Cheap oil may delay GCC’s shift to clean fuel

Supported by low oil prices, GCC states may continue to use petroleum distillates instead of implementing plans to switch over to clean fuels, a senior analyst with Merrill Lynch has said.

Gustavo Soares, a senior commodity strategist with Merrill Lynch, said with oil prices hitting rock bottoms, it might seem irrational in the short term for the Gulf states to generate power with “anything that’s not oil”. He said government incentives to switch over to low-carbon energy sources can ensure green energy projects are not abandoned.


The comment comes in tandem with a recent PFC Energy report, which said the demand for fuel oil in the region will continue to rise throughout 2009.

“A lot of people were talking about switching to alternative sources of energy last year when the oil prices were high. The short movement in oil prices put that sort of transition on hold. In the current environment, that should put such a transition on hold,” Soares, who recently co-authored a study titled Global Power Demand to Languish in 2009, said.

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