ESRI Seminar – “Oil prices, the Paris Agreement and the endgame for fossil fuels"
Guest Speaker: Professor Dieter Helm, University of Oxford
The collapse of oil prices at the end of 2014 has turned out to be anything but temporary. Despite Trump, despite the repeated optimism of the oil companies and despite further drilling in the Arctic, oil and the other fossil fuels are entering a long, slow decline. The implications have yet to sink in - gradual continuing falls in oil prices mean oil today is worth more than oil tomorrow, cash strapped oil producers will seek to increase supply, and the relentless march of new digital technologies will chip away at demand. For oil, demand is about transport and petrochemicals. For both read electric vehicles and new materials, and gas as the transitionary way of generating the electricity. It is about peak demand not peak supply.
These big technology shifts are what matters, and what Trump tweets and does and the future of the Paris Agreement are at best bit parts in a much more fundamental game.
For the OPEC countries in the Middle East and for Russia, this is all very bad news. For conventional oil companies, harvest-and-exit makes more economic sense than pushing on with expensive frontier explorations. For electric utilities it means an end to the old vertical integration model, as zero marginal cost renewables and digital technologies cut away at wholesale prices and markets. For the US and Europe it is mostly upside.
Dieter is an economist specialising in utilities, infrastructure, regulation and the environment, and concentrating on the energy, water, communications and transport sectors primarily in Britain and Europe. Dieter is an Official Fellow in Economics at New College, Oxford, Professor of Energy Policy at the University of Oxford and Professorial Research Fellow of the Smith School of Enterprise and the Environment. Yale University Press published his recent book – "Burn Out - the endgame for fossil fuels", in 2017.