The global addiction to energy subsidies

ENERGY prices have been falling for a year. Over the last month that trend has accelerated. On July 24th, the price of a barrel of oil in Americareached a low of $48. In spite of this, governments are still splurging on subsidies to prop up production. Fossil fuels are reaping support of $550 billion annually, according the International Energy Agency (IEA), an organisation that represents oil- and gas-consuming countries, more than four times those given for renewable energy. The International Monetary Fund’s estimates are substantially higher. It said in May that countries will spend $5.3 trillion subsiding oil, gas and coal in 2015, versus $2 trillion in 2011. That is equivalent to 6.5% of global GDP, and is more than what governments across the world spend on healthcare. At a time of low energy prices, high government debt and rising concern over emissions there is scant justification for such spending. So why is the world addicted to energy subsidies?

Continue reading

Advertisements

Peak oil isn’t dead: An interview with Chris Nelder

Our newfound oil resources, he argues, aren’t nearly as promising as they first appear. And peak oil is still as relevant as ever.

Warnings about “peak oil” have been with us since the OPEC crisis in the 1970s. At some point, the experts said, the world would hit a limit on how much oil could be extracted from the ground. Production would then drop, prices would soar, chaos would ensue.

surgut

But after a worrisome series of price spikes starting in 2007, oil triumphalism is once again ascendant. Companies are now using new technologies to extract crude from hard-to-reach sources, from the tar sands of Alberta to shale formations in North Dakota. After decades of decline, U.S. oil production has risen to its highest levels since the 1990s. And that’s led many analysts and journalists to confidently declare that “peak oil is dead.”

Not everyone’s convinced, however, that oil is really on the verge of a new boom. Energy analyst Chris Nelder, for one, has spent a lot of time scrutinizing the claimsof the oil triumphalists. Our newfound oil resources, he argues, aren’t nearly as promising as they first appear. And peak oil is still as relevant as ever.

Continue reading