Business

PARIS — Global oil demand will return to pre-pandemic levels in two years and reach record heights by 2026 unless governments take swift action to meet climate goals, the International Energy Agency (IEA) said on Wednesday.

Oil markets and the world economy are recovering from the massive collapse in demand caused by the coronavirus pandemic, the IEA said in an annual report.

"The COVID-19 crisis caused a historic decline in global oil demand — but not necessarily a lasting one," IEA executive director, Fatih Birol, said in a statement.

As people get vaccinated and restrictions are lifted, demand will return to its 2019 level by 2023, according to the report.

The IEA's five-year projections estimates global demand will rise each year to reach 104 million barrels a day (mb/d) by 2026, a gain of four per cent from the level in 2019.

The outlook for demand, however, has shifted lower as the pandemic has forced changes in behaviour, with people working from home and travelling less, the report said.

More governments are also focusing on a potential "sustainable recovery" to move quickly towards a low-carbon future.

This raises the prospect of reaching a peak in oil demand sooner than expected "if governments follow through with strong policies to hasten the shift to clean energy," according to the report.

"Achieving an orderly transition away from oil is essential to meet climate goals, but it will require major policy changes from governments as well as accelerated behavioural changes," Birol said.

"Without that, global oil demand is set to increase every year between now and 2026," he said.

"For the world's oil demand to peak anytime soon, significant action is needed immediately to improve fuel efficiency standards, boost electric vehicle sales and curb oil use in the power sector."

Asia is expected to lead renewed growth in global demand and account for 90 per cent of the increase from 2019 to 2026, according to the agency's base scenario.

"By contrast, demand in many advanced economies, where vehicle ownership and oil use per capita are much higher, is not expected to return to pre-crisis levels," the IEA said.

If fuel efficiency standards are improved, electric vehicle sales take off, the power sector uses less energy, people recycle and work from home more and business travel fails to pick up, the picture could change dramatically.

Taken together, it could reduce oil consumption by up to 5.6 mb/d by 2026, "which would mean that global oil demand never gets back to where it was before the pandemic."

Birol said: "No oil and gas company will be unaffected by clean energy transitions, so every part of the industry needs to consider how to respond as momentum builds behind the world's drive for net-zero emissions."

DAMASCUS — Damascus raised petrol prices in government-held parts of Syria by more than 50 per cent after the Syrian pound hit record lows in the black market.

The cost per litre of subsidised petrol rose to 750 from 475 Syrian pounds, the trade ministry said on Monday.

The price increase amounts to “officially” 60 US cents, or 17 US cents at black market rates.

Syrian motorists are allocated 75 litres of subsidised petrol per vehicle per month, then must pay unsubsidised rates — which also rose from 1,300 to 2,000 pounds a litre, the ministry said.

Gas canisters used in homes are now selling for 3,850 pounds, up from 2,700, it added. 

Damascus has repeatedly raised fuel prices in recent years to tackle an accelerating economic crisis sparked by a decade-long civil war and compounded by sanctions, the coronavirus pandemic and a financial crunch in neighbouring Lebanon.

The trade ministry did not provide a reason for the latest hike, but in the past it has blamed Western sanctions.

The oil ministry last week said it had been forced to cut fuel supplies due to "a delay in the arrival of imported fuel derivatives because of the US blockade".

Washington has imposed several rounds of economic sanctions on the Syrian government since the war broke out in 2011.

The trade ministry's latest announcement came as the Syrian pound continued to plunge against the dollar on the black market after it hit a record low of 4,000 to the dollar this month.

The pound, officially valued at 1,256 to the greenback, was selling for around 4200 on the black market on Tuesday, according to money exchangers. 

The economic crunch has seen food prices skyrocket over the past year in a country where the majority of the population lives below the poverty line.

Rani, a 37-year-old food wholesaler, said the hike in fuel prices would hit other goods.

"We are going to have to raise the price of our products to make up for steeper fuel prices," he said.

Heating fuel, petrol and cooking gas have been in short supply in government-held areas for years, and motorists have grown used to long queues to fill up.

Syria used to produce almost 400,000 barrels of crude per day before the war.

OTTAWA — Rogers Communications announced on Monday the purchase of its rival Shaw for Can$26 billion ($21 billion) in a telecoms deal that would merge two Canadian family dynasties.

By combining, the two firms said they will have the "the scale, assets and capabilities" to accelerate a rollout of fifth generation (5G) mobile communications and better compete with the nation's top two providers Bell and Telus.

