FOR IMMEDIATE RELEASE
9 April 2020
David Tong, david.tong [at] priceofoil.org
Lorne Stockman, lorne [at] priceofoil.org
Oil Change International Experts React to OPEC+ Deal
In response to the apparent deal struck today by major oil producers for deep output cuts to end the price war, and in anticipation of the G20 meetings tomorrow, experts at Oil Change International have issued the following statements:
Lorne Stockman, Oil Change International:
“It is currently far from clear that the deal struck today, and the one being negotiated for the G20 meeting tomorrow, deals with the source of the problem. The global oil industry in general, and the US shale industry in particular, has been oversupplying the market for much of the past decade while ignoring the urgency of the climate crisis.
“The scale of COVID-19’s impact on oil demand is beyond the scope of either OPEC+ or the G20. Therefore, the coming weeks are very likely to see oil storage fill up around the world regardless of what is agreed at these meetings. Many producers will be forced to shut in some production when there’s nowhere for the oil to go. For poorer oil producing countries this is going to be particularly painful. G20 members should focus on supporting vulnerable countries’ health budgets not bailing out the oil sector. Especially in light of the fact that it is overproduction in the U.S., a country that should be leading the world in phasing out fossil fuels, that has forced the hand of OPEC+ to begin with.
“The parties in the negotiations need to look beyond the short-term pain of the crisis and towards a global pact to reduce production in line with climate goals, and protect and support workers and communities through the difficult transition ahead.
“There is currently no indication that U.S. negotiators are even aware that the climate crisis looms over the long-term demand for oil, and appear transfixed by the spurious notion of America’s “energy dominance. A U.S. plan for transitioning its economy and workforce to clean energy is missing in action. Its addiction to growth undermines its negotiating position.”
David Tong, Oil Change International:
“This comes on the eve of a crisis meeting of the G20, convened at the IEA’s request. Just weeks ago, Dr. Fatih Birol of the IEA urged all governments to put clean energy at the heart of their stimulus packages. Now, he appears to be pushing them to squander public money buying up oil and bailing out the fossil fuel industry. Big Oil companies like Exxon, Shell, BP, Total, and Equinor meanwhile have continued to secure debt to make sure they can pay big dividends to shareholders.
“The IEA can’t have it both ways. You can’t save the oil sector and jumpstart a meaningful shift to a clean energy economy at the same time.
“To be consistent with prioritizing a clean energy recovery, any deal done today and tomorrow must sit within a careful framework of conditions: protecting workers, enabling a managed decline in fossil fuel production, and aligning with the goals of the Paris Agreement. Preventing a total crash of the oil market is a temporary fix to a structural problem. Without a longer-term vision for a just transition away from fossil fuel production, this is little more than the next phase of a volatile boom-bust cycle.”