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Cheap energy now
and in the future
Cheap oil has become even cheaper. High oil, coal,
natural gas supply and inventories have become even higher. The prospect for
more economic prosperity of many developing
countries has become bigger.
This is the current and near-future scenario in global
energy prices and supply. There is more supply of oil, coal, natural gas and
other energy products than the world can use and consume and store. So the
natural and predictable result is low and even lower prices.
Below are the charts for the last five years of West
Texas Intermediate (WTI) and Brent crude prices. These are low prices which
have not been seen since six or more years ago.
Figure 1. Crude
oil prices as of December 19, 2015
Source: http://oil-price.net/
While the members of the Organization of Petroleum
Exporting Countries (OPEC) are unhappy with these low oil prices, most industries
and sectors that rely on oil products are relieved. People who save on their
land travels because of high oil prices can now drive and visit more places.
Airlines, shipping lines and bus lines should be capable of cutting their fares
as their fuel costs have significantly decline There should be more tourism,
more use of farm tractors and machines and less of farm animals, more use of
gas for cooking and less use of firewood and charcoal, saving more forests.
World coal prices too are stabilizing at low levels. The recent
UN Conference of Parties (COP) climate meeting in Paris has produced a general
but non-binding agreement. No penalties for countries that do not obey their
promised emission cuts, or countries that do not give their share of the
targeted $100 billion a year starting 2020.
Figure 2. World
coal prices in the last 10 years
Coal use by more developing countries like India, China,
Indonesia, Philippines, Brazil, etc. will be rising; And rich countries too
like Japan and the US.
Peak oil, along with peak food and Malthusian hypothesis
of more hunger and massive deaths, has been discredited since many years ago. The short- and medium-term scenario is that
world oil prices will hover between $40-$50, still low compared to 2012-2013
levels of nearly $100. And lower than the past decade's prices.
We are in a period of cheaper energy, cheaper food,
longer lifespan, healthier people. The problem of many countries now is there
are more fat/obese people than thin and undernourished people. When people die
at 50 or 60 yrs old, some would say, "he/she died young". In 1900,
when a person dies at 40 yrs old, that's "long" already because life
expectancy was only around 33 years.
So a few decades from now, if a person dies at 70-80 years
old, other people will say, "he/she died young." Why, because the average
life expectancy then will be around 90-100 yrs old.
This period of cheaper energy is a good opportunity for
countries and governments to depoliticize energy pricing and procurement, to
depoliticize the pricing of gas and
other petroleum products.
Governments should not heed any advice from multilateral
agencies (World Bank, IMF, ADB, etc.) to raise fuel taxes and royalties. It is
not a wise move by governments and the multilaterals to make cheaper energy to
become expensive again.
More energy at cheaper price, more prosperity.
-------------See also:
Business 360-29, Low oil prices and energy development in South Asia, October 25, 2015
Business 360-30, Freedom to trade in South and East Asia, October 29, 2015
Business 360-31, SAARC, RCEP and free trade, December 23, 2015
Business 360-31, SAARC, RCEP and free trade, December 23, 2015
Business 360-32, Energy independence in Asia, December 24, 2015
Energy 53, Expensive electricity + mandatory renewables, Philippine case, January 17, 2016
Energy 54, Need for cheaper, reliable energy sources, January 18, 2016
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