The Big Picture

High Prices Buffet Transition Politics

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  • High oil and gas prices are fueling arguments that the energy transition is to blame for deterring fossil fuel investment.
  • Declining investment has roots in the price crash of 2014-16, the industry’s poor returns on capital and the 2020s pandemic.
  • But the debate is leading to clearer distinction between demand policies, which underlie the transition from fossil fuels to low-carbon energy, and supply, which cannot be curbed too early without causing crises.

High prices have sharpened the energy transition’s dividing lines. Producers and other pro-industry voices say high prices show the transition is moving too quickly and argue more upstream investment is needed to ease consumer price pain. Advocates of climate action, including some big consumer governments, say rising prices — and price and geopolitical volatility — demonstrate the need to shift away from fossil fuels even faster.

Policy and Regulation, Resource Access, Macroeconomics
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