×

Oil headed to $100? $30? It may not matter

There is a great debate in the markets as to whether oil prices are going to $30 a barrel before they return to $100, or vice versa.

It may not matter because energy alternatives could soon make oil a worthless commodity. It may seem unthinkable, but history is replete with commodities that not only lost the bulk of their value, but also their utility.





When John D. Rockefeller first got into the oil industry in the early 1860s, the main use for crude oil was to refine it into kerosene, which was used to illuminate American households. Indeed, kerosene made coal oil and whale oil obsolete. (Of course, the incandescent bulb and a wired world eventually made kerosene a relic as well.)

Read MoreCrude to 'go the way of whale oil': Dennis Gartman

The automobile and other forms of transportation would increase demand for gasoline, fuel oil, jet fuel, other byproducts of crude, and make it the ubiquitous commodity we have come to know — and sometimes hate — today.

But will it always be so?

There is an energy revolution going on today that goes beyond just fracking (which is a major revolution in and of itself).

Dinosaur
Dave and Les Jacobs | Getty Images

Virgin is the latest company to announce a foray into electric cars, joining Tesla and Chevrolet. And Tesla is preparing to showcase a battery that can power an entire home with stored wind and solar power, effectively reducing one's power bills and taking homes entirely off the grid.

Lockheed Martin, best known as a defense and aerospace giant, has made some explosive claims about the potential for its "compact fusion" reactors. The company says that reactors, small enough to fit on the back of the truck, can harness the power of the sun and usher in a disruptive innovation that will make fission reactors, and other more conventional forms of energy, entirely obsolete.

Read MoreLockheed opens up about secret weapons unit

The U.S. has also surpassed Russia as the world's largest producer of natural gas, which is another fuel that could ultimately replace oil and gasoline as a source of power for cars — or, more likely, trucks.

With a more than abundant supply of petroleum, and a shockingly rapid pace of disruptive technological developments in energy fields, of all kinds, it appears that we are on the cusp of an explosion in the number of energy sources available to homes and businesses alike.

I think that the long-term implications for oil prices are far more bearish than the $30 "bottom" that many are waiting for. It may be an exaggeration to suggest that oil is going to zero. But it may be quite possible that oil has no meaningful upside — save for a trade, every now and then.

Boone Pickens, a lifelong oil man, recently reiterated his prediction that oil prices will be higher by the end of the year — he expects to see it hit $70 a barrel.

Read MoreBoone Pickens: Why I see $70 oil by year end

Well, Rockefeller once thought that his inexpensive kerosene would light the world forever. He was right about the future of oil, but wrong about one of its most significant byproducts.

These alternative energy sources may one day be abundant enough to drive oil out of the market entirely. It used to be widely believed that oil came from the remains of dinosaurs (a theory that was disproven a few years ago). Well, oil may ultimately face the same fate … extinction.

Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. He also editor of "Insana's Market Intellgence," available at Marketfy.com. He delivers a daily podcast, "Insana Insights," and a long-form weekly version, both available on iTunes and at roninsana.com. Follow him on Twitter @rinsana.