A collapse in the price of fossil fuel means bad news for efforts to curb global warming
THE price of fuel oil has always played a major role in shaping global events in the 20th Century. Many would like to link the collapse of the communist bloc to the big tumble that the price of oil took in 1984. A fall therefore in the price of oil in 1998 should also be expected to have global implications.
The current economic crisis in Asia means less consumption of oil in this region and a consequent effect on the global price of crude oil for a long time. It is also being predicted that with oil prices set to remain weak in the foreseeable future the cartel of Oil Producing and Exporting Countries could fall apart. The result of this could tie up in knots the moves to quell global warming inadequate as the current emissions reduction commitments are under the Kyoto Protocol.
This slump in oil prices is coming at a time when governments and industries in the North have to start a massive transfer of investment from fossil fuels to non-carbon based energy sources like solar power. Global warming mitigation efforts will now have to contend with a sudden increase in the availability of cheap fossil fuel.
Already international lending agencies in Russia are being encouraged to press for creating small private bodies to exploit and sell more oil to the North. Kazakhistan is busy signing agreements to exploit oil and gas in the Caspian shelf. Azerbaijan has attracted long-term investment worth US $40 billion for developing its oil sector.
The sudden flood of oil which will result from all these efforts will lead to a downward spiral in conventional energy prices. The Royal Dutch Shell, the world's largest oil company predicts that prices of crude oil will hover around US $12 to 16 a barrel over the next two to three years.
This is bound to invite more consumption of gasoline. It is estimated that this would bring about a corresponding increase in carbon emissions to the tune of 33 per cent above 1990 levels in a business as usual scenario in the US. This is sufficient to set back efforts to slow down global warming and force the US to push harder for cheap options to cut emissions in developing countries instead of doing much at home.
It seems the crisis in Asia is just about to trigger off a major environmental crisis.
We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.
Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.