A Taxing Issue/Win-Win Technology

OPEC Bulletin Commentary July-August 2005.

A Taxing Issue

The issue of downstream bottlenecks is very topical in the oil market at present and the direct impact this is having on industries and sectors that rely heavily on products to conduct their businesses is demonstrated in this issue of the OPEC Bulletin on page 10.

Here, the head of the International Road Transport Union (IRU) explains how high product prices are undermining operations for his members who are already subject to high levels of government taxation. As every driver knows, filling up your car can be an expensive business, but for road transportation companies, the costs of filling up fleets of lorries every day can be excessive.

The IRU believes that its members are being unfairly penalized by government fuel taxation policies. With road transportation mainly centered in consuming countries, the IRU says that many governments in these countries are not assuming their responsibilities with regard to transportation policy and thus affecting wider economic development. The future of the road transport sector is key to overall economic growth as it accounts for the transportation of 95 per cent of all goods around the world.

The IRU-OPEC meeting in Vienna is in line with the Organization’s promotion of institutional co-operation with major stake-holders in the oil industry, including, of course, key consumers.

Win-Win Technology

Environmental issues are also covered in this edition (see page 14), namely, carbon dioxide (CO2) capture and storage, whereby CO2 is captured from stationary sources such as power plants and injected into geologic formations for long-term storage.

This is now viewed as one of the most promising technologies to reduce CO2 emissions and, excitingly, the storage of CO2 in depleting oil reservoirs could increase reserves through enhanced or improved oil recovery processes.

As this article explains, this technology represents a ‘win-win’ situation — offering the possibility to reduce a significant amount of emissions but at the same time to exploit oil reserves that would otherwise not be easy to access. OPEC is very interested in this technology for the obvious benefits it offers.

In today’s world, oil must be cleaner, safer and more efficient than ever before. This means the focus must be on new technology. It is hoped that research now underway into CO2 capture and its application for enhanced oil recovery will make it commercially viable on a widespread basis.

Technology will help expand sources of oil supply, reduce costs, improve oil-use efficiency and satisfy beneficial environment requirements. OPEC supports all efforts in this important area.

This Commentary is taken from the July-August 2005 edition of the OPEC Bulletin, which can be downloaded free of charge in PDF format from the OPEC website.

OPEC Bulletin (July-August 2005)

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