tv Ali Velshi on Target Al Jazeera February 4, 2016 9:00pm-9:31pm EST
next. next. i'm ali velshi, on target - the crude reality of falling oil prices, good for you when you fill up at the pump, but maybe bad for your 401k. falling oil prices are wreaking havoc on oil producers and workers. this week royal dutch shell said profits fell 56% in the last three months of 2015 compared to
the year earlier, and confirmed the new wave of job cuts. american oil giant conoco phillips lost a billion in the same. here is why u.s. crude settled at $the 31.72. prices dipped into the 20s, that's a far cry from the $100 plus that oil traded at in mid 2014. and the downward spiral takes a toll on global stock market in asia and america. and that caused angst at the world economic forum. in davos switzerland, that brings together leaders, executives and others from the global elite. they meet to change ideas and solutions. i sat with some of the big wigs in davos, including sir richard branson, the british typhoon, and he offered a different take on the mayhem of falling oil prices. have a listen.
>> i cannot understand why the stock markets are panicking over low oil prices. many companies will be affected and oil producing countries will be affected. for the vast majority of people in the world. they'll benefit from low oil prices. for the vast majority of companies, they'll benefit from low prices and it could be the generator of, you know, the economy that you can imagine. on top of that, you will have clean energy revolution taking place, and what the governments have said. they'll get to carbon zero by 2015. that means every year we'll have 2-3% more clean energy produced and that will reduce the demand for royal. iran comes on board saying they have started shipping half a million of oil a day on to the
marketplace, and that would go up to three or four million. we have a world where you have low oil maybe indefinitely. where you adjust and see the benefits of that. countries that are reliant on oil figure it will happen, they have to get used to it diversifying. >> one of awards was given to leonardo dicaprio who gave a speech about oil companies and damage to the companies and we have to move on to renewals, many were uncomfortable with that, do you believe the paris treaty and governments that say we can cut our carbon emissions by 2050, the way we are planning to? >> we have to, i believe.
cole is the number one energy. we have to be sure. >> indians and chinese say we need a lot of power and coal. >> china could have a revolution against the leadership, and clean up their cities. so the last thing they need is more coal fired stations. i think the leadership realized that. there is a revolution going on in china. so i think the - i think, you know, if governments set the rules and say to business we are going to be carbon neutral by 2050, we have a marshal plan to get carbon neutral by 2050, and business people work with governments to show how they can do it. and are working with bill gates on looking at breakthrough in
energy, they have major breakthrough in the energy revolution to get there. we'll get there. and i think the energy industries have to realise that it is likely that that will be achieved. the governments must set rules, like pricing carbon. on a global base when you look at a company like virgin, to use an example. does that mean physical neutrality or pricing it in a way that there's an offset that passengers hope for. >> 2010 to 2020. it's through not heavy planes, but carbon - made of carbon.
and by 2020 do 2050, but hopefully long before that, we have to finish fuels not emitting and we are starting a major programme. they are. >> if there's one or two industries, where that has to happen, that is fine. ideally, we want to get every industry that is carbon neutral. >> that wases sir richard branson, and i sat with a chief global economist at standard&poor's, and he's watched economic destruction caused by plummeting prices. i asked how oil prices got though this point. here is his explanation. >> when the oil price collapses
in the way it's down and continues to do so, it's supply and demand. the question becomes which factor and driving it. we don't think it's a collapse in demand. >> if you look at the oil price drop that's all you knew. demand may slow. that's because the structure of the economy is changing. we are living in an information world. talking of davos, the fourth industrial revolution is the theme. economies are revolving around information and new technologies, it's not as intensive of oil. on the command side, technology is hoping. it seems to be predominantly a
supply story, feeding in as well. >> it is coming back into the global supply chain. oil prices are falling. it will hit producers, oil countries, and the sector itself. 70% of the u.s. economy is the consumer, consumption, and it's putting more dollars in the pockets of consumers. it's true in china, europe and japan. >> the countries that win the most are net importers. the u.s. is in a situation where it produces a lotle oil. >> net balance is good for consumers. >> 15-20 years ago you would have said it was unambiguous. >> because of the jobs from oil and profitability yit for oil
companies. the fall in the oil price, immediately it would be positive. >> interestingly, a year ago, one of the biggest issues was europe. low oil prices was a game. they were not exporters or producers. >> correct. europe is - i don't know if you want to pivot to europe. it's an interesting story. we think europe will do well this year. they still have got a lot of structural problems that they are dealing with. let's find out about what - europe has been going in a different direction than the united states. the united states now signalling upward in interest rates. europe is still moving the other direction, trying to be more stimulative. is that the answer, is it likely to work. >> it is the answer, it will work. it's important to bear in mind here that the e.c.b. only
started doing quantitative easing less than a year ago, starting in march of last year. the federal reserve did quantitative easing last - at the end of swathe, beginning of 2009. the economies are in different positions. unemployment in the u.s. is 5%, more than 10% in the eurozone. the level of g.d.p. in the eurozone - this is shocking statistic. the level of g.d.p. is still about half a percent shy of its pre-crisis peak. has not got back to that water mark. in the u.s. that mark is close to 10%. the fed is starting to normalize monetary policy. the e.c.b. was late to jump on the quantitative easing. the train has left the station, it's a good thing, it will have a positive effect but it's no magic bullet. >> if you make xars and trucks
>> this is one of the most important sites in the century. >> this linked the mafia and the church. >> why do you think you didn't get the medal of honor? >> i can't allow you not to go into that because that is your job. >> we gonna bring this city back one note at a time. >> proudest moment in my life.
