What to do about oil prices

The drop in global oil prices has all sorts of annoying consequences (apart from the problems it causes an oil-producing country like Scotland). For instance, renewables are suddenly bad value for money (which is causing investment in them to drop), and recycling of plastics is now dearer than producing new stuff from oil (which again kills off recycling companies).

At the same time, it’s not like we’ve suddenly found a lot of new oil in the ground or have discovered a way to use it without causing even more global warming. At some point in the future, oil will run out or get banned, and before either happens, prices are likely to skyrocket.

Oil prices might of course rise again well before then. The current drop is caused by a combination of factors, including a drop in Chinese demand, an increase in supply (caused to a large extent by the advent of marginal producers that are only in business because oil prices were so high for a while), and a plan by Saudi Arabia to get rid of the marginal producers by lowering prices to a very low level for a few years. We’re not living in a world where prices have dropped to a new and permanently low level.

Anyway, the sensible course of action for Scotland (and the UK until we gain our independence) would be to subsidise renewables and recycling during the years of low oil prices. Unfortunately, income from oil production falls at the same time, which means there’s less money to do this with.

So here’s an idea: Why don’t we create an inverse fuel duty, whereby the price at the pump is practically constant because the duty goes up when the price goes down, and vice versa? If a large part of this fuel duty was used to subsidise renewable energy, plastic recycling and similar projects, their subsidy would increase when oil is cheap, which is exactly what you want. At some point in the future, oil will get so expensive that the subsidy would drop to zero, which would again be perfect because at that point they wouldn’t need it any more.

Sadly, we aren’t independent, which means we’ll have to convince the English Tories to introduce it, but they don’t seem to care about renewables and such things. We really need independence more than ever!