From 17m ago
Jillian Ambrose and Damian Carrington are online now answering your questions about fossil fuel profits, the climate crisis, energy policy and more.
Key events
- 2m agoIs it right that oil prices haven’t risen because China’s oil imports have dropped?
- 13m agoHow does fossil fuel subsidy compare with profit?
- 17m agoJillian and Damian are live
- 6h agoWelcome to the conversation
Mazter asks: I see that oil imports into China have dropped about 30%. And that may be the reason the oil price hasn’t gone far higher, is that correct?
Also, that 30% may represent a ~15% reduction in demand, plus another ~15% from drawing down on their huge strategic reserve. Is filling/building that reserve why their oil demand hadn’t dropped the last 5(ish)yrs, despite a huge shift to electric transport?
From there, if we weren’t seeing supply constraints (Russia and Middle East), could China now(ish) reduce demand and oil prices enough to make profitability from the more expensive production (Canadian tar sands and US frack oil) questionable?
Damian:
double quotation markYou are right – China is the reason the US-Israeli war on Iran has not pushed oil prices higher. This excellent article from the Economist explains”
“Between February and June, China slashed its crude imports by half, or 5.5m barrels per day – enough, experts reckon, to have shaved $30 or more off Brent, the global benchmark. That is more than half of the worldwide decline during the covid-19 lockdowns … As one oil-trading boss puts it, ‘China is the new OPEC’.”
China uses three main levers: drawing down on its reserves, restricting exports of refined product like jet fuel, and curbing domestic demand. It’s also worth remembering that China is the world’s green energy superpower, rolling out (and exporting) huge amounts of solar, wind and electric cars.
Dingleberryc asks: How much are the fossil fuel companies subsidised compared to their profits?
Damian:
double quotation markIt is one of the craziest aspects of the climate crisis that governments provide colossal subsidies for fossil fuels – the subsidies are pouring fuel on the fire.
In 2023, the IEA reports, governments subsidised the use of fossil fuels to the tune of $620bn, far greater than the $70bn was spent on support for consumer-facing clean energy. The OECD puts the fossil fuel number at $920bn. These are direct subsidies. When you add in indirect ones – like the cost of air pollution – as the IMF does, the figure soars to $7tn a year. That is more than the estimated total revenue for the oil and gas industry alone in 2024 of about $6tn.
Why don’t governments end the subsidies? It is politically extremely hard to raise energy prices unless you have low cost alternatives like solar and wind in place already. But the argument that the subsidies protect the poor is largely wrong – the better off take most of the subsidies for the simple reason they use the most energy. Help targeted at poverty specifically is a better solution.
Jillian Ambrose and Damian Carrington are online now answering your questions about fossil fuel profits, the climate crisis, energy policy and more.
Last week Jillian Ambrose and Damian Carrington published a front-page story that revealed the vast scale of the profits that eight of the biggest oil firms made in three months as the Iran conflict sent energy prices soaring and the emissions-fuelled climate crisis caused deadly heatwaves.
They will be online at 2pm to answer your questions about their reporting – and any others you might have about how the oil markets work – and how many of these companies have withdrawn from their commitments to a clean energy transition.
As the Guardian’s energy correspondent, Jillian’s recent reporting has also included the spike in demand for solar power in the UK; the political row surrounding how Great Britain’s grid operator was managed during recent heatwaves and what is holding back a British green energy transformation.
Damian’s recent work as environment editor has included looking at how the climate crisis has accelerated the scale of Europe’s summer heatwaves; an audacious plan to refreeze the Arctic and a fascinating piece looking at how nature can help treat mental illness.
Ask a question or discuss this story: log in or sign up here
Explore more on these topics