AN ENERGY OPPORTUNITY…. As recently as the spring, fuel prices were so high, desperate politicians were frantic to propose nonsensical solutions, and desperate consumers were willing to believe them. Americans were paying $4 a gallon, and there was no relief in sight.
That was then. A recession and a stock market collapse changed the equation.
Oil prices fell below $60 a barrel on Tuesday to their lowest level in 20 months, as weak economic growth has reduced consumption around the world.
The drop came despite growing indications that OPEC producers have been trimming output to try and stem the price decline. The cartel reached an emergency agreement last month to reduce output by 1.5 million barrels a day starting on Nov. 1.
A sharp drop in consumption has more than compensated for OPEC reducing their output and paring exports.
So, is this the silver lining of a financial crisis? The economy is a mess, but at least we’ve seen the end of skyrocketing fuel prices, right?
Not really, no. The International Energy Agency noted last week that oil prices will go right back to where they were when global economic conditions approve, hitting $100 a barrel, and double that over the next 20 years. (What’s more, oil futures, despite the current drop in prices, are doing just fine.) “[T]he era of cheap oil is over,” the IEA explained.
Given all of this, TNR’s Brad Plumer noted, “[I]t sounds like a stellar idea for us to spend the intervening years becoming less reliant on oil, so that when the price jets back up to $100/barrel and beyond, we’re not all buckling at the knees again.”
Why, that’s a great idea. Here’s hoping policy makers are thinking the same thing.