Oil and gas production has been the main concern for all environmental activists for many years and It’s no surprise why.
From the second they are extracted from the ground, they start to show their negative effects on our environment.
There have been many anti-oil efforts to keep these fossil fuels under the ground but so far, politicians around the world are begging Opec and many oil-rich countries to increase their production, why?
Why do governments want the world to produce more oil than ever?
Following a solid economic recovery after the covid 19 lockdowns, oil prices have climbed substantially to almost $100 per barrel.
Furthermore, the war between Russia and Ukraine, as well as escalating geopolitical tensions in the Middle East, are leading to rising prices and economic recovery concerns.
Oil accounts for around 3% of the world’s GDP and right now, it is one of the most important commodities in the world.
The price of oil influences industrial and production expenses across countries, which means it can directly affect the cost of living for every part of society.
Higher oil prices mean higher inflation
Increased oil prices have historically been statistically connected to higher inflation. As oil prices rise, so do the prices of items that rely on it.
As of September 2022, energy accounts for about 19.8% of unadjusted CPI which includes 19.7% for energy commodities.
increased oil prices, directly and indirectly, increase inflation since crude oil is a vital element in petrochemicals used to create plastic.
expensive oil raises the price of most plastic-based items.
Similarly, transportation expenses, including fuel prices, are included into consumer pricing, and the cost of oil accounts for nearly half of the retail price of gasoline.
Because oil is a critical element in manufacturing and a major cost element in shipping, oil prices have historically had a higher impact on the cost of products than on the cost of services.
Has the world ever decreased oil production?
On the supply side, we are digging up the ground more than ever, despite all the climate protests around the world.
According to a report published on Statista, Despite the beginning of the Covid-19 pandemic and recent production cuts from opec+, oil production has been constantly increasing every year for the past two decades but so far, Supply has not been able to fully respond to increased demand.
An Economic growth demands more oil.
As of 2021, the United States is the world’s largest oil producer, surpassing Saudi Arabia, which most people assume is the largest.
Can the world Replace oil and gas with clean energy?
Renewable energies are fundamentally “uncontrollable” sources of supply.
Solar panels can not generate energy when the sun is not shining. Reduced circumstances, such as cloudy weather or dust for solar, and light winds for wind generation, all restrict energy output from renewable assets to levels below-installed capacity.
One may argue that Renewable energies such as solar or wind energy can and should be stored in batteries for usage when the sun isn’t shining or the wind isn’t blowing.
However, there are many critics regarding the main sources of lithium or cobalt-based batteries.
The environmental and humanitarian damages of lithium and cobalt mining operations, which are the key elements of making batteries are still under investigation by scientists and human rights organizations.
furthermore, Most big batteries have a capacity of two to six hours and so far they are very expensive.
Despite all the pro-environmental masks that politicians try to wear before the elections, in stressed situations like the one we are facing now, all of them returned to oil and gas despite all the concerns and promises they gave to environmental activists before they took office.
In reality, switching to renewable energies can not be achieved in a short time period and it is a long-term goal that we had to truly start years ago.
Any type of rushed and unreasonable decisions in our path to a clean and green planet will only cause more damage to the global economy which will naturally cause more damage to our planet.
Cover photo credit : Reuters