Consumers can expect lower oil and natural gas prices over the next five years, according to the International Energy Agency (IEA). This positive outlook is based on projections that oil and natural gas supplies will increase in the second half of the decade, as long as geopolitical conflicts do not disrupt current trends. The IEA’s World Energy Outlook report states that this shift could result in downward pressure on prices, providing relief to consumers who have been struggling with price spikes in recent years.
While the report presents a hopeful outlook for energy prices, it also emphasizes the need for a faster transition to clean energy to address the climate crisis and ensure global energy security. The IEA warns that geopolitical tensions could threaten energy security and calls for investments in clean energy technologies to mitigate these risks. Additionally, the report highlights the potential oversupply of oil and liquefied natural gas in the coming years, along with an excess of manufacturing capacity for key clean energy technologies like solar panels and batteries.
The IEA suggests that the forecasted decline in fossil fuel prices could create an opportunity for governments to focus on investing in clean energy transitions and phasing out inefficient fossil fuel subsidies. By redirecting resources towards green energy, policymakers could accelerate the transition to a more sustainable energy system while also addressing climate change. The agency points out that many clean energy technologies offer long-term financial benefits by reducing operating costs and shielding consumers from volatility in fossil fuel prices.
Climate change poses a significant threat to energy infrastructure, with extreme weather events like heat waves, floods, and droughts causing disruptions to energy supply chains. The IEA emphasizes the need to prepare for these challenges by investing in resilient energy systems that can withstand the impacts of climate change. The agency reiterates its prediction that demand for oil, natural gas, and coal will peak by the end of the decade, but warns that more action is needed to align with net zero goals and limit global warming to 1.5 degrees Celsius.
To meet global climate targets, worldwide greenhouse gas emissions must be reduced to zero by 2050. However, current policies are on track to result in a 2.4-degree increase in global average temperatures by the end of the century, highlighting the urgent need for more ambitious action. The IEA’s report underscores the crucial role of government policies and consumer choices in shaping the future of the energy sector and combating climate change. By prioritizing investments in clean energy and phasing out fossil fuels, countries can work towards a sustainable and climate-resilient energy future.
