Risk of oil price spike may benefit gas

Lower oil prices have stimulated demand for transport fuels derived from crude oil such as gasoline and diesel, while scuppering the drive to promote the use of gas as an alternative fuel in the transport sector. As oil prices recover, and upstream underinvestment points to a potential price spike, the window of opportunity for gas may open once again. If it does, then governments should act to capture it.

Until recently, vehicle fleets in OECD countries had been becoming progressively more fuel efficient. In the UK, for example, the number of litres of fuel used per 100 km travelled fell by 31% for diesel- and 33% for petrol-fuelled cars between 1997 and 2014, when oil prices were still above $100 per barrel. This trend is now in jeopardy – larger cars have seen a resurgence since oil prices dropped, and SUVs with lower miles per gallon are bestsellers again.