One of today's great environmental concerns is whether the world can continue to sustain damage caused by the rising use of oil, natural gas, and coal. This environmental dilemma stems from the contention that the emissions from burning hydrocarbons are raising global temperatures -- known as the greenhouse effect -- and damaging the world's climate.
The big oil companies, who are under pressure to reduce harmful emissions and consumption are counting on help from research and technology to reduce pollution from the use of their products, and keep demand and profits healthy. The European Round Table of Industrialists notes that carbon-dioxide emissions may be captured and buried at sea. Other industry experts agree that techniques to sequester carbon dioxide and recycle it by reinjecting it into oil fields are certainly doable. OPEC however, whose members just pump out crude oil, face pressure from shifting energy policies, cheaper producers, and their own internal problems.
"Environmental questions are now one of the driving forces of energy policy," stated Tatsuo Masuda of the International Energy Agency in Paris to highlight how energy priorities of major consuming countries, once directed primarily at ensuring secure oil supplies at reasonable cost have changed.
The companies expect an international agreement to limit greenhouse gases by year end, when a ministerial conference of the United Nations Framework Convention on Climate Change is scheduled in Kyoto, Japan.
But the oil companies also see a counterweight in the fact that the life of such capital assets as power plants, often stretching to 50 years, will still be met by mostly oil and gas. The oil industry believes oil and gas use will continue to grow for several more decades, and the IEA agrees to project increasing world use of oil and gas until the year 2010. According to a BP statistical review, world demand for energy grew 3% in 1996, more than double the average rate of growth for the past 10 years and the highest rate of growth since 1988.
But OPEC already faces tough competition from rising oil production in the North Sea, Columbia and other places resulting in sliding prices. Moreover, its members worry that taxation-led price rises for oil products in consuming countries will curb demand for crude oil. OPEC's current director of research, Shokri Ghanem, believes a carbon tax uniformly applied by developed countries would inflict revenue losses of tens of billions of dollars a year on the group, whose 11 members account for more than half of world oil exports.
Leo Drollas, deputy director of the London-based Centre for Global Energy Studies, figures on a barrel of North Sea Brent crude falling to about $17.50 in the second half of 1997 from $19.60 in the first half. To support prices, Saudi Arabia, Kuwait, and the United Arab Emirates produce under capacity. Of course, Iraqi output is currently locked in by the U.N. which limits Baghdad's exports.
-- Posted the week of June 23, 1997
Source: The Wall Street Journal June 23, 1997 pg. A1