Oil prices go negative for the first time in history!!!
by Martyn Lowder
What's Going On Here?
This week, global oil price dipped below $16 a barrel for the first time since 1999. In the US, oil prices are negative for the first time ever at minus $37 a barrel! This means that oil producers (without access to storage space) actually began to pay customers to take barrels of the black stuff off their hands.
What Does This Mean?
This slimy situation is the result of a perfect storm for the oil industry. A price war between Saudi Arabia and Russia led to a glut of cheap oil on global markets, just as demand slumped due to the coronavirus lockdown (due to travel restrictions and the wider economic slump).
Although prices have now stabilised somewhat, most experts predict prices to remain cheap for a while.
Why Should We Care?
In 2008, before the last recession, we saw similar patterns of an economic meltdown in oil. Experts say we should regard this as ‘the sick canary in a coal mine’ and expect the worst for our economy.
But... from a climate perspective, the thing that matters most is whether or not that supply ever reaches the Earth’s surface. So, here are the favourite solutions we’ve heard:
3) Green power incentives – Investors scared by the unpredictability of oil prices could instead invest in wind and solar. Tighter regulations and extra incentives from governments could help accelerate the global switch to green power as businesses look to rebuild and adapt!
If governments don’t use the oil price slump as an opportunity to roll out low-carbon infrastructure and green incentives, then the world will soon return to business as usual.But with such an uncertain future ahead of us, we think it’s important to help shape the world we want to live in. Here are our suggestions of how you can help:
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