High prices for oil, gas and coal are “here to stay”, says The Economist. Demand is rocketing post-pandemic. Miffed motorists are queuing up at British petrol stations. Power cuts are plaguing China. Oil has hit $81 a barrel. In greedier times, Big Oil responded to robust demand by splashing out on more drilling. But investors now treat such cash sinks “like week-old fish” – “The mood has swung against the dirtiest fossil fuel.” The problem is, we still rely on it.
The past five years have been an “age of abundance”. There was almost too much to go around, as wind, solar and a shale boom in the US cut into the market. Oil was cheap. But now the tanks are drying up. Reserves at some of the world’s biggest projects have fallen from 50 years’ worth to about 25. Gas, a by-product of drilling for crude, has also taken a hit. A supply crunch was averted last year because the pandemic “clobbered oil demand”. But once the world restarted, it was only a matter of time before “a squeeze started to emerge”. And that’s unlikely to change in the era of decarbonisation. The high prices are actually good news in the long term – they will make green energy more cost-competitive, accelerating the transition from fossil fuels. But try telling that to consumers having to pay more for a tank of petrol.