As the price of solar drops, the demand rises, which is being met by increases in the supply of systems and installers, which is driving down costs, which increases demand, and the cycle repeats. An opposing, but different, cycle is happening in oil where, as the price of oil drops, the profits decrease, the debt incurred to drill for the oil becomes harder to pay off, but more oil must be pumped to make up the revenue, even if it isn’t at a profit. Some oil firms have been cash flow negative since 2009, and;
“Almost no new drilling programs will be initiated at current prices except by the financially desperate and the irrationally impatient, and in three years over 80 percent of all production from current wells will be gone!” – Barrons
Over-extended drillers are expected to begin defaulting on their loans, which an expected rate of 20% in 2016.
In the meantime, solar and wind progress to the point that they are cheaper than fossil fuels, further enabling one virtuous cycle while degrading the other.
(Click on the photo for the link.)