(EnergyAsia, July 21, Monday) — The G8 Summit early this month ended with the leaders of Britain, Canada, France, Germany, Japan, Italy, Russia and the US promising to tackle a host of issues pertaining to the climate food and energy crises. Despite the pledges in a long statement, the summit is unlikely to accomplish much as the leaders are more concerned about the immediate health of the their national economies and the spreading impact of the US credit crisis.
Oil was also on their minds as prices continued to set new highs, surging past $147 a barrel shortly after the summit in Hokkaido, Japan which was also attended by the leaders of 15 other countries including China, India, Brazil, Australia and eight African states.
At these lofty levels, oil is inflicting heavy damage on the economies of many countries across the world. The International Energy Agency (IEA) is calling it the third oil shock, with a sting far worse than the first two in the 1970s.
Americans are finally reacting by driving less and ditching their SUVs and fuel guzzlers for smaller vehicles. Truck drivers and fishermen in the US, Europe and Asia are regularly staging protests , demanding their governments “do something” to bring down fuel prices. The airlines industry is on life support while the shipping industry fears world trade could slow down or even decline if bunker fuel cost continues to escalate.
Meanwhile, reports of fuel shortages are becoming more frequent and severe in many of the world’s poorer countries which practise price controls. The poor and even lower middle income earners in many countries are increasingly being priced out by $140 oil.
Now, what if oil surged to $200, as increasingly predicted by authoritative analysts?
The consequences on the world economy and political stability will be devastating. World trade will decline sharply while air travel will revert to the days when only the rich and famous could afford to fly. Energy guzzling industries will shut down and vehicle traffic will be reduced.
If you were an environmentalist, all the above developments would be unmitigated good news. Painful as it is in the short term, $200 oil would be the most effective solution to much of our climate problems.
Most of the G8’s promises to address the world’s climate issues would be immediately made redundant, and exposed for what they really are: rhetoric.
In one fell swoop, $200 oil would override carbon trading schemes, efforts to establish a post-Kyoto agreement and technological innovation to combat climate change.
In brief, demand destruction or a drastic and immediate reduction in fossil fuels consumption would be the “real” solution to combating global warming and climate change.
The full version of this story is available in the July 2008 issue of Renewables Report.