Seize the opportunities
One of the hottest topics today is the abrupt 50% oil price decrease since its 2014 peak. In basic economics of our actual system the price varies until demand and supply find equilibrium, this is not happening though. Several reasons can be attributed to this decline then: an increase in supply driven by US shale oil, a surprising steady production in some troubled Middle East countries and the OPEC’s (Organization of the Petroleum Exporting Countries) decision to do not lower production in order to maintain their market share took last November in Vienna, Austria.
This can be either good or bad news depending on the point of view. According to the World Bank, a think-tank, these are good news because it will boost economic growth and countries that are oil importers will be specially benefited. On the other hand oil extracting countries whose GDP (Gross Domestic Product) is highly dependent of oil revenues will not be that lucky. Another example: costly exploration and extraction projects are not economically feasible at these prices and are being paused, not the best news for oil companies but can be good news to the environment if the money is rather invested in renewable energy projects (and still bad news if the money is funneled to build new cheap oil-fired power plants).
Low oil prices can help to lessen negative impact of tough decisions: subsidies. In 2014 governments spent US$550 billion on fossil fuel subsidies holding prices and financing companies to look for oil, this money has also lead to an increase in pollution and an even more unequal wealth distribution. If subsidies are cut the cash can be used to increase public spending building schools and hospitals for example.The situation can also be the right opportunity to start pricing carbon emissions as the IEA (International Energy Agency), a think-tank, mentioned in their last meeting in December in Lima, Peru. Having low oil prices reduce the political risk of taxing and creating new carbon-related policies. These directives will encourage energy conservation and push for clean energy use. All these are powerful tools to fight against climate change.
The next OPEC meeting will take place in June this year and decisions will take place depending on the supply and demand evolution of these months. In the meantime there are plenty opportunities to foster sustainability. Economies can be re-healed thanks to cut in subsidies and carbon pricing, environment will appreciate more penetration of renewable energy systems and societies can enjoy cheaper energy using it in less and more efficient manners. Governments and society have an important opportunity to act for a sustainable future; there are good times ahead.