(Newswire.net — June 3, 2020) — In early March, world oil prices began to decline due to the collapse of the OPEC + deal. Coronavirus quarantine, introduced in many countries in March and April, finally undermined oil demand: for example, WTI oil prices became not only low but negative. The lowest price minus $37.6 per barrel was at the auction on April 20, which became a kind of anti-record.
The coronavirus pandemic has shown the vulnerability of countries whose economies are solely related to hydrocarbon production. Russian companies will have to reduce production and freeze wells, which will be expensive and difficult to open. Have we reached the point where we are in a world without oil? In this article, we will focus mainly on Russia because it is the country which definitely suffered the most from the crisis.
Coronavirus only accelerated a change in the situation
The climatic changes that we observe in different parts of the planet have become not just calculations of scientists, but an obvious phenomenon. Floods and fires in Siberia, an abnormally snowless winter in many regions, a reduction in the number of penguins in the Antarctic, melting glaciers in the Arctic – all this is daily news.
The United Arab Emirates also is a victim of the decreased price of oil. Most notably, Forex brokers to trade with in UAE showed significant reductions in oil trade which was not expected when 2020 was starting. But the whole situation turned upside down from then on.
One of the main causes of climate change is the extraction and burning of coal, oil, gas. Many countries have long begun the transition to renewable energy. In Russia, solar stations and wind farms are often perceived as exotic, while, for example, in Ukraine, renewable energy in peak periods is ahead of fossil energy.
Until now, Russia has ignored both climate and economic forecasts. So, in the draft strategy to reduce greenhouse gas emissions, the goals are set so that emissions in the coming decades will increase, not decrease. Even before the pandemic began, Russia had plans to develop deposits in the Arctic.
What do Russians think?
Opinion polls show that the number of Russians concerned about Russia’s oil dependence is growing. Thus, according to the Public Opinion Foundation, over the past three years, the number of people who see the future of Russia with or without oil has become equal. Moreover, the proportion of supporters of dependence on oil exports is falling, and the proportion of supporters of the opposite point of view is growing.
Since 2012, the same POF has been doing regular polls on Russia’s dependence on oil. From them, it can be seen that over the past six years, more and more people are inclined to believe that oil dependence is unacceptable for Russia. The change in opinion of Russians coincided with a fall in oil prices in 2014.
It can be assumed that with a further drop in oil prices, the demand for an alternative model of the economy will grow in society.
What will be the outcome?
It is still early to talk about the complete removal of oil from our regular life. People drive by cars, factories operate so without oil it would be difficult to carry on. Actually, the dependence on oil will indeed reduce, but nothing like the complete “annihilation” of it. The oil industry is still resilient to withheld the challenges posed by the coronavirus.
Conclusion
The current situation in the world may become a turning point for the whole world, and show prospects for development in the alternative direction, safe for people from an economic and environmental point of view. The government of Russia, in particular, can subsidize the development of renewable energy, generating electricity on the solar roofs of residential buildings, biogas plants operating on organic waste, and legitimize the cultivation of forests on abandoned agricultural land.