Oil = the New Tobacco

In my day job I don’t do a lot of oil stuff: it’s too easy a commodity to deal with commercially (compared to gas and electricity) to need much specialist consultancy.  But I can tell you that in gas and electricity, the stuff that greens don’t like (e.g. coal-fired and gas-fired power stations) has for several years now been quietly passing into the hands of private equity, asset by asset, SPV by SPV**.  The traditional players are hoping to run their businesses as green-approved specialists in future – made all the easier by the 2018-19 decisions that enshrine “climate-change adaptation” & “resilience” etc as Green.  

RWE is a superb and quite extreme case study (because they’ve got perhaps the biggest coal-&-lignite challenge), but Statoil (Equinor), Shell, BP, Total and several others are almost as striking – and are well on the way.  Ørsted (formerly DONG++) has pretty much worked the oracle already.  Most of them stumble a bit, because they ain’t so hot on the ultra-high-tech that’s often involved (I’ve watched Shell making an arse of itself at close hand) – but they are big and capable and determined, and many of them will probably learn the new ropes.  (They made a much worse hash of it in the 1990s when they all piled into the electricity sector, stupidly thinking it couldn’t be much different from gas.)

So watch out for the oil industry going the same way, headed for thick-skinned ownership that will seek to profit from strong, unending global demand while the woke-west averts its eyes (and still takes holidays abroad, uses mobile phones, plays online games etc etc etc).  If this doesn’t work (and I think it will), well, China will clean up.  We offshore the world’s manufacturing CO2 emissions to them, and maybe we’ll outsource that nasty oil production as well.  (Russia stands a decent chance of muscling in on this one, too.)

As noted here before, Exxon is the standout progress-resister, desperately wondering if it can carve out a viable “last remaining dinosaur” niche.  It ain’t gonna get away with that unnoticed.  But I’m not sure it knows anything else.  The elephant never did learn how to dance.  And the Darwinian race is to the adaptable.

 ND