Soaring gas prices are a “transition bonus” to renewable energies, according to OPEC chief
DUBAI, United Arab Emirates – Soaring gas prices are the cost of trying to switch to renewable energy sources, OPEC Secretary General Mohammed Barkindo told CNBC on Tuesday.
“I talked about a new premium that is emerging in the energy markets and that I call the bridging premium,” Barkindo told CNBC’s Dan Murphy at the Gastech conference in Dubai.
The longtime oil cartel leader has criticized what he believed to be an overly emotional approach to energy policies and climate change, though he did not specifically point the finger at who was to blame for what he did. described as a “misrepresentation of the facts”.
Barkindo claimed that there was “a distortion of facts and science, and a misrepresentation of those facts in the conversation, which is not healthy, as climate change and the energy transition are supposed to be driven by Science”.
“The intergovernmental panel on climate change is supposed to be the most authoritative body when it comes to both climate change and transition,” he said. “And we at OPEC think they do a great job, they produce some very, very important and foundational reports, but unfortunately those reports are being put aside and the discussions that follow right now, more or less. motivated by emotions rather than the great work this scientific body produces for all of us.
Gas price tripled
The OPEC chief’s remarks reflect a growing debate among policymakers and energy officials about the future of energy, renewables and the climate. Many governments around the world and especially in the West are pushing to abandon the use of fossil fuels, while those in industry argue that an attempt at a rapid transition will disrupt markets, hurt consumers and is ultimately unrealistic.
Global gas prices have tripled this year alone, sending ripples into the markets and raising fears that commodity prices will continue to rise.
The causes of the price increase lie in higher demand and lower supply, as higher summer temperatures in the United States fueled demand for air conditioning, and longer cold spells in the United Kingdom in d Other parts of Europe in the spring brought increased heating needs.
The fuel nozzle in a car at a gas pump at the Citgo gas station on Lancaster Ave in Reading, PA on Monday afternoon September 20, 2021.
Ben Haste | MediaNews Group | Getty Images
All of this has resulted in lower gas supplies for the coming winter months, which means we will likely see more pressure on supplies and higher prices to come.
Gas prices had remained very low since the start of the coronavirus pandemic, at around $ 2 per million British thermal units, or mmBtus. But reopening economies and restarting travel as vaccination campaigns expand have driven up demand.
“A burden for many countries”
UAE Energy Minister Suhail Al Mazrouei, speaking to CNBC at the same event, claimed that while gas prices seemed high, they came from a very low level to begin with.
“It came from a very low environment,” Al Mazrouei said of the gas price situation. “I think the current prices, if they continue, they will be a burden on many countries and will not see longer term demand being ready to accept such prices.”
The Energy Minister said that “the right balance is the balance between affordability for consumers and the fact that we see a reasonable return for developers and producing countries”, but added: “We do not are not there yet “.
The costs, regulations and financing needs surrounding new energy projects are an obstacle to any return to lower prices, noted Al Mazrouei.
“This is a situation that responds to a low gas environment that has happened before,” he continued. “Now what is sustainable, I think the market will dictate. There are challenges, funding new projects, especially for IOCs (international oil companies), and we need to have a realistic view of easing. of these restrictions to fund new projects. “
“This is what I think we will be discussing between industry, business and consumers and some developers as well, and hopefully during the discussions at the event they could announce some new projects that could balance prices in the future, ”he added.