Shell oil reports losses as it scales back exploration
I was driving to a client meeting yesterday (in my used Nissan Leaf), when an encouraging story came on the radio: Shell oil is reporting a loss as it quits arctic drilling and shelves some tar sands projects too.
It is, I think, just one more sign that Big Energy can't rely on business as usual anymore. And while the economic hardship that some oil workers will feel is both real and unfortunate, there's no denying that the Earth itself—and those of us who rely on it for survival—should be feeling just a little more hopeful.
True, fossil fuel prices have gone up and down countless times before, hitting profits before rebounding as demand picks up again. But what oil companies—and the investors who make their work possible—can't afford to ignore anymore is that alternatives to fossil fuels are becoming ever more competitive, and that more and more companies, organizations, communities and governments are making long-term commitments to significantly cut or even eliminate their fossil fuel usage. From Toyota slashing its fleet's gas usage by 90% to Sweden aiming to go fossil fuel free, the idea that oil demand will continue to grow in the decades to come no longer feels like a foregone conclusion.
Oil companies' unfortunate predicament is compounded by the fact that they need oil prices to rebound so profits recover and unconventional source of oil become viable once more, yet they no longer have the same room to maneuver that they once did, because as soon as oil prices go up, alternatives to oil—now widely available and extremely popular—start to look even more attractive. As Jeremy Leggett put it in his excellent serialized book The Winning of the Carbon War recently [I paraphrase]: They lose at high prices, and they lose at low prices. In the long run, they can't win.
No wonder that industry mouthpieces are describing Tesla as "hell on wheels", and pondering out loud whether it's the beginning of the end of oil. With coal plants closing all over the place much sooner than expected, and energy giants pledging to decarbonize, oil companies would be foolish to assume that their incumbency will last forever.
Big Energy is beginning to eat itself. This should be entertaining.