Oil Companies Are Preparing for a Lucrative Decline | The industry is not doubling down on the future of fossil fuels. Far from it.
by silence7
Oil Companies Are Preparing for a Lucrative Decline | The industry is not doubling down on the future of fossil fuels. Far from it.
by silence7
2 comments
It will be interesting watching the decline. Once fossil fuels are genuinely past their peak the entire dynamics of the energy markets will look very different than they do today.
Given oil & gas companies high operating leverage and financial leverage, I think we’ll see a few things:
1. Greater volatility in oil & gas prices
2. Fossil fuel prices that grow at a rate persistently higher than inflation for the first time since the 1970’s.
3. Some localized chaos in markets that are rapidly de-carbonizing. The global average of de-carbonization is deceiving, as some markets are de-carbonizing rapidly and others are doing very little. Businesses like refineries will shut down when their throughput drops by large amounts, but those refineries also support things like natural gas pipelines, chemical production, asphalt production, etc. Some supporting businesses will be SOL before ready replacements are available.
I believe sometime in the mid-2030’s, the difference between the haves and have-nots will be partially defined by those who have the means to escape dependence on fossil fuels and those who don’t.
This is a beautiful analysis. Thanks for posting!