Oil-producing countries may have preserved their relevance as an economic cartel after deciding to reduce their annual output to avoid another price collapse.
The agreement, the first cut in eight years, expectedly pushed oil prices to above $50 a barrel Thursday. But impact of the decision, reached by members of the Organization of Petroleum Exporting Countries and non-member Russia, could be fleeting in the face of a worldwide initiative to counter global warming and rely more on renewable sources of energy.
Opec members had to curtail their production after oil prices dropped to near 13-year lows of below $30 a barrel in February from as high as $100 in June 2014, mainly because of oversupply and the viability of fracking gas and oil from shale rocks.
Falling crude prices have given nations heavily dependent on oil for power and motor fuel, like the Philippines, a huge relief. In contrast, major producers like Saudi Arabia found their fiscal house in a disarray as their major source of revenue—oil exports—dwindled, prompting them to cut back on construction and expenditures.
Reduced output from the Opec members, and the resulting spike in oil prices, will only force non-producing countries and those wary of the disastrous impact of climate change to ramp up the search for cleaner and sustainable sources of energy.
Solar power technology, for instance, has proven to be cheap of late, while hydroelectric sources of energy are staging a comeback.
Some major cities, meanwhile, are serious in fighting climate change. Vancouver has expanded its network of bike roads and rail transit lines to reduce harmful carbon emissions. The Canadian city in 2015 set a target of 100 percent renewable energy by 2050. Los Angeles, California plans to generate 50 percent of its electricity from renewable resources, specifically wind and solar energy, by 2030.
The dependence on fossil-based fuels like oil and coal will soon decline as more nations realize their damaging impact to the environment and budgetary resources. Opec, too, will lose its market clout amid the clamor for cleaner sources of energy.