• Coronavirus pandemic…Western governments take control of volatile energy markets and climate change
• A sustainable future and oil could drop to $10 by 2050 if the Paris climate goals are met
• Can we say that governments have used climate change to re-establish their control over energy markets?
The coronavirus pandemic has enabled governments, especially European and some Asian countries, to control their economies in a way that they had never dreamt of! The pandemic also forced them to restructure foreign trade and international relationship in a way that was not possible before its spread.
In short, coronavirus has changed the world in a way that history books will record as a major historical event that may not be repeated at all!
Then came the massive government spending to buy vaccines and revive the economy, which means more government control, and also more debt accumulation.
Between big spending and big debts, it will generate inflation and a rise in taxes, which means an additional layer of government intervention in these countries.
In short, coronavirus has destroyed a large part of the globalisation that has spread in the last 30 years, as well as what is left of any thought to limit the role of governments and give the private sector a greater role in participating in government sector activities.
Specifically in Western countries, the private sector may not do anything to stop climate change, and then governments must adopt policies that contribute to stopping it.
Accordingly, global climate conferences and related agreements have been held, and governments have spent hundreds of billions of dollars in subsidies to develop the renewable energy and electric vehicles sectors.
Hence, it can be said that governments have used climate change to re-establish their control over the economy and their foreign relations, through aid, which ultimately means buying the loyalty of specific sectors of the economy.
The environmentalists and the beneficiaries of spending on climate change in Europe and the United States realised that they are facing a historic opportunity that will not be repeated, and that the governments of these countries may restore their control over the global economy and change energy systems properly under the garb of coronavirus, its clean environment and renewable alternatives.
Under this scenario, oil demand could decline by 70% by 2050 from current levels.
It is expected that the demand for oil will begin to decline from 2023 under this scenario, and this decline will accelerate rapidly after that, with an annual decline of about two million barrels per day, and this negatively affects the refined oil derivatives as well as the consumption and future gas price as it is linked to oil.
Oil prices could enter a "final drop", with the international benchmark Brent crude falling to between $37 and $42 a barrel by 2030.
Therefore, we have seen many people calling for the necessity to exploit the opportunity and for governments to promote renewable energy and electric cars by issuing laws and providing more subsidies, while the fossil fuel industry is “penalised” and huge taxes are imposed on it.
This legal imposition of policies, the so-called criminalisation of a free industry in a free market, and the imposition of huge taxes on it, is seen inconsistent with everything that the West has historically called for in terms of free markets, freedom of expression, and the need to reduce taxes and customs duties.
One of the results of these developments could be to divide the world into two halves, with the western part controlling the other.
The Western world will witness a new phase in response to the coronavirus pandemic, and the cycle begins again.
The problem is that during these cycles, generations in developing countries are destroyed as a result of poverty, neglect, and a slowdown in the global economy.
However, in the midst of these painful and costly changes, there is a great opportunity for some emerging economies to grow rapidly by ignoring these developments in the West, especially countries such as the Gulf (GCC), Turkey and Brazil.
The truth is that fossil fuels cannot be eliminated, and governments cannot continue to provide financial support for renewable energy projects and electric cars forever due to the high cost.
Also, what advocates of climate change ideology have called for seems to completely ignore the foundations of energy security, which are based on diversifying its sources and sources of imports.
None of them may not be able to answer the following question yet – Why are electricity prices highest (in the world) in countries that have adopted renewable energy on the largest scale? In addition, why did France finally raise electricity prices? And why have electricity prices in Texas soared as the share of wind power increases?
And why did the consumption of gasoline and diesel not decrease in Norway by the same rate as the increase in the number of electric cars? And why was Norway, which promotes renewable energy and electric cars, the most active country in the world in the last two years in oil exploration?
In sum, the world needs all energy sources, but market forces determine these sources. Within this general framework, governments can issue appropriate laws to reduce emissions in those cities and localities, which may include preventing cars from entering the city centre, for example.
The current demand for more government intervention under the pretext of climate change means that they realise that market forces do not support their projects, and that what they are saying about the continuing cost reduction is not necessarily true.
Otherwise, why are they asking governments for more laws, more subsidies, and more taxes on industries, which they don't want?
Saad Abdulla al-Kuwari is an expert in oil and gas and is exploring the future of energy.