Skip to main content

Thank you for visiting You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

  • Article
  • Published:

Quantifying uncertainties influencing the long-term impacts of oil prices on energy markets and carbon emissions


Oil prices have fluctuated remarkably in recent years. Previous studies have analysed the impacts of future oil prices on the energy system and greenhouse gas emissions, but none have quantitatively assessed how the broader, energy-system-wide impacts of diverging oil price futures depend on a suite of critical uncertainties. Here we use the MESSAGE integrated assessment model to study several factors potentially influencing this interaction, thereby shedding light on which future unknowns hold the most importance. We find that sustained low or high oil prices could have a major impact on the global energy system over the next several decades; and depending on how the fuel substitution dynamics play out, the carbon dioxide consequences could be significant (for example, between 5 and 20% of the budget for staying below the internationally agreed 2 C target). Whether or not oil and gas prices decouple going forward is found to be the biggest uncertainty.

This is a preview of subscription content, access via your institution

Access options

Buy this article

Prices may be subject to local taxes which are calculated during checkout

Figure 1: Oil price levels targeted in the two diverging cases.
Figure 2: Cumulative energy demand from 2010 to 2050 by primary resource under low or high oil prices.
Figure 3: Fossil fuel and industrial process CO2 emissions under low or high oil prices.

Similar content being viewed by others


  1. World Energy Outlook 2015 (International Energy Agency, 2015).

  2. Chen, W., Hamori, S. & Kinkyo, T. Macroeconomic impacts of oil prices and underlying financial shocks. J. Int. Financ. Mark. Inst. Money 29, 1–12 (2014).

    Article  Google Scholar 

  3. Cunado, J., Jo, S. & Perez de Gracia, F. Macroeconomic impacts of oil price shocks in Asian economies. Energy Policy 86, 867–879 (2015).

    Article  Google Scholar 

  4. Wang, X. & Zhang, C. The impacts of global oil price shocks on China’s fundamental industries. Energy Policy 68, 394–402 (2014).

    Article  Google Scholar 

  5. Baffes, J., Kose, M. A., Ohnsorge, F. & Stocker, M. The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses (World Bank Group, 2015).

    Google Scholar 

  6. Espinasa, R. & Sucre, C. Cheap Oil? Making Sense of a Competitive Oil Market (Inter-American Development Bank, 2015).

    Book  Google Scholar 

  7. International Energy Outlook 2014 Report Number DOE/EIA-0484(2014) (U.S. Energy Information Administration, 2014).

  8. van Ruijven, B. & van Vuuren, D. P. Oil and natural gas prices and greenhouse gas emission mitigation. Energy Policy 37, 4797–4808 (2009).

    Article  Google Scholar 

  9. Rout, U. K. et al. Impact assessment of the increase in fossil fuel prices on the global energy system, with and without CO2 concentration stabilization. Energy Policy 36, 3477–3484 (2008).

    Article  Google Scholar 

  10. McGlade, C. E. Uncertainties in the Outlook for Oil and Gas. PhD thesis, Univ. London (2013).

  11. Krey, V. Global energy–climate scenarios and models: a review. WIREs 3, 363–383 (2014).

    Google Scholar 

  12. Riahi, K. et al. Global Energy Assessment—Toward a Sustainable Future 1203–1306 (Cambridge Univ. Press and the International Institute for Applied Systems Analysis, 2012).

    Google Scholar 

  13. ADVANCE ADVANCE Integrated Assessment Model Wiki Documentation (University College London and the International Institute for Applied Systems Analysis, 2015);

  14. European Brent Spot Price FOB (U.S. Energy Information Administration, 2015);

  15. Yergin, D. The Prize: the Epic Quest for Oil, Money, and Power (Simon Schuster, 1991).

    Google Scholar 

  16. Rogner, H.-H. et al. Global Energy Assessment—Toward a Sustainable Future 423–512 (Cambridge Univ. Press and the International Institute for Applied Systems Analysis, 2012).

    Google Scholar 

  17. Aguilera, R. F. Production costs of global conventional and unconventional petroleum. Energy Policy 64, 134–140 (2014).

    Article  Google Scholar 

  18. Hartley, P. R., Iii, K. B. M. & Rosthal, J. E. The relationship of natural gas to oil prices. Energy J. 29, 47–65 (2008).

    Article  Google Scholar 

  19. Brown, S. P. A. & Yücel, M. K. What drives natural gas prices? Energy J. 29, 45–60 (2008).

    Article  Google Scholar 

  20. Erdős, P. Have oil and gas prices got separated? Energy Policy 49, 707–718 (2012).

    Article  Google Scholar 

  21. Asche, F., Oglend, A. & Osmundsen, P. Gas versus oil prices the impact of shale gas. Energy Policy 47, 117–124 (2012).

    Article  Google Scholar 

  22. Correlations Between Daily Futures Price Changes of Crude Oil and Other Commodities Generally Rose in Recent Years (U.S. Energy Information Administration, 2015);

  23. European Union The Impact of the Oil Price on EU Energy Prices (Directorate General for Internal Policies, 2014).

  24. Kriegler, E. et al. The role of technology for achieving climate policy objectives: overview of the EMF 27 study on global technology and climate policy strategies. Climatic Change 123, 353–367 (2014).

    Article  Google Scholar 

  25. McCollum, D., Krey, V., Kolp, P., Nagai, Y. & Riahi, K. Transport electrification: a key element for energy system transformation and climate stabilization. Climatic Change 123, 651–664 (2014).

    Article  Google Scholar 

  26. Smith, P. et al. in Climate Change 2014: Mitigation of Climate Change (eds Edenhofer, O. et al.) 811–922 (IPCC, Cambridge Univ. Press, 2014).

    Google Scholar 

  27. Rogner, H.-H. An assessment of world hydrocarbon resources. Annu. Rev. Energy Environ. 22, 217–262 (1997).

    Article  Google Scholar 

  28. Trends in Global CO2 Emissions: 2014 Report (PBL Netherlands Environmental Assessment Agency and European Commission, Joint Research Centre, 2014).

  29. IPCC: Summary for Policymakers. In Climate Change 2014: Mitigation of Climate Change (eds Edenhofer, O. et al.) (Cambridge Univ. Press, 2014).

    Google Scholar 

  30. Synthesis Report on the Aggregate Effect of the Intended Nationally Determined Contributions (United Nations Framework Convention on Climate Change, 2015).

  31. Riahi, K. et al. Locked into Copenhagen pledges—implications of short-term emission targets for the cost and feasibility of long-term climate goals. Technol. Forecasting Soc. Change 90, 8–23 (2015).

    Article  Google Scholar 

  32. The Emissions Gap Report 2014. A UNEP Synthesis Report (United Nations Environment Programme, 2014).

  33. McJeon, H. et al. Limited impact on decadal-scale climate change from increased use of natural gas. Nature 514, 482–485 (2014).

    Article  Google Scholar 

  34. Capros, P. et al. The impact of hydrocarbon resources and GDP growth assumptions for the evolution of the EU energy system for the medium and long term. Energy Strategy Rev. 6, 64–79 (2015).

    Article  Google Scholar 

  35. McGlade, C. & Ekins, P. The geographical distribution of fossil fuels unused when limiting global warming to 2 C. Nature 517, 187–190 (2015).

    Article  Google Scholar 

  36. McCollum, D., Bauer, N., Calvin, K., Kitous, A. & Riahi, K. Fossil resource and energy security dynamics in conventional and carbon-constrained worlds. Climatic Change 123, 413–426 (2014).

    Article  Google Scholar 

  37. Keppo, I. & Strubegger, M. Short term decisions for long term problems—the effect of foresight on model based energy systems analysis. Energy 35, 2033–2042 (2010).

    Article  Google Scholar 

  38. Messner, S. & Schrattenholzer, L. MESSAGE-MACRO: linking an energy supply model with a macroeconomic module and solving it iteratively. Energy 25, 267–282 (2000).

    Article  Google Scholar 

  39. Meinshausen, M., Raper, S. C. B. & Wigley, T. M. L. Emulating coupled atmosphere-ocean and carbon cycle models with a simpler model, MAGICC6—Part 1: Model description and calibration. Atmos. Chem. Phys. 11, 1417–1456 (2011).

    Article  Google Scholar 

  40. Jewell, J., McCollum, D., Krey, V. & Riahi, K. Report on Improving the Representation of Existing Energy Policies (Taxes and Subsidies) in IAMs Deliverable 3.1. (ADVANCE, 2014);

  41. World Energy Outlook 2014 (International Energy Agency, 2014).

  42. Villar, J. A. & Joutz, F. L. The Relationship Between Crude Oil and Natural Gas Prices (Energy Information Administration, Office of Oil and Gas, 2006).

    Google Scholar 

Download references


The authors acknowledge funding provided by the ADVANCE project (FP7/2007–2013, grant agreement No. 308329) of the European Commission. The International Energy Agency (in particular A. Bromhead, L. Cozzi, N. Selmet and G. Zazias) provided critical data support, which made the price calibration possible in the model. P. Kolp and M. Strubegger of IIASA are also recognized for their assistance with model code development.

Author information

Authors and Affiliations



D.L.M, J.J., V.K. and K.R. designed the research. J.J. contributed data for the modelling. D.L.M. and V.K. implemented the modelling. M.F. and M.B. provided feedback on the scenarios, in particular assisting with the framing. All authors contributed to writing the manuscript.

Corresponding author

Correspondence to David L. McCollum.

Ethics declarations

Competing interests

The authors declare no competing financial interests.

Supplementary information

Supplementary Information

Supplementary Tables 1–7, Supplementary Figures 1–7, Supplementary Discussion, Supplementary Methods and Supplementary References. (PDF 1250 kb)

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

McCollum, D., Jewell, J., Krey, V. et al. Quantifying uncertainties influencing the long-term impacts of oil prices on energy markets and carbon emissions. Nat Energy 1, 16077 (2016).

Download citation

  • Received:

  • Accepted:

  • Published:

  • DOI:

This article is cited by


Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing