The economic implications of the tumbling cost of crude are momentous but mixed. For the environment, though, it should at least mean that more fossil fuels stay in the ground
A decade ago, British civil servants were packed off on a training day about, in a then-fashionable phrase, future-proofing UK plc. The idea was to game the mid-century economy on a range of feasible assumptions, one of which concerned the oil price. There was an “expected case” for 2050 of $45 a barrel, a “best case” of $35 and a “worst case” of $55. So much for the bureaucratic imagination. Over the short years since, the price has twice been more than double the so-called worst case, and then twice also come skidding down by two-thirds.
We are currently in the midst of a great oil collapse, with prices sinking to within touching distance of $30 on Tuesday afternoon, 73% down on 18 months ago. As with every climb up and every slip down the greasy price pole, analysts are scrambling around to figure out whether the change will endure. Nobody can know, but when financial sentiment swings, some always conclude that it will soon swing even harder. The RBS note for investors which this week unleashed a note of panic by advising them to “sell everything” mentioned the possibility of $16 a barrel, a number with little obvious basis apart from being half the current price.
Related: The Guardian view on the geopolitics of falling oil prices | Editorial