The oil industry has a trust problem -- can it put that right?
The oil and gas industry provides the energy that drives economic growth and social development, at a time when the environmental impacts of fossil fuels are being critically reevaluated against these benefits. In the past, the industry would have without question had a seat at the table in attempts to address the balance between costs and benefits for society's long-term good. But today, it is not a foregone conclusion.That's because the oil and gas industry has a trust problem.
Why is there a trust problem?
Since the First Industrial Revolution, oil and gas have played a pivotal role in economic transformation and mobility.
But now, with the prospects that major economies like the United States, China and European nations will try to shift away from oil, producers are coming to realize that their oil reserves under the ground -- sometimes referred to as "black gold" -- could become less valuable in the future than they are today. Of the four scenarios for the future of the industry ... three of them envisage this type of world.
What happens when demand for oil peaks?
Amy Myers Jaffe talks with CNBC about the energy sector and how changing trends will affect demands for oil at Davos World Economic Forum 2016
"The technologies are going to wipe out a lot of the demand over time ... There is a much more negative view for long-term demand trends, and that's caused all the companies to reassess. Should I be drilling in the Arctic, should I be drilling in places that are expensive?"
Last year California became the first state to source 5% of its annual electric generation from utility-scale solar plants.
"Other states are following suit. Analysts have consistently underestimated the pace of expansion, and solar is likely to gain even stronger momentum ... The solar industry is facing turbulent waters, including an uphill political battle -- from entrenched power utilities -- to establish fair metering for residential consumers. Still, these problems aren't proving insurmountable."
Why the World's Appetite for Oil Will Peak Soon
"Conventional wisdom about steadily rising demand is wrong ...The world's economy is experiencing transform- ational changes that will dramatically alter patterns of energy use over the next 20 years. Exponential gains in industrial productivity, software-assisted logistics, urbanization, political turmoil in key regions of the developing world, and large bets on renewable energy are among the factors combining to slow the previous breakneck growth for oil." "
U.S. House of Representatives Testimony
How the Changing Dynamics of World
Markets Impact our Economy and Energy Security
"While it is true that rising U.S. oil production was what put OPEC under pressure in the first place, the decision by key member states such as Saudi Arabia, Kuwait, the United Arab Emirates and Qatar, to allow oil markets to remain oversupplied is driven mainly by broader geopolitical concerns which coincide with the United States."
Energy Market Globalization: Geopolitical Interactions and
"All the indictors are these long structural downward lines, which give you the option to export material. The United States has this incredibly unique opportunity with these exports ... If all this material is going to leave the U.S. at a spot market-related price, then the price leadership of transparent market prices becomes double pressure on OPEC."
The Baker Institute • Rice University