The cost of crude oil per barrel fell back below $50 the moment that Donald Trump announced that the USA would withdraw from the Paris accord on climate change. The move has prompted speculation that the US will ramp up both coal and shale oil production further, leading to higher carbon emissions and lower fuel prices at the pumps.
In the short term, the fall in the cost of oil should translate to a further 2p a litre reduction in the cost of fuel within two weeks, a £1 saving per fill up. While this is a timely boost to those on low incomes, the long-term environmental cost of losing the US from the climate change agreement is very harmful, experts believe we’re witnessing the unravelling of 25 years of environmental work in one US presidential administration over the next 5 years.
In case you missed it, here is Trump’s full withdrawal video:
Trump and Big Oil
As speculated several months ago, this is part of Trump’s ongoing vision to support the American Midwest, decimated by low investment in job creation and the loss of jobs from traditional gas, oil and coal production industries, closed during the Obama administration to meet Paris Agreement targets.
The harsh truth is that this decision isn’t being done to support jobs, it’s to support the coal, oil and gas industry of America. They were major backers of the Trump presidential campaign and are now looking to get their money back by encouraging the US government to lift all the restrictions they’ve been operating under for a decade.
As well as lifting domestic restrictions on coal, oil and gas production, there is a global power play at work here by what Trump is doing. The USA is 3rd in the list of global oil producers behind Saudi Arabia and Russia. Saudi Arabia has effective control of 65% of the world’s oil supply under the OPEC group of 14 member states. Almost 18 months ago, OPEC and Russia deliberately stifled the growth of American shale oil producers by producing high volumes of oil, forcing the global cost of oil down and in turn hitting the incomes of hundreds of low volume US producers.
What we are seeing now is the fightback of US gas and oil interests supported by the US government against OPEC and Russia’s aims to limit supply and keep the oil price higher. This can only mean in the short term global supplies of oil will be greater than demand, so we could see fuel prices fall a little further but not likely to reach the £1 a litre mark of Dec 2015.
What happens now?
However, while these price declines are good news, one cannot avoid feeling a sense of despair about the Paris Agreement and what will happen now that the world’s biggest economy has decided to withdraw from a plan to tackle climate change.
This has similarities to the UK government’s attitude to tackling pollution in our cities. If the leaders of the world are not serious about tackling these issues head on, then what chance do we, or future generations have coping with climate change and pollution in the future?
Is it worth having lower cost fuel if it means the environment is worse off? If the US doesn’t follow climate change rules, then why should the UK government meet pollution targets? Let us know in the comments below.
Image Credit – YouTube