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The high drama of the OPEC+ meeting is certainly exciting, particularly for tweeps like me who study global oil history.
But there's a bigger picture.
The actions of energy producers will have a profound impact on the mitigation/adaption to climate change over the next century
But there's a bigger picture.
The actions of energy producers will have a profound impact on the mitigation/adaption to climate change over the next century
Cheap oil has fueled the expansion of the global fossil fuel economy: since the 1940s, Great Powers have encouraged Western companies to make oil available, in large quantities and at low prices, to consumers in the West.
The oil revolution of the 1970s altered the equation, but not the fundamental principles under-girding the fossil fuel economy. Since 1980, carbon emissions have exploded, as oil consumption moved from the industrial West to the Global South.
Oil is still a commodity, despite the immense political significance bound within it. OPEC states have long understood that dependence on oil is dangerous in the long-term. Since the 1960s, leaders have foreseen an age where oil loses its charm. But this produces complications
A sense of urgency encouraged producers to pump as much as possible. This drives down prices. Theories of cartelization argue that a gradually rising price is best for a wasting asset like oil: but new deposits kept appearing, and oil is now more abundant than ever.
That means that OPEC states (which possess the largest and most low-cost oil deposits) cannot wait for economic factors to push them away from oil. Through cooperation, they could potentially manage prices forever, despite threats from abroad.
The existence of abundance means the move away from oil must be a choice, rather than a move determined by models or economic indicators. For better or for worse, the transition towards a cleaner energy economy must involve OPEC.
This meeting--which could result in the largest orchestrated production cut in history--might be the beginning of a new era, where the profitability (and sustainability) of fossil fuel production is increasingly questioned.
Along these lines: a piece yesterday from @liamdenning illustrates just how many challenges the world's swing producer faces https://www.bloomberg.com/opinion/articles/2020-04-08/opec-meeting-oil-savior-saudi-arabia-s-world-is-coming-undone?sref=kOk687Pk
Meanwhile the US govt might have to step in to prop up its own oil and gas industry, as it has often done in the past, to ensure profitability. https://www.bloomberg.com/news/articles/2020-04-09/occidental-urges-staff-to-write-congress-asking-for-liquidity
The point is this:
The fossil fuel economy is a product of the 20th Century. It resulted both from technological advancements, but also specific political and economic decisions made by a host of actors.
These same actors face a similar choice today: to stick by oil or move on
The fossil fuel economy is a product of the 20th Century. It resulted both from technological advancements, but also specific political and economic decisions made by a host of actors.
These same actors face a similar choice today: to stick by oil or move on
