Change is a-comin’ (fast) for oil and gas
Wildfires in the West. Five storms in the Atlantic at the same time, including one that became a hurricane and pounded the eastern Gulf Coast.
These natural disasters, rather than unusual events, are just the continuation of recent trends. The burning of the West followed an active fire season last year and one the year before. Hurricane Sally, which dumped catastrophic amounts of rain on Alabama and the Florida Panhandle, came only a few weeks after Hurricane Laura smashed the Louisiana coast with catastrophic winds.
The Atlantic hurricane season has been so busy that the National Hurricane Center is close to running out of letters in the alphabet to the name the storms.
Scientists are pretty much in agreement that the climate disasters they’ve been forecasting for decades have arrived. Climate change is advancing swiftly, much faster than government, society and the energy industry are responding to it.
It’s hard to believe that people — aka voters — will allow the leisurely pace to continue as they see photos and videos of fast moving fires, skies darkened in the middle of the day by smoke and urban life shrouded in otherworldly orange glows. Pressure will build on government, the courts and, more broadly, society, to do something. In other words, oil and gas industry, they’re coming for you.
It’s even harder to think that oil and gas companies can continue to tell themselves, “Sure, the energy transition is coming, but we’ve got lots of time — decades — before we really have to worry about it. The world is going to depend on petroleum of a long time to come.”
Maybe not so long. Bank of America recently forecast that oil demand will peak around 2030, similar to projections made by European oil major Royal Dutch Shell. The British major BP just forecast that oil demand could fall by as much as 80 percent by 2050 if national governments follow through on pledges to cut greenhouse gas emissions.
The corporate world, however, may not wait for governments to act. Google recently pledged that by 2030, it won't use any energy source that emits carbon dioxide — that means you, fossil fuels. Amazon is pledging to get to net-zero carbon emissions by 2040. Microsoft just signed an agreement to buy wind and solar power from BP.
The thing about transitions, energy or otherwise, is they provide the time and opportunity for companies to adapt, adjust and reinvent themselves. They also tend to move more quickly than expected.
I would point to my own industry, newspapers. Most knew the internet was changing how people consumed news and advertisers reached them, but they continued to feast on print advertising, taking modest steps and making modest investments to adjust to changing preferences of readers and advertisers.
As is quite plain now, the information transition happened more quickly than publishers anticipated and certainly more quickly than they reacted. We know the results: Newspapers represent one of the few industries doing worse than energy
The bottom line for energy companies is change is coming, and probably faster than they think. Their survival may well depend on how they adapt and how quickly they do it. Here in fossil-fuel central, we will get regular reminders of what both our vital energy sector and local economy face in the years ahead.
A new climate assessment, the first focused on the Houston area, forecasts longer and hotter summers, more days with temperatures over 100 degrees, and more powerful and destructive storms.
In other words, we’re going to get hit where we live.