Oil Price Benchmarks Are Missing One Thing: The Climate Cost

The briefing contends that current oil price benchmarks, such as WTI and Brent, fail to account for the varying greenhouse gas emissions intensities of the oils they comprise. It highlights that oils with similar quality and price can have climate footprints that differ by a factor of two to five, creating perverse incentives. By integrating data from the Oil Climate Index plus Gas (OCI+), the author suggests that the market could better incentivize emissions reductions and allow buyers to accurately account for supply chain emissions.

• Current oil price benchmarks are based on oil quality (density and sulfur), location, and timing, but they do not factor in the climate damages caused by the oil and gas industry.
• Oils that are blended into the same benchmark and sold at essentially the same price can have vastly different climate footprints; for instance, a barrel from Canada's Kearl oil sands has three times the upstream production emissions intensity of one from Colorado's Denver-Julesberg basin, yet both are blended as West Texas Intermediate (WTI).
• There is no correlation between benchmark prices and greenhouse gas (GHG) intensity. For example, Algeria's Sahara Blend commanded a high price in 2022 due to quality, despite high methane leak and flaring rates, while the Mars crude is priced lower due to quality but has one of the lowest emissions intensities in the sample.
• Integrating emissions intelligence from the Oil Climate Index plus Gas (OCI+) into pricing could have led to earlier decommissioning of high-emitting assets, such as the Brent field, which had an emissions intensity over six times the average of other oils in the Brent basket.

APA

RMI (2023). Oil Price Benchmarks Are Missing One Thing: The Climate Cost. https://rmi.org/resources/oil-price-benchmarks-are-missing-one-thing-the-climate-cost/

Chicago

RMI. Oil Price Benchmarks Are Missing One Thing: The Climate Cost. 2023. https://rmi.org/resources/oil-price-benchmarks-are-missing-one-thing-the-climate-cost/.

Wikipedia

{{cite report |author=RMI |title=Oil Price Benchmarks Are Missing One Thing: The Climate Cost |date=1 May 2023 |url=https://rmi.org/resources/oil-price-benchmarks-are-missing-one-thing-the-climate-cost/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023oil, author = {{RMI}}, title = {{Oil Price Benchmarks Are Missing One Thing: The Climate Cost}}, institution = {RMI}, year = {2023}, month = may, url = {https://rmi.org/resources/oil-price-benchmarks-are-missing-one-thing-the-climate-cost/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }