WASHINGTON (Sputnik) — The latest drop in oil prices is unlikely to last more than a few days, but as long as it continues it will reduce the motivation for countries to find alternate sources of energy, analysts told Sputnik.
"This will probably cause a short-term blip (days in length), but have no long term effect," Crisman Institute for Petroleum Research Director Professor Dan Hill at Texas A&M University said on Monday.
On Sunday, negotiators from the world's major oil-producing countries, including both Organization of the Petroleum Exporting Countries (OPEC) members and non-cartel producers, failed to reach an agreement on freezing production levels in talks in Doha, Qatar.
The news triggered a sharp drop of about 4 percent in oil prices.
Hill noted that the failure to reach agreement on supporting a basic global oil price at the just-concluded Doha talks would not change the structure for negotiations between the world’s major oil-producing and exporting nations since that had already been in disarray.
The outcome in Doha was likely to encourage oil-dependent industrial nations to put off ambitious plans to switch to other, more costly renewable energy sources, Woodrow Wilson Center economic analyst Shihoko Goto said.
"A low oil price is bad news for exporters, but it also is bad news for energy importers," Goto maintained.
Industrial nations were likely to be lulled into complacency by continuing low energy costs in the short term, making them more vulnerable to eventual crises in production or transportation of oil in the future, Goto argued.
"For importers, weak prices are a disincentive to find alternatives. That cuts back on innovation and increases dependency on the whims of politically unstable nations," she explained.
A continued slump in oil prices would also act as an economic disincentive to innovation for new clean energy sources and increased efficiency on the part of users, Goto added.
"Of course, cheap energy cuts costs in the short term. But what importers should strive for is reduced dependency. There is a direct correlation between high energy cost and more investment into alternative energy sources," Goto pointed out.
The failure of the Doha talks on Sunday meant that oil-producing nations would not be able to reach any deal on freezing their total production before the next scheduled meeting of the OPEC member-states in June, Venezuelan Oil Minister Eulogio del Pino told Sputnik on Monday.