What are the effects of cheaper oil?
Meanwhile, lower prices should have positive effects on net oil importers, including Japan, India, China and, indeed, the UK. However, there has been less discussion about how this may affect the growth of alternative and renewable sources of energy.
What's the connection?
The last big drop in oil prices, in the early 1980s, led to a dramatic fall-off in investment. "Renewable energy subsidies have been mostly sold to the public on the basis of the economic benefits," says Peter Atherton, an energy analyst with Liberum Capital, in an interview with The Independent.
"But the economic arguments hinged on the idea that fossil-fuel prices would get more expensive, while expensive renewable subsidies would be able to come down over time. That's looking doubtful now."
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Does everyone agree with this analysis?
On the other hand, many analysts say the lower oil price won't do any significant damage to the demand for renewables, pointing out that the world is now a very different place from 30 years ago.
What has changed?
Climate change is seen by policymakers in the world's biggest economies as a core strategic issue, and there's a plethora of local and national incentive policies for renewable power around the world that offers renewables a buffer against fluctuations in the oil price.
So while oil companies scramble to mothball projects that are not economic with oil below $70, developers are on course to invest more than $250bn this year on wind, solar, geothermal and other types of renewable power, according to Reed Landbergof Bloomberg.
"Renewables are supported by policies, and that's not something that will be amended quickly just because of oil prices," says Takashi Hongo, an adviser to the Japanese government. "There will be hardly any impact."
Is it just about subsidies?
In addition, costs for oil and renewables are heading in opposite directions, says Bernstein Research. Right now "renewable and fossil-fuel cost per unit of energy are roughly comparable in many places".
However, "renewable energy is a technology.In the technology sector, costs always go down. Fossil fuels are extracted. In extractive industries costs (almost) always go up". That trend implies we can expect renewables to prosper, even in the face of cheap oil.
What if oil gets even cheaper?
On the other hand, Xizhou Zhou of IHS Energy points out that coal is widely used for power generation in China and has always been cheaper than renewables but a 40% to 60% slump in coal prices in recent years hasn't dented the growth in China's renewables business.
What's more, attitudes to the environment are changing, so lower oil prices don't automatically mean that consumers will once again become "gas-guzzling monsters", reckons Jeffrey Ball in The New Republic.
"Times have changed since the dawn of the last era of cheap oil. Even assuming low oil prices are the new normal, a cleaner energy system probably is too."
The outlook for oil investments
The investment bank's analysts examined 400 oil and gas fields around the world, many of which are awaiting a final investment decision. It found that with oil at $70 per barrel, fields representing 2.3 million barrels per day of output by 2020 (and 7.5 million by 2025) have become uneconomic.
The Goldman findings are significant, given that 7.5 million barrels is 8% of global demand, reports Christopher Adams in the FT. However, they also suggest that "the supply glut that has sent prices tumbling could soon vanish as the oil majors delay big-ticket production projects".
