Many around the world, including scientists, economists, and engineers, believe that the global oil and gas industry is in a terminal decline. 2020 proved to be one of the worst years on record for the industry, combining the blocking of most forms of travel, as well as more people than ever staying at home to work rather than going out and travelling in their vehicles.
Oil has been in a spiral for the last few decades, reaching its peak at some point in the mid 2000s, and seeing annual declines that paint a grim picture for its future.
The rise of renewable energy and the world’s commitment to them has also been a large factor when considering how oil has been plummeting. In fact, most experts agree that we will see the industry totally collapse at some point in the current era as de-investment and the rise of renewable continues. Read on to learn why Big Oil may no longer be a part of our future within the next couple of decades.
Dropping Demand Across The World
Data put together shows that the demand for gasoline made something of a recovery after the end of most of the world’s lockdowns during the 2020 pandemic. With information provided by both Apple and Google when it comes to car usage and walking, we’ve seen that while most transport took a massive dive over the year, it has made something of a rebound.
But with the skyrocketing costs of processing oil and gas, along with the ever-present growth of wind, solar, and nuclear energy, oil companies are beginning to realise that it’s becoming possible to meet the global demand, especially as more countries aim to start fighting the current problem of climate change.
Major oil firms worked hard to make sure that oil was available for the inevitable stabilisation of the world’s transport and manufacturing, meaning that it didn’t take long for the expect rebound to take place. However, it hasn’t quite been enough to bring the industry back, and has rather caused further downfalls in the future.
The Reality of The Future
Since around 2005, both oil and gas stocks have seen a gradual decline that few other markets have been able to match, with a return of just 2% when compared to the average S&P of 9%.
Over 2019, most oil companies were already facing a number of downgrades from investors that hit stock that much harder, meaning that investing in oil stock is much more of a risk than playing bingo Australia games.
It seems, then, that even without the pandemic, oil was in a decline that it had no means of saving itself from. At the moment, around 100 million barrels of oil are produced internationally, and it’s become apparent that it’s simply not a sustainable way of providing global energy, doubly so when we consider that a staggering 45% of all energy-related carbon emissions can be traced back to the burning of petroleum products.
Added with renewable energies, such as solar – which has seen its costs drop by 89% over the last ten years – the oil industry is almost on its last legs.