Why cheap oil is good news for the climate

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Why cheap oil is good news for the climate

By Jess Worth


Adam Selwood under a Creative Commons Licence

In the last six months, something very important has happened in the world of global energy. The price of oil is now almost half of what it was. It was high at $115 a barrel in June. Then prices went down fast and now are under $60 a barrel. And it is possible the price will go down even more. The change in the price of oil is important in many ways. People like Richard Branson, the “green capitalist”, say it is very bad news for the renewable energy industry. Perhaps this opinion is too strong. People who support the environment should not worry about the talk of very low fuel prices and the increase in fossil fuels. Cheap oil does not mean that there will be more and more dirty fuel. It does not mean more greenhouse gas now that we need to cut it. In fact, it is possible that cheap oil means the opposite.

As finding oil in the usual way is now more difficult, the big oil companies are looking at more expensive ways. Shell, Exxon, BP, and others say that most of the oil in the next few years will come from tar sands, fracking, deepwater drilling, and the Arctic. That’s where their shareholders’ are putting their money today. But that’s also where many of the problems are. The new ways of finding oil are much worse, more carbon-intensive, with more danger of accidents. We need to leave 80 per cent of fossil fuel in the ground to stop serious climate change and we need to, starting with stopping these new ways of finding oil. But the good news is that all these new ways of finding oil are more expensive.

Tar sands, deepwater drilling, and the Arctic – none of these are possible at an oil price of $60 a barrel. And not possible at $70 a barrel. So the big drop in oil prices is a real problem for these plans, and shareholders are not investing their money yet. In fact, Goldman Sachs said this week that $1 trillion of investment plans are now uncertain. They don’t say that at the same time these plans would mean a temperature rise of well over 2 degrees. This is very bad for the world. Here in Britain, Chancellor George Osborne has given billions of pounds of tax breaks to the North Sea oil industry in the last three years. But the industry is still doing badly with low oil prices. This shows that the government is wasting tax payers’ money when it supports the oil industry and that the government is making the age of oil longer. The government needs to support the renewables industry in the same way and then we would no longer be a long way behind the other countries in Europe with clean energy. In Alberta, Canada, oil companies are very worried as the multi-billion dollar tar sands industry looks more and more like the world’s largest and most environmentally destructive project of no value to the community. Perhaps it will come to nothing now.

And what about shale? In some ways the big increase in US shale oil started the problem. America’s oil fracking suddenly created so much oil and so OPEC quietly started a price war. OPEC knew that many (but not all) of its oil-rich members would be OK with the low oil prices but that the frackers would not. Now the high-cost shale industry is also starting to have problems. This is good news for the planet and for people living in US states with a lot of fracking. Their water, air, and land is polluted and their health suffers. After their terrible experiences the state of New York stopped fracking this week. Perhaps with less fracking this will give other US states a chance to do the same.

So there is hope for us and a reason to celebrate.

NOW READ THE ORIGINAL:http://newint.org/blog/2014/12/19/cheap-oil-good-for-climate/

(This article has been simplified so the words, text structure and quotes may have been changed).