Gasoline already expensive? The price could go through the roof in the coming years

Motorists pay record prices at the pump: a liter of Euro 95 cost 2.15 Euro on Tuesday. There is bad news for them, because the oil price (and with it that of diesel and petrol) could explode in the coming years. The cause: impending shortages.

Bard van de Weijer and Anna de Haas

Even Dutch people who do not follow the gas market closely have recently learned that the price of natural gas is sky-high. A look at last month’s energy bill says it all. Due to the global economic recovery, small gas reserves and the Ukraine crisis, natural gas is now five times more expensive than a year ago.

Many motorists also lost their laughter at the pump. Those who were shocked by a petrol price of 2.15 euros per liter last week should brace themselves, experts say. It can sometimes become much more.

The price of oil, which this week reached its highest level since 2014, will trail that of gas if things go wrong. This is stated by ABN Amro, among others, in a report on the global energy sector. It is a bit hidden at the end: ‘A situation of shortage such as we are currently experiencing in the gas market is not inconceivable for the oil markets in the long term.’

Switch to sustainable

Gas is now five times more expensive. Oil soon too? How is that possible? One of the reasons is that the worldwide search for oil has been put on the back burner. Under pressure from shareholders and governments, who want to force the switch to a more sustainable energy supply for the sake of the climate, oil companies are now less intensively looking for new fields.

That is good news for the climate: according to the International Energy Agency (IEA), investment in the oil and gas sector is declining enough to have zero CO2 emissions by 2050. But, the IEA warns, even if all plans are actually implemented worldwide, the advance of green energy will be completely insufficient to close the gap with fossil energy.

“We have been warning for years that investment in the global energy sector is completely insufficient,” IEA boss Fatih Birol grumbled last year. ‘This threatens more turbulence for the global energy markets.’ That’s jargon for: severe price swings.

The demand for energy may exceed the supply in the coming years. When this happens, the economic laws are inexorable: prices will rise. Or the world will have to consume much less energy in the short term. But that chance is not very great, says Hans van Cleef, energy economist at ABN Amro and author of the report. ‘In reality you see a growth, or at least an equal demand for energy.’

Production issues

There are already problems on the supply side; oil-producing countries have the greatest difficulty increasing their production. There are plenty of good intentions. OPEC, the organization of oil-producing countries, will announce on Wednesday that it will supply an additional 400,000 barrels of oil per day. But the question is whether countries such as Nigeria, Angola and even Russia can pump up the extra quantities, says Van Cleef. Last month, less was delivered than had been promised.

The reason for this is that Western oil companies have already started a partial withdrawal. These countries are unable to increase production on their own, because they lack the knowledge to do so.

According to the IEA, the supply of green energy from sun and wind is growing rapidly, but not fast enough. ‘Basically we throw away our old shoes, when we only have the laces of the new ones,’ says Van Cleef.

Normally, Saudi Arabia is willing to open the oil tap a little further. A little more is always possible, but not in the quantities that may be needed. Other OPEC countries will resist, fearing that Saudi Arabia will gain too large a market share. The United States, potentially the world’s largest oil producer, will not help either, because President Biden has restricted shale oil extraction. Additional oil from Iran is possible if the US concludes a nuclear deal with this country, but it is uncertain whether such an agreement can be reached in the short term.

The same scenario threatens for oil as for natural gas. Experts consider it unlikely whether the oil price will also rise by a factor of five. ‘On the other hand: at the start of the corona pandemic I once said that a negative oil price was unthinkable. That same evening the time had come,” said Van Cleef.

No one knows exactly how fast the oil price will rise and when this will happen. But, the ABN economist warns, ‘a price shock usually comes earlier than expected and is almost always more severe’.

Hedy Borreman, director Taxicentrale Amsterdam

‘The price increases are heavy for our drivers. About 60 percent of our taxis still run on diesel. Although drivers are now starting to calculate whether it is not better to switch to an electric car. The high prices can therefore help with the energy transition, but after the recent crisis years, the reserves for a new car have dwindled.’

Hans van den Berg, spokesperson Transport and Logistics Netherlands

‘Fuel prices are very important for the transport industry. They make up about a quarter of the total costs. Fortunately, many of our members have a fuel clause in their contracts, which allows them to pass on higher costs to customers. However, those clauses often work with a delay: if a fuel price has been agreed on Monday, drivers will still drive at that rate throughout the week. Even if fuel prices continue to rise. This means that the costs can quickly add up.’


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