the plunge in oil and gasoline pricing has been a boost for most of the u.s. auto industry, car companies selling 17.5 million cars and trucks in the united states, in 2015. $2 gas has been terrible news for automakers, betting big on electric vehicles. sales dropped 5% last year, and no one knows about the challenges facing electric cars than carlo, the chairman of renault nissan alliance. the electric car, the leaf, saw sales fall 43% in 2015. i spoke to him at the world economic forum in davos, and asked about the challenge of selling cars in an era where oil dipped below $30 a barrel.
here is what he told me. >> i don't think we would have expected to talk about oil with a 22 in front of it, i doesn't spect it with a three in front of it. at what point do you look at the line up, long term projections about what kinds of cars you are selling. >> we all know that the price of oil is unpredictable. we can predict it in one month, five years down the road, 10 years down the road. you cannot build strategy on pricing of oil. you have to build it acknowledging the fact that the price of oil is unpredictable and that is what you are doing. most of the technologies that we are developing, and cars of tomorrow, are more impacted by emission regulation, consumer expectation, technology evolution than the price of oil. it's not because we would love to see it, but... >> all of those three things we talk about, emission,
regulation, customer expectation and technology lead to the same place, which is greater fuel economy. >> connected cars, these are the cars of the future. this is going to happen independently. however, does this low price of oil put a further dent - you and i were dreamers about electric cars. i think we thought the market would be bigger than it already is. does this put a dent in it, the incentive to get an strict car. goes away when gas prices are doing this. >> when gas prices slow down, it's an obstacle to the revolution, when prices go up. it's a tail wind. i don't think the gas price will deviate the strategy, it will continue with the strategy. from time to time we'll have
head winds and tail winds. i was the only one in 2006. all car-makers are coming with stricke cars. yes, we are a little disappointed by the speed at which the market will be developing. it will develop much faster, particularly led by the prestriction on emission. >> i wonder whether is it regulation or incentive government policy or people that want trick cars, what drives the market. >> i don't think we can see people want diesel or gasoline, engineer. at the end of the day, don't thing in terms of this. for example, for stricke car.
they have another support from government. they see that it is something not a concern. they will move. so they are a little diagnostic in terms of technology. >> i imagine people like your kids are less ab nostic. younger generation seems to want zero cars. >> not at the price. they would love to have electric carat the same price. this is where we have to make sure we reduce the costs of electric car, which is happening. the scale is gaining, you have more and more suppliers bringing the necessity apart at the attractive prices. we'll get there, it's taking more time than we thought. >> let's talk about how ubiquitous this will be. there are stricke cars out there. tesla is the name around it. you are selling cars at a different price point making it accessible. it doesn't roll off the tongue.
