Another ‘Day of Reckoning’ For Big Oil is on the horizon, but it is not what you think

US oil worker - Energy News Beat

There are several things that our team at King Operating get asked while talking with our clients. One of the questions is, will oil and gas be even needed after 3 to 5 years with all of the renewable energy being installed?

A little over a month ago, Big Oil was dealt a serious hand in Washington D.C. In a unanimous decision by the U.S. Court of Appeals for the District of Columbia Circuit, a three-judge panel upheld a recent regulation requiring major oil companies to disclose more information about their climate change pollution. The decision came down just days after an expert panel from within the Administration’s Environmental Protection Agency, charged with reviewing the impact of climate change on America’s energy security, delivered a report that found the rule was likely to be effective in reducing greenhouse gas emissions from oil and gas drilling.

I have been interviewed on the subjects around the price and longevity of the oil, and our team has had multiple experts on our webinars with a common theme. The demands for oil and gas have not peeked and will continue to increase. The ironic part of the victories of taking down big oil is going to have huge negative impacts.

In Tsvetana Paraskova wrote today some interesting points.

Global oil demand will continue to rise, probably for another decade, until electric vehicles (EVs) and other technologies—which are not yet to scale—undermine demand for fossil fuels.

As demand grows, the gap left by international oil majors, if they accelerate a shift away from oil and gas faster than they have planned under investor and activist pressure, will simply be filled by national oil companies. Those companies, held by the Middle East oil powerhouses such as Saudi Arabia, the United Arab Emirates (UAE), Iraq, or Kuwait, as well as Russia’s Rosneft, haven’t pledged any ‘net-zero energy company’ goals. Nor do they operate in major markets that have net-zero emission targets.  

While activists are focused on punishing international oil majors, the national oil companies will not be sitting on the fence drafting net-zero strategies. They will step up to explore for and extract more oil and gas because, first, the world still needs fossil fuels. And second, because oil revenues are the pillars of government budgets and the social contracts in major Middle Eastern economies, including that of the world’s largest oil exporter, Saudi Arabia.

Moreover, how many shareholders would demand climate action at Saudi Aramco or Abu Dhabi National Oil Company (ADNOC), considering that the state holds (nearly) all the shares in each of those oil giants? Would Greenpeace activists dare breach a court order and board a rig offshore Saudi Arabia, as they have done several times in the North Sea in recent years?

While Big Oil fights climate activists in the courtrooms, OPEC+ will gain an ever greater geopolitical influence and will step up production, hindering the global fight to reduce emissions from oil and gas operations and the use of fossil fuels. So the United States independent oil companies will see a historic boom coming around the corner thanks to the climate activists. They are also going to be surprised how much spending power they will be losing with the impact of big oil’s downfall on the world economy. Those that invest in independent oil companies will be the real winners.

Send me your thoughts and would like to hear from you about your thoughts on the current market.

Jay R. Young, CEO, King Operating

Jay R. Young, front profile

Source: This article was originally published on King Operating

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