When will we stop using fossil fuels for good? Many people predict that the coal and oil industry will collapse under pressure from renewable energy and new environmental awareness. However, in the very short term it seems that things will actually go in the opposite direction.
Over the next two years, both demand and production of oil, responsible for one third of pollutant emissions, will increase. This will also be due to new fields coming on stream and the expansion of some of the existing ones. Countries where no oil was once produced, such as Guyana, will in fact add hundreds of thousands of barrels of oil to the world’s daily production. Others, such as Brazil, Canada and Norway, will increase their production after years of stagnation.
According to some estimates reported by the New York Times, thanks to these four countries there will be one million more barrels in 2020 and two in 2021. As these countries are politically stable, their oil supply will be secure and unrelated to international tensions. In addition to this, we should consider that demand for oil will probably decline in the short to medium term. This is due to both the “decarbonisation” – i.e. quitting fossil energy sources – and the risk of a new global recession.
Taken together all these factors indicate a likely further decline in oil prices in the near future. Oil seems unlikely to return above the $100 a barrel it had reached before the crisis. Consider that today it is around $60 a barrel. While this is good news for those countries that import oil, it is not good news for the future of energy conversion. Cheap fuel, in fact, means less incentive to switch to other energy sources.
The future of oil therefore seems to be complicated. As demand for oil begins to stabilize and then fall, prices will do the same and double pressure will begin to crush producers. On the one hand, prices: the fields where it is hard and expensive to extract oil, such as the new fields opened in recent years in the United States or some of those in more remote areas of Russia, will gradually be taken out of the market. At the same time, environmental pressure will lead to avoid the most polluting extractions. Shale oil and fracking oil, for example, have a particularly high environmental impact and are likely to be the first to experience serious difficulties.