The unexpected decision by OPEC and its allies to reduce output was motivated by one thing, and that was the sharpest increase in oil prices in well over a year. Nevertheless, it is less apparent how this will affect the ongoing worldwide drive to halt the use of fossil fuels since they contribute to global warming.
Because of the crisis between Russia and Ukraine over the last year, energy costs have skyrocketed, which has been both a blessing and a disaster for the move to more environmentally friendly options. Even the most environmentally advanced countries have been forced to reconsider their reliance on renewable energy sources as a result of the crisis between Russia and Ukraine. The disadvantages of depending on a small number of countries for the supply of goods have also become apparent to nations.
The most recent price spike, which was caused by OPEC, is not an exception.
According to Ole Sloth Hansen, director of commodities strategy at Saxo Bank, “the stronger the motivation to continue the change, the higher the cost of conventional fuels.” “This is also one of the reasons why OPEC isn’t out there to ruin its market by promoting a return that is more than $100 a barrel. It would be detrimental to demand while also hastening the change.
Oil producers have a responsibility to be aware of the alternatives to their goods that are available to consumers. After two years of steadily increasing prices, the expenses of environmentally friendly technologies and materials are now beginning to level out and drop, in the same way that they drive up the price of a barrel of oil. Let’s take a look at lithium, the price of which had its sixteenth consecutive day of declining market activity on Tuesday. It has decreased by more than 58% thus far for this year. This has made it simpler for automakers like Tesla Inc. to lower their pricing as an increasing number of electric vehicles enter the market.
The costs of purchasing other essential components have also come down in recent years. The price of solar-grade polysilicon, which is essential in the production of solar panels, has dropped by thirty percent since reaching its high point in 2017. The price of steel that is used in wind turbines has reduced by more than 20% in North America and by more than 40% in Europe from its peak point in 2022.