Higher Prices Push Dirtier Fuel Use, India Gas Producer Says
(Bloomberg) -- The “skyrocketing” prices of energy will encourage customers to use dirtier fuels that could impact demand for oil and gas in the near term, according to an Indian gas producer.
The spike “will be a short-term blip where people will switch to dirty fuels,” Santosh Chandra, Chief Executive Officer of Essar Oil and Gas Exploration and Production Ltd., said in a Bloomberg TV interview Monday. “Industries do get impacted and there will be some demand destruction if the prices stay high.”
Prices of crude oil to natural gas are at a multi-year highs driven by production curbs and surging demand ahead winter, when consumption peaks leading to a scramble for dirtier coal from China to India and Europe to help stave off the deepening power crisis. Coal’s resurgence comes as India is pushing for greater use of cleaner fuels such as natural gas and renewables to reduce pollution and meet its decarbonization goals.
Chandra expects the Organization of Petroleum Exporting Countries and its partners to boost daily production to rein in oil prices, that climbed above $80 a barrel for the first time since 2018 last week.
The group of 23 nations led by Saudi Arabia and Russia will meet later today to decide on oil production.
“I guess OPEC+ will take some call, because there has to be a price balance, otherwise there will be demand destruction in the oil sector,” Chandra said. Essar Oil and Gas, which produces coal bed methane gas in eastern India and prices it to Brent, benefits from higher oil prices.
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