Oil Price Will Recover To $100 Unless There Is Further Climate Action, Says BP

Source: The Week

A global glut of oil will eventually be eroded by steadily increasing demand and its price will spike to $100 a barrel a number of times over the coming years, according to oil major BP.

In its annual Energy Outlook report, the company presents a "base" case scenario that would mean fossil fuels, including oil, still accounting for 80 per cent of all the world's energy needs by 2035. As demand will have grown substantially, especially in emerging economies, this will require huge new extraction of oil and prices will be much higher than current levels.

Spencer Dale, BP’s chief economist, told The Guardian the oil price would return again - and more than once - to the $100 threshold from which it tumbled in its current protracted slump. International benchmark Brent crude was at close to $30 a barrel this morning after another dip overnight.

However, the report has come in for sharp criticism, with Greg Muttitt, of campaign group Oil Change International, branding the findings a "public relations exercise… designed to boost fossil fuels". BP stressed it was simply offering a forecast based on current trajectories. It also outlined scenarios that would see reduced carbon emissions from fossil fuels but which assume more government intervention.

Chief executive Bob Dudley told the Daily Telegraph that while it take many decades for renewable energy to reach critical mass, huge reductions could be made if the industry switched "immediately" from coal-fired power to gas for the bulk of its electricity generation, if moves were made to tackle excess waste such as gas burning and if global carbon pricing was introduced.

The "priority for the world" must be changing a situation where only 12 per cent of energy is converted into useful heat, power or light, he said. The company set out options including ramping up the carbon price from $5 per tonne currently to $100 to fund low-carbon investment.

Such actions, in addition to boosting nascent carbon capture technologies, are likely to be at the top of the agenda after December's agreement by world leaders to limit global temperature rises to less than two degrees Celsius to prevent catastrophic climate change.