Oil is constantly underestimated. Underestimated hopefully in most cases but underestimated nonetheless.
A - Demand for oil is notoriously inelastic.
If demand drops a little, a big shift in price will "compensate." If solar starts genuinely digging into oil's market share the oil prices will drop by a lot, fast until almost the same amount of oil gets bought as before. Whatever you are assuming is the "cheaper than oil" flip point, is very likely to be too optimistic. It is likely to just be cheaper than the most expensive marginal 5%.
This is inherently speculative because economics and because real marginal costs of oil production are closely guarded secrets, but over the last 50+ years this has usually been correct. This isn't disruptive tech land where the cheaper-worser becomes the cheaper-better and wins total victory. This is substitutable commodity land where prices drop like rocks but total volume produced barely moves.
^Much cheaper power for slightly less carbon is still a good thing, but more on the prosperity front than the climate change front.
B - There is a lot of oil down there. Even "dry" wells are usually only slightly drier than they were when we started drilling them. We just got the easy oil out and then stopped. FInding oil really means finding "accessible" oil. Our methods of finding and our methods of accessing are technology too. It's advancing, like solar tech is.
This is what "fraking" is. It's a new way of accessing.
C - Speaking of fraking… It's only just begun, probably. It's happening in the states because that's where it happens to have been invented. There is no reason to think that it is not equally applicable in Russia, S. America, the Persian Gulf or anywhere else with oil.
I like the elegance of solar though, and I hope it succeeds. Decentralization seems like it can take a big part of the residential market. In rich countries, a lot of people can afford it and with between incentives, people's general interest and the real estate value (people like investing in their home), it seems like it will have a good run.
In poor and/or dysfunctional places, going off grid is always a favored option. Solar power can do what mobile phone did. Anything that relies on less infrastructure is more suitable for these places. This is an especially attractive idea. Mobile phones/modems mean that phone infrastructure is much easier to come by. Solar + battery could mean the same for electricity. Add in rainwater + home purification systems (progress here too) and all we'll need is hover cars to deal with potholes.
I need a Terry Pratchett philosopher to help here, but they're all in the bath.
First, the inelasticity means that a tax is a great way to raise taxes, but a terrible way to reduce use. Oil has gotten more expensive lots of times, when has it ever made people take the bus? We've seen oil price fluctuations. A tax will work just like a natural price hike. A nasty painful tax (with street protests just short of revolution) might get you a 10% reduction in emissions, maybe 30% over a really long time if your tolerance for civil unrest is above average. Probably less. Also, flat taxes hit poor people hard.
Second, a carbon tax is an almost hopeless mission. We're having enough trouble with money taxes. I mean we might be able to make carbon tax or cap-and-trade or something in that family of thing work in a country. We might even be able to get it partially functional in the EU, NAFTA or some group level. We are absolutely not ready to pull off this level of cooperation at international scale yet.
We will have cheating and defecting. Carbon tax evasion and carbon tax loopholes and carbon tax havens, or whatever the gasey equivalents of monetary tax mess are.
A great book (though slightly dated now) on climate change is "Climate Wars" by Gwynne Dyer. He's a shining beacon journalist and an ex soldier-scholar tip. He made the argument (I'm paraphrasing) that we're lucky we hit this problem now, when we have a chance of cooperating at this scale. Imagine if you had to get China, Kazakhstan, Brazil, Canada and everyone else to cooperate in the 1700s. I like the thinking, but I think he's overestimating our chances. It's straddling the border region between optimisms and lunacy.
We have spent the last 20 years trying to come up with a light weight agreement for minimal reductions in rates of expansion. The idea was, put in a framework, make it easy and painless at first. Then turn the crank. We failed! We failed at ground level, well before the point where it even starts to sting. Even though the targets were way under what we need to be targeting in order to avert disaster based on the median models (or the most lenient ones), we failed to agree on them. And, when we did agree them, we failed to meet them.
A - Demand for oil is notoriously inelastic. If demand drops a little, a big shift in price will "compensate." If solar starts genuinely digging into oil's market share the oil prices will drop by a lot, fast until almost the same amount of oil gets bought as before. Whatever you are assuming is the "cheaper than oil" flip point, is very likely to be too optimistic. It is likely to just be cheaper than the most expensive marginal 5%.
This is inherently speculative because economics and because real marginal costs of oil production are closely guarded secrets, but over the last 50+ years this has usually been correct. This isn't disruptive tech land where the cheaper-worser becomes the cheaper-better and wins total victory. This is substitutable commodity land where prices drop like rocks but total volume produced barely moves.
^Much cheaper power for slightly less carbon is still a good thing, but more on the prosperity front than the climate change front.
B - There is a lot of oil down there. Even "dry" wells are usually only slightly drier than they were when we started drilling them. We just got the easy oil out and then stopped. FInding oil really means finding "accessible" oil. Our methods of finding and our methods of accessing are technology too. It's advancing, like solar tech is.
This is what "fraking" is. It's a new way of accessing.
C - Speaking of fraking… It's only just begun, probably. It's happening in the states because that's where it happens to have been invented. There is no reason to think that it is not equally applicable in Russia, S. America, the Persian Gulf or anywhere else with oil.
I like the elegance of solar though, and I hope it succeeds. Decentralization seems like it can take a big part of the residential market. In rich countries, a lot of people can afford it and with between incentives, people's general interest and the real estate value (people like investing in their home), it seems like it will have a good run.
In poor and/or dysfunctional places, going off grid is always a favored option. Solar power can do what mobile phone did. Anything that relies on less infrastructure is more suitable for these places. This is an especially attractive idea. Mobile phones/modems mean that phone infrastructure is much easier to come by. Solar + battery could mean the same for electricity. Add in rainwater + home purification systems (progress here too) and all we'll need is hover cars to deal with potholes.