Slump in global oil prices spells bad news for green initiatives
Home ECONOMY Slump in global oil prices spells bad news for green initiatives
ECONOMY - March 11, 2020

Slump in global oil prices spells bad news for green initiatives

The price war among oil producers has led to international crude prices crashing by their biggest margin since the 1991 Gulf War. While the slump in crude oil prices would be seen by some as a piece of merry news, experts suggest it could spell trouble for green initiatives.

In the short term, this collapse in global oil prices can affect the transition to green energy, discourage the use of public transport and impact the market of electronic vehicles.

The plunging crude price could prompt more people to choose cars and planes over public mode of transport.

For individuals as well as businesses, a cheap barrel of crude also means cheaper heating oil, a slowdown in energy savings and could delay schemes to convert to “greener” electricity.

“Expensive oil makes alternatives like electric vehicles more attractive. Cheaper oil creates a headwind for that change,” Charlie Kronick, oil finance adviser to environmental campaigners Greenpeace UK, told news agency AFP.

Cheaper oil may also encourage the purchase of bigger fuel-hungry models such as SUVs.

Fuel prices in India witnessed a sharp slump this week and the trend is projected to continue for the rest of the week as well. Fuelled by crude oil rates drop, as a result of the price war between Russia and Saudi Arabia, petrol prices in India slipped below Rs 71-mark for the first time in eight months on Monday.

On Tuesday, Saudi Arabia said it would boost its oil supplies to a record high in April, raising the stakes in a standoff with Russia and effectively rebuffing a suggestion from Moscow for new talks on production levels.

The clash of the two oil titans sparked a 25 per cent slump in crude prices on Monday.

On Wednesday, crude oil prices climbed for a second day, lifted by hopes that US producers will cut output, but gains were limited compared with Monday’s crash after Saudi Arabia and Russia triggered a price war.

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