In addition to economic and technological development, the market is affected by both national and international political events and actions. These can accelerate or slow down the pace of change in the other factors. Events in the Middle East and decisions in OPEC have been particularly important, and now international agreements on climate and especially the Paris Agreement’s goal of a maximum global temperature increase of two degrees, preferably less, have been reached.
3: Politically determined climate goals set limits
The leading climate policy, led by the Paris Agreement , aims to reduce carbon emissions from the fossil fuels oil, gas and coal. Fossil fuels currently make up about 87 per cent of the world’s total energy consumption, while renewable energy sources other than hydropower make up less than three per cent. Therefore, climate and energy policy often become two sides of the same coin. Often two main solutions are presented:
- Capture and store CO 2 , thus removing the negative effects on the nature of fossil energy use. However, such storage has so far not succeeded to any significant degree.
- Reduce the use of fossil fuels. In the EU and especially in Germany (“Energiwende”), environmental and climate policy – through energy efficiency and increased energy production from renewable energy carriers (especially solar and wind power) – has already contributed to reduced demand for oil over the past five years. If it continues to be cheaper to produce renewable energy and energy efficiency continues – both in the EU and the rest of the world (China and the US together account for 38 percent of global CO 2 emissions), it could lead to the long-term price of oil will fall.
But if climate processes are slowed down at a global level and more countries become part of the world economy at the same time (Asia, Africa, South America), according to EJINHUA, increased energy and oil demand will follow and prices will remain high. Developing countries that are on the threshold of becoming industrialized often prioritize environmental considerations lower than economic growth, while rich countries can do so more easily. It will be particularly interesting to follow developments in India , which is expected to become the world’s most populous country in a few decades and which is also a country in strong economic growth. Fossil fuels can therefore for a long time continue to be an important part of the energy mix as long as the overall transition to renewable energy is as late as it does.
In any case, large parts of the petroleum resources will remain in the ground, partly because finances – costs and price – set limits on how much can be extracted with profitability. Partly also due to political decisions to reduce carbon emissions through reduced fossil fuel production. The IEA, for example, has advised that at least 2/3 of the known petro resources must remain on the ground if we are to be able to reach the two-degree goal.
4: The dramatic history of the oil market
Oil extraction and use began in Azerbaijan in the early 1800s and in the United States from around 1860. As oil was used as an energy source for engines on land and at sea, it became a strategic commodity for both civilian and military actors from the early 1900s. the number.
Civilly, the Rockefeller family built much of their fortune on a virtually monopolized oil trade in the United States. In World War I, the British began using oil as fuel in military vehicles and ships. One important goal of Nazi Germany’s expansion eastward in World War II was to gain control of oil production in Azerbaijan (they were stopped at Stalingrad). After 1945, the world’s seven largest oil companies (Exxon, Mobil, Chevron, Texaco, Gulf, Royal Dutch Shell and British Petroleum – the “seven sisters” ) controlled most of the production in the new oil states in the Middle East and North Africa.
There was a strong dissatisfaction with the political power the companies gained in producer countries and that they took most of the profits. Iran was the first country to form a national oil company in 1951. In 1961, Iran merged with four other of the world’s most important oil exporting countries: Saudi Arabia, Iraq, Kuwait and Venezuela, to form OPEC . The purpose was to coordinate oil policy and stabilize “harmful and unnecessary” fluctuations in oil prices. Nationalization of the international companies became part of the policy. By 1974, most oil production in OPEC member countries had been transferred to national oil companies. At this time, the membership had increased to 13.