people are not saying do you have a leaf, they say i have an electric car, do you have a tesla. >> but the premium market represents 8-9% of the market. when you look at how much the market covers in the media. it's more than 50%. 8% of the market share. it's totally normal that when you bring an electric car on a premium car, everyone is talking about it. you know, bread and butter kind of car, it's less attractive. if you really want to make a difference in terms of your mission, you have to address the bulk of the market. if you don't, it's not the 1%, 2%, 100,000 car that will make a difference. we continue to concentrate on the bulk of the market. even though it's less talked about. we think on the long run, this
just interrupting global markets. that topic was discussed at the world economic forum in switzerland, where leaders, corporate executives meet each year to exchange ideas to promote growth. i talked oil, geopolitics with ian bremer, the director of a political risk form. he said this year they met under a cloud of anxiety. this is the first time this group has gotten together in the new year. it's the world's leading c.e.o.s, financiers policy leaders, thinkers, and what happened in the last two weeks, it's been basically a profusion of negative headlines, you have the china markets, oil, fresh low, the u.s. took a beating. the migration issue. so, i mean, if you are looking
at the headlines, and you have a lot of anxiety, and they are getting together, and it's feeding on itself, frankly, i would not be surprised if we were to look back every year when you have an environment like this. i bet the davos effect has an expanding impact on the market. >> these are some of the biggest corporate leaders in the world, some of the biggest commentators, political leaders, if there's anxiety, everyone leafs with a bit of it. everyone is feeding into themselves. in some ways, i'm very concern beside the geopolitical environment particularly emanating from the middle east. i look at what is happening in the world right now with, i think, more balanced approach than what i'm hearing. >> i have been looking and wondering if it feels a little like it was before world war i, where everything is a tinter
box, and everything can have an explosive effect somewhere else, particularly the geopolitics around the middle east. iran and arab countries, russia, n.a.t.o., turkey in a fight with everyone that it can find. what is your more balanced approach. it seems explosive. >> markets impact each other. geopolitics a little less so. americans are insulated from geopolitical problems in the middle east, so is china and japan, the three largest in the world. if you say - i had so many meetings in the last two days talking about refugees and myingiants, and there were no -- migrants, there were no solution, actually, there are, just not for the syrians and the middle east. the solutions for the united states is clear. europeans are hitting on that solution.
merkel may be the last to get the joke, and it's hurting her ratings, when i saw the german president saying we have to put quotas, this is because everyone in europe is saying "not my problem." i think the europeans are going to limit the exposure they have whether through external borders, to not just syria, but iraq, afghanistan and everywhere else. that will go down badly to the sustainability. >> how does that change the equation. >> if millions can't find their way to europe and the united states. what happens? >> well, we have countries in the broader middle east, north africa. central south asia, that don't look sustainable. we have governments that will lose control. we have economic models that are
not going to work. if you have a country that has done well, on the basis of energy wealth, and yet you haven't created diversification. >> it's largely the case for saudi arabia and surrounding neighbours. >> they have done something in terms of education, but they have not, yourself, diversified as well as it should have. >> and saudi arabia is increasingly looking isolated as a consequence of that. it's the saudis saying you are going to cut you have relations with iran. the only country that did was bahrain. i think djibouti, sudan, that is not a coalition. the other countries condemned it.
ban ki-moon did all the time. they are basically saying no. the suedies are not going to write the checks. if you are leading one of these governments. you have to ask yourself, you are insecure saying what will keep me in power. what will keep my elites happy and fed and off the streets in the one, two, three, years. i accept that. this is a real problem. it's not fixable. they'll use an option past the tipping point, and the question is how much can you contain the damage, not can we fix it. nobody has a solution to that problem. so saudi arabia - we are in a million, iran threatens to put
half a million. >> how long does saudi do it before it blinks. oil, at this price, is not sustainable for the saudis. >> it's not clear what blinking for the saudis would mean. if they take a significant amount of oil off the mark, prices go off. but the saudis take the oil off. it's hurting them. when prices go up. the americans, fracking can snap back overnight where in the historical perspective it would have taken 6-12 months. i don't know what your option - i don't think you have economic option. one of the reasons, i think, that you see saudi escalation, and a reason you continue to see more fractious security in the region is because domestically there aren't the options. these are not stupid people. leaders look at the options. there's a reason people pull
back on production, they don't think it will work. >> that's the show for today, i'm ali velshi, thanks for joining us. the news continues here on al jazeera america [ ♪ music ] thanks for joining us for "america tonight", i'm joie chen. there is new terrifying indication that europe's refugee crisis is spiralling out of control, has tone on another frightening dimension. "america tonight" investigates the plight of