With petrol prices dipping below $1 at the pump for the first time in six years, motorists may be grinning but oil and gas companies certainly aren’t. Plunging oil prices are making unconventional oil and gas increasingly uneconomic to extract, and have led to cutbacks of oil and gas exploration activities.
This has in turn prompted Resources Minister Ian Macfarlane to again raise the spectre of gas shortages, but such cries of shortages have been repeatedly exposed as a con. There is no actual shortage of gas – just a rush by companies like the now worthless Santos to cash in on international gas prices that remain significantly higher than domestic ones.
False crisis aside, plunging oil prices could be seen as a complication for the clean energy transition, but the opposite is apparent. Some argue the low oil price has created opportunities for carbon pricing to be implemented without political pain; while others note that the drop makes it easier to reduce reliance on energy imports as the economic, social and political risks that come with reliance on such a volatile commodity are more visible, and the benefits of switching to renewable solutions clearer.
“The theory is that Opec, led by powerful oil producers such as Saudi Arabia, is playing the long game – seeking to drive the fracking industry from boom to bust, stabilise prices well above their present level, and regain its place as the world’s pre-eminent source of oil.” Climate News Network journalist Kieran Cooke.
As motorists enjoy the temporary reprieve, the future for fossil fuels continues to grow bleaker.
Tesla and Toyota have both opened up their patent archives to drive new innovations in electric and hydrogen vehicles and speed up the transition away from internal combustion engines; renewable generation records are being set around the world; governments are setting increasingly ambitious clean energy targets; the democratisation of power through rooftop solar is ringing the death bell for coal; and the concept of a total fossil fuel phase out finally came of age at the Lima climate negotiations.
Top image: Tecnomovida