Cop29 has drawn to a close with arguments over a $250 billion (£200 billion) a year ‘loss and damage’ fund, which developing countries complain is not nearly enough to match their demands. But away from the grand gestures at the summit it is worth looking at what countries are actually doing rather than what they say they are going to do. The answer to that seems to be drilling for more oil.
According to the International Energy Agency (IEA), the global supply of oil in October rose by 290,000 barrels a day to reach 102 million barrels per day. That is just as well given that the IEA predicts that global oil demand will rise by a further 1 per cent to reach a record 103.8 million barrels per day in 2025.
There’s no sign of peak gas or peak coal any more than there is of peak oil
While production has fallen in Iran and Kazakhstan, this seems to be being more than offset by the return of production in Libya as well as significant increase in production by the US, Brazil, Canada, Argentina and Guyana. It isn’t just Donald Trump who is crying ‘drill, baby drill’: countries which have agreed to sign off some platitudes in Baku promising to steer the world away from fossil fuels will doubtless do the same.
But more remarkable than the numbers is the outright bullishness of oil companies. There is little sign of the industry being concerned about being caught with what Mark Carney would call ‘stranded assets’. On the contrary, there is a big revival underway in deep sea oil exploitation – an industry which went into retreat after the Deepwater Horizon disaster in 2010. This incident in the Gulf of Mexico led to the biggest oil spill in history and ended up costing BP over $60 billion (£47 billion).
While shale oil and gas has been the story of America’s quest for energy security over the past decade and a half, there is a renewed boom in drilling for offshore oil. The analysts Rystad say that $104 billion (£82.3 billion) has been invested this year, a 50 per cent rise in the past five years. The boom is being fuelled by falling costs for exploration and drilling, which have slid from $14 (£11) per barrel to $8 (£6.3) per barrel over the past decade.
Shell is among the companies said to be investing anew in the Gulf of Mexico – with a new platform which was installed before Trump’s election. In other words, the industry didn’t fear re-election of the Democrats. Joe Biden may have been applauded as a hero by environmental activists for taking the US back into the Paris agreement, and through the bungs he handed out to US green technology companies under the auspices of the Inflation Reduction Act – a protectionist device in disguise. But he never did anything to prevent the expansion of the US oil industry.
And what about gas? The IEA says production was up by 3 per cent in the first half of 2024. Coal? Up by 3.1 per cent in 2023 to an all-time high – and expected to continue growing by a more modest 0.3 per cent in 2024. So, no, there’s no sign of peak gas or peak coal any more than there is of peak oil.
One country which will not be joining the party, needless to say, is Britain, where Ed Miliband has refused to issue licenses for new oil and gas extraction, and where windfall taxes are hastening the decline of the industry. Miliband wants us to think that he is aligned with the arc of history, and that it will pay Britain to make the earliest possible transition to renewables. In his mind we will end up enriching ourselves while dinosaurs who continue to invest in oil will get more than their fingers burned. If he is right, he will have scored a famous victory against a very big tide of money.
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