The transaction, however, must still be approved by shareholders and regulators.

Both companies were founded in the 1960s and grew mostly through acquisitions of smaller cable companies. Founders Ted Rogers died in 2008 and JR Shaw passed away last March.

The deal follows Rogers' failed joint bid with Altice USA last year for Quebec's Cogeco Communications, as well as Shaw's entry into the wireless business by acquiring startup Wind Mobile in 2016.

According to a statement, Toronto-based Rogers will pay Can$40.50 per share in cash — a 70 per cent premium — for the shares of its Western Canada competitor, for a total of Can$20 billion.

Rogers will also take on Shaw's Can$6 billion debt, bringing the total value of the deal supported by the Shaw family to Can$26 billion.

The merged company, they said, would invest Can$2.5 billion to build up 5G networks in Manitoba, Saskatchewan, Alberta and British Columbia provinces and add 3,000 new jobs.

WASHINGTON — Amid reports that the richest Americans have grown far richer during the pandemic year, Treasury Secretary Janet Yellen said on Sunday the Biden administration had yet to decide on imposing a new wealth tax.

"That's something that we haven't decided yet," Yellen said on ABC's "This Week" programme.

She said that President Joe Biden "hasn't proposed a wealth tax, but he has proposed that corporations and wealthy individuals should pay more in order to meet the needs of the economy, the spending we need to do".

Senator Elizabeth Warren, a liberal Democrat, has called for an annual tax of 2 per cent on every dollar of people's wealth above $50 million, and 3 per cent on every dollar above $1 billion.

Last month, Yellen told the New York Times that a Warren-style wealth tax would have "very difficult implementation problems". But she said she would consider other approaches that might have a similar effect.

A recent study by the humanitarian group Oxfam found that the world's richest 10 people — including Americans Jeff Bezos, Elon Musk and Bill Gates — had collectively seen their fortunes grow by $540 billion since the pandemic began, even as millions of Americans suffered.

The trillions of dollars spent in government stimulus plans during the pandemic have greatly swollen the federal deficit, and Republicans — who supported stimulus spending during the Trump administration — now warn that the deficits risk becoming unsupportable. 

Not one Republican supported Biden's $1.9 trillion stimulus plan, and the president could face similar resistance as he seeks to push through massive infrastructure or green-energy plans.

But, Yellen noted, the current exceptionally low interest rates have greatly reduced the cost of government borrowing. 

"Interest payments relative to the size of the economy have remained quite low," she said, "no higher than they were back in 2007".

The secretary did add that "in the longer run we need to get deficits under control to make sure that our fiscal situation is sustainable".

Yellen, a former chair of the Federal Reserve, again played down fears that stimulus spending could fuel dangerous levels of inflation, especially as the coronavirus vaccinations of millions of Americans raise hope of an economic boom.

"I think there's a small risk of inflation," she conceded. But "the most significant risk we face is a workforce that is scarred by a long period of unemployment."

Yellen said she "absolutely" does not expect a return to the runaway inflation of the 1970s.

If lower levels of inflation should emerge, the secretary said, "We have the tools to address it."

NEW YORK — Wall Street closed out a volatile week mostly higher on Friday, but tech shares once again lost the battle between optimism over a stronger economy and concerns about inflation.

US Treasury yields jumped again, returning to the pre-pandemic levels of February 2020, as the 10-year note rose above 1.6 per cent.

That is a sign of growing investor fears that the Federal Reserve will have to raise borrowing rates sooner than expected to contain inflation — despite the central bank's assurances to the contrary.

The tech-rich Nasdaq Composite Index recovered from the lowest point of the day, closing down 0.6 per cent at 13,319.87.

The benchmark Dow Jones Industrial Average climbed 0.9 per cent to 32,778.64, setting another record, while broad-based S&P 500 edged up 0.1 per cent to 3,943.34, adding four points to the all-time high set on Thursday.

"There is a tug of war in the market regarding where inflation will settle," Quincy Krosby of Prudential Financial said, with traders watching how President Joe Biden's $1.9 trillion stimulus package will impact the economy, as well as the infrastructure package he's pushing.

"No one is suggesting at this point that we will be due for hyperinflation," she said. But since the Fed has made it clear they will run the economy hotter, markets are now wondering, "how hot?"

Tech shares are seen as most vulnerable to rising borrowing rates, and Apple and Amazon each lost 0.8 per cent.