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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
Consumers are in for some relief: Lower energy prices are on the way
By Olesya Dmitracova, CNN
Updated:
12:00 AM EDT, Wed October 16, 2024
Source: CNN
For consumers still scarred by jumps in their energy bills in recent
years, the International Energy Agency has good news: Oil and natural
gas prices will probably be lower over the next five years.
Energy prices soared in the wake of Russia’s full-scale invasion of
Ukraine in February 2022, which followed a rise in global demand as
economies reopened after Covid lockdowns put lives on hold.
Oil and natural gas supplies will increase in the second half of this
decade, as long as the conflict in the Middle East and Russia’s war
in Ukraine don’t derail current trends, Fatih Birol, the executive
director of the International Energy Agency, said Wednesday.
And that “would move us into a very different energy world from the
one we have experienced in recent years during the global energy
crisis,” he added in a statement accompanying the IEA’s latest
report. “It implies downward pressure on prices, providing some
relief for consumers that have been hit hard by price spikes.”
While the report strikes a positive note, it also calls for faster
transition to clean energy, not only to address the climate crisis but
also to ensure global energy security threatened by geopolitical
tensions.
European benchmark natural gas futures reached a closing price of
€339 ($370) in August 2022, more than eight times their current
level, and they are still far above pre-pandemic prices. Brent oil
prices, the global benchmark, are closer to their pre-Covid levels but
they have risen in the past month as violence in the oil-producing
Middle East has widened.
But global oil output has been increasing, thanks mostly to producers
in the United States and other countries in the Americas. For natural
gas, the IEA expects “a huge new wave” of the fuel in liquefied
form to come to market in the next five years, mostly from the US and
Qatar, Birol told CNN.
The IEA projects an “overhang” of oil and liquefied natural gas
supply during the second half of the 2020s, alongside a glut of
manufacturing capacity for some key clean energy technologies such as
solar panels and batteries.
Combined with a “major comeback” for nuclear power generation in
many countries, “the stage is set for a buyer’s market,” Birol
told CNN.
More room for climate action?
The forecast downward pull on fossil fuel prices might be good news for
consumers’ pockets, but whether it will also help climate change
action, as the IEA hopes, will largely depend on what governments do
next.
“The breathing space from fuel price pressures can provide
policymakers with room to focus on stepping up investments in clean
energy transitions and removing inefficient fossil fuel subsidies,”
Birol said in the statement. One example of such pressures is the
hundreds of billions spent by European governments since September 2021
to .
“This means government policies and consumer choices will have huge
consequences for the future of the energy sector and for tackling
climate change,” Birol added.
Investing in green energy isn’t just necessary to prevent a climate
catastrophe — as burning fossil fuels is the main cause of climate
change — it also makes financial sense, the IEA suggests in its
wide-ranging report.
“Many clean energy technologies are already the most affordable
options when lifecycle costs are considered,” the agency wrote.
“While their upfront costs in many cases are higher than those of
their conventional equivalents, they often have much lower operating
costs because they are more efficient. They also shield consumers from
volatility in fossil fuel prices.”
At the same time, extreme weather events such as heat waves, floods and
droughts, intensified by climate change, have damaged energy
infrastructure, led to power outages and disrupted energy supply
chains, causing temporary price surges, the IEA said. Such costs are
expected to rise, especially if global temperatures climb sharply, it
added.
The energy body reiterated its previous forecasts that demand for oil,
natural gas and coal will peak by the end of the decade. But it warned
that “the world is still a long way from a trajectory aligned with
its net zero goals.”
Scientists say worldwide greenhouse gas emissions must go down to zero
by 2050 on a net basis — taking account of all the pollution produced
and removed from the atmosphere — in order to keep global warming to
no more than 1.5 degrees Celsius.
Based on today’s policies, the world is on track for a rise of 2.4
degrees in global average temperatures by the end of the century, the
IEA said.
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