Negative oil prices are an opportunity to move to a healthier, greener economy

If this is really oil’s swan song, then we need to use the full force of economic policy to ensure its fortunes never return

Only a month ago, the oil price started its sharp decline towards zero. At the onset of the price war between Saudi Arabia, Russia and the US, the tumbling price of oil was compounded by the pandemic that continues to spread throughout the world, killing more than 160,000 people.

Now, the price of oil has gone south of zero, with lockdown measures around the world drying up demand. Oil is quite literally not worth the barrel it’s stored in. And, with negative prices, fossil fuel companies are better off keeping oil in the ground. Not only do negative prices make the extraction of oil unprofitable, but these prices could also see oil companies paying buyers to take the resources off their hands.

Their business models undoubtedly will take a hammering and hundreds of thousands of jobs will be put at risk. But, as with every economic crisis, it will be the workers who bear the brunt, not oil executives. It is increasingly apparent that we can no longer hinge the prosperity of communities around the world on the price of oil and the fragility of an oil-fuelled economy.

Such low prices for oil could have very negative results, including disincentivising the investment shift we have seen into renewables over the past decade, locking in our reliance on extraction and emissions for years to come. Worse still, the oil majors could dump the oil on global markets, further destabilising the world economy.

Or we could use this opportunity to shift and diversify our economy away from fossil fuels, providing high-quality, unionised jobs in sectors that respect environmental boundaries and human health. We could remove fossil fuel subsidies too, which costs British taxpayers billions each year to prop up an industry that needs to become a relic of the past. If we are to think global, we could save an estimated $5tn from removing fossil fuel subsidies worldwide.

With oil producers in free-fall, governments could even take the step of bringing fossil fuel companies into public ownership, only to wind them down and ensure a fair transition for workers. A policy move like this not only makes economic sense but also has a symbolic edge: no longer will our governments support an industry that is systematically destroying our future.

If this is really oil’s swan song, then we need to use the full force of economic policy to ensure its fortunes never return. Sources of clean energy – namely wind and solar – are continuing to increase in cost competitiveness relative to fossil fuels and are proven to deliver, providing 37 per cent of the UK’s electricity demand in 2019. With negative oil prices continuing to fracture the global economy, these technologies offer governments a cleaner, greener source of energy, at the heart of an economic stimulus.

When coronavirus passes, and we mourn the scale of life lost, talk will turn to an economic recovery. Clean renewable energy must be at the heart of this recovery plan, stimulating a section of the economy that will help us lead on our international commitments and bring us in line with our planetary boundaries. This recovery plan must also meet people’s immediate needs and provide a jobs guarantee, rent controls and support for the many workers, including those in the fossil fuel industry who are about to be left in the lurch, while oil executives will most likely retire with exorbitant pay-offs.

And when the fossil fuel industry calls for a public bailout, just like the airlines have done, we all ought to remember the untold harm on humanity and the planet that this industry has caused.

With the power and profits of the fossil fuel industry cast into doubt and the economy hurtling towards a deep recession, we have a unique opportunity to build a fairer, more just economy in its wake; an economy that protects its most vulnerable and cherishes its key workers.

We must stand steadfast in our opposition to more extraction and destruction. And we must make sure that this economic recovery is for the people and the planet, not the bankers and oil barons.

Fatima Ibrahim is the co-executive director of Green New Deal UK