The OPEC leader claims that rising gas costs are the ‘transformation premium’ in the march toward renewables

Secretary-General of OPEC Mohammed Barkindo informed CNBC that rising gas prices are the price of attempting to transition to renewable energy sources. “I have talked about a new premium developing in the energy markets that I call the transformation premium,” Barkindo said at the Gastech event which was held in Dubai to CNBC’s Dan Murphy.

The oil cartel’s long-time leader chastised what he saw as an overly emotional response to energy legislation and climate change. However, he did not blame anyone in particular for what he called a “false representation of facts.” “Distortion of scientific facts, and the distortion of these findings in the conversation,” Barkindo claimed, “which is not beneficial, since climate change, as well as the energy transformation, are meant to be guided by science.”

“In terms of both climate change and the shift, the Intergovernmental Panel on the Climate Change is meant to become the most authoritative body,” he stated. “And we in OPEC trust they are doing an excellent job, producing very essential, seminal reports, but sadly, these reports are being ignored, and the current discussions are more or less propelled by feelings rather than the excellent work that this scientific organization is creating for all of us.”

The OPEC secretary general’s remarks reflect a rising discussion among policymakers and industry executives over the future of renewables, energy, and climate change. Many governments throughout the world, notably in the West, are propelling for a transition away from fossil fuels. At the same time, industry insiders believe that such a move would disrupt markets, damage consumers, and be unachievable in the long run. The worldwide price of gas has tripled in the last year, causing market tremors and creating fears that the commodity’s price would continue to grow.

Higher summer temperatures in the United States stoked the need for air conditioning, while extended bouts of cold in the United Kingdom and other areas of Europe in spring caused increased heating needs. All of this has resulted in decreased gas supplies for the next winter months, implying that supplies will be further squeezed and prices will rise.

Since the start of the coronavirus epidemic, gas costs have stayed exceptionally low, approximately $2 per million British thermal units (mmBtus). However, when economies recover and travel resumes as vaccination campaigns increase, demand has risen sharply.

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