Oil and gas prices are rising – a reminder of how dependent we still are on fossil fuels

We need to use less energy, writes Hamish McRae, and the fact that it has suddenly become much more expensive should encourage us to do so

A section of the BP Eastern Trough Area Project oil platform in the North Sea (Reuters)

The oil price hit a seven-year high on Monday with the benchmark Brent crude going over $87 a barrel. Following on from the surge in gas prices, it was a salutary reminder of how dependent the world is on fossil fuels. It may be moving rapidly towards a carbon-neutral economic system, but it has a long path to travel.

Everything has been disrupted by the pandemic, but according to the International Energy Agency, in 2019 oil accounted for 31 per cent of primary energy supplies, gas 23 per cent, and coal 27 per cent. That adds up to 81 per cent of the total. Back in 1971, before the first oil shock, the total was nearly 87 per cent, which gives you an idea of how little progress has been made over half a century.

The subject is so massive that it is hard to process the global significance of the current surge in oil and gas prices. Coal, too, has shot up to an all-time record. That does not hit the headlines because it is mainly used in power stations, but it is currently around $220 a ton, compared with between $50 and $130 between early 2009 and last spring. From an environmental point of view the high coal price is welcome, in that it will discourage public utilities from using it to generate electricity if they have any other options. But in the short-term it adds to inflation, as do gas and petrol prices.