By David Toke
With world oil prices barely touching $40 a barrel and BP announcing major cutbacks in oil exploration you may be thinking this is an odd moment to talk about needing to head off an oil price spike. But the fact that oil companies are scrapping plans for oil exploration is itself a warning sign that as and when the world economy recovers there is not going to be enough production to meet demand.
Sure, long term we are heading for peak oil demand as the increasing use of electric vehicles of various sorts cuts into oil demand – but as yet we are yet to see much influence of this trend on oil demand. Indeed with electric vehicle sales still struggling to get above 2 per cent of new car sales this growth could easily, for the moment, be overshadowed by a drop in oil prices in recent times which encourages less fuel efficient petroleum based vehicles to be purchased. That is especially the case as more SUVs are being put on the road, for example in the USA.
When people discuss oil price crises there’s usually too much focus on who in and outside of OPEC is doing or not doing this or that. But there’s a simple truth: if oil demand grows and supply has not increased to meet it, prices will spike.
Consumers are going to become confused and in some cases angry if and when oil prices increase sharply. They are going to wonder what Governments, like the UK, been doing in cutting back on incentives to buy new electric vehicles. Environemntalists will certainly be criticising governments at different levels for not making cities more bicycle friendly. The covid crisis with its emphasis on isolated personal travel has shone a spotlight on the means to do this.
There’s clearly no time to lose. We must, as far as we can, go for bikes and electric cars; not just to head off spiralling temperatures from climate change, but to head off spiralling oil prices!
And, of course, to power that sustainably we need an urgent increase in energy efficiency in renewable energy
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And of course there is travel avoidance and working from home and setting lower speed limits, so clearly shown to be possible and desirable during the lockdown.