October 26, 2007 / 7:04 AM / 11 years ago

Oil bigger threat than climate change in 10 years

LONDON (Reuters) - Rising oil prices are a bigger threat to the world economy than climate change in the next 10 years - that was the surprising verdict of company executives from carbon trading, fuel cell, oil exploration and solar power firms who attended the Reuters Smaller Companies Forum.

Rising oil prices are a bigger threat to the world economy than climate change in the next 10 years - that was the surprising verdict of company executives from carbon trading, fuel cell, oil exploration and solar power firms who attended the Reuters Smaller Companies Forum. REUTERS/Zohra Bensemra

But climate change is likely to have a greater effect on the global economy over a 50-year timespan, according to those executives from old and new energy companies.

“In a short-term scenario it is hard to say climate change is going to be a differentiating factor,” said Jack MacDonald, finance director of carbon cutting project developer EcoSecurities ECO.L.

“If oil prices quadruple it is probably more of a challenge to the economy than climate change,” he said.

But he added high oil prices would force businesses to tackle climate change earlier, as it is a greater problem in the longer term.

Peter Bance, chief executive of fuel cell domestic boiler maker Ceres Power (CWR.L), said the world can cope with both pressures in the short term, but there were signs that natural catastrophes were already forcing a radical rethink.

“Hurricane Katrina woke people in the U.S. up in a very big way, even though it was not necessarily 100 percent linked to climate change,” he said.

“Droughts and flooding are a much bigger long-term driver (of people’s behaviour) than the oil price,” he added.

Dr Peter Finnegan, finance director of solar wafer maker PV Crystalox Solar Plc (PVCS.L), said oil was a far more obvious threat to the economy than climate change over the next 10 years.

“High oil prices have a direct cost implication in terms of industrial output,” he said.

However Eugene Whyms, Finance Director of oil and gas explorer EnCore Oil EO.L, said he did not think either issue was of much concern.

“The threat from climate change — I’m not sure what that is, apart from panic and extra taxes in case we all go under water,” Whyms said, adding that the climate has always changed.

“And the oil price has doubled in the past few years, without any major consequences.”

The fight to tap oil fields in Alaska, the Arctic and Antarctic will be the key battleground between climate change campaigners and old, fossil-fuel based, energy firms, Whyms thinks.

“The battle will probably come to a head on something emotive, like spoiling Antarctica,” he said.

Asked whether those areas should be drilled, he said: “It would be very expensive and I don’t think there is a big imbalance between oil supply and demand. I think the price has partly been pushed up by a lot of traders and speculators.”

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