is coming to a close.