Kaieteur News- Amidst our excitement about oil, the billions of barrels discovered, the billion-dollar projects competing for priority, and the likely billions of dreams sloshing around in Guyanese heads, some icy reminders came recently to relay what the future looks like. This was what was made clear in an article in The Week on June 4th that was titled, “Oil companies begin to face reality.” Whether we like it or not, the reality of oil companies, the good and not so good, are also ours. It is because so much of our future prospects are tied at the navel to oil. The oil companies can still make money today, but their future is not as rosy and everlastingly prosperous as it has always been.
Exxon has a quarter of its board now represented by a ‘foreign’ possibly hostile presence. Royal Dutch Shell was rocked by a judicial decision, and Chevron’s investors confronted the company successfully. Some details should be helpful in giving the lay of the land.
First, Chevron’s investors voted to cut emissions, even after its board urged them not, which is unprecedented. Next, Shell fell in a Dutch court, when judges ruled that the company has to cut its greenhouse gas emissions by 45 percent by 2030 (relative to their 2019 levels). The menace is of countless lawsuits demanding more companies cut more and everywhere. Third, there was great cheer when the tiny Engine 1 triumphed with its 25 percent board membership at Exxon. But, as The Week pointed out, the hidden gem is “that Exxon is ignoring easy profits and threatening its own long-term viability by continuing to focus on digging up and burning fossil fuels.” The news for Guyana’s long-term prospects took a hit, with clouds gathering.
This is because “the world is in the middle of a rapid energy transition where the use of coal has fallen by 62 percent and “the cost of wind power fell by about 70 percent, and solar power by 89 percent.” And The International Energy Agency estimate is that solar photovoltaic is the “the cheapest source of electricity” versus its main competition (coal, natural gas), and with further economies expected. As The Week noted, “it may take decades, but the long-term business prospects of oil and gas are dismal. It follows that a sensible oil company should be pivoting hard to other kinds of energy business — taking its oil profits and investing them in wind, solar, advanced nuclear, carbon capture. If Exxon and all the other Big Carbon companies don’t get with the programme, they are going to die.” But it is far from over.
For it would be irresponsible to think that the era of Big Oil and big profits are over. But, “much more aggressive action is needed to attack climate change anywhere near fast enough to prevent severe disruptions to human society.” There has been applause over President Joe Biden’s push for climate change. But he has to get the kind of infrastructure bill passed that would make a difference. At present, this is bleak, with the U.S Congress weighing. Further, President Biden’s must spend more on research towards a green economy. According to one report, Americans spend more on pet food annually, than what the president contemplates for green economy research dollars.
This is the sum of the existing contexts of our oil discoveries and prospects, near term and longer term. Technology has introduced new forms of energy that are threatening the continuing viability of carbon profits. The worry for oil companies is that, if a small hedge fund like Engine 1 can successfully challenge an Exxon for board seats, and with intentions of influencing the mindsets, strategies, and behaviour of a global oil powerhouse, like Exxon, even in drops and small steps, then there is so much more that could occur. Meaning, when activists put heads together to launch a full-scale war in favor of climate change. And the corresponding attitudes that wean away from so much fossil fuel dependency. The Guyana government and Guyanese people must pause and take note. And then go a rung higher: how do we partner domestically and externally to get the most and best for us, amidst a sea of changing circumstances?
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