Is Big Oil doomed to repeat the mistakes of the coal industry?

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Until this year, scare-mongers proclaiming the end of oil were often seen as nuts or overly optimistic environmentalists. But the spread of the new coronavirus and its unprecedented disruption of the global economy and many strong industries within it have amplified the discussion of life after oil and brought it into the mainstream. This year’s headlines have been filled with oil obituaries, shale companies going bankrupt like dominoes to think-over coin after reflection saying goodbye to the oil industry as a whole, from Sierra.The end of oil is near“To Vice”The end of the oil age is upon us. »

And it’s not just sensationalism or overreaction. Even Big Oil itself seems to see the writing on the wall and is rapidly moving away from oil exploration to more lucrative ventures now that ” Big Oil’s Most Profitable Business No Longer Oil. In Europe in particular, Big Oil seems to accept the inevitability of an imminent global energy transition and is taking the first steps to transform itself into Great energy.

“Nine years ago, ExxonMobil was the world’s most valuable company,” wrote The Houston Chronicle Friday. “Last week, Dow Jones removed the stock from its industrial index supposed to represent the US economy. Exxon’s market capitalization has fallen from $ 400 billion in 2011 to just $ 175 billion today, and the oil industry is no longer as important to the US economy. “

Related: Putin Would Like To See Oil Prices Above $ 46 A Barrel But Big Oil in the United States has reacted very differently to its decline than its European counterpart. Instead of innovating and evolving, America’s response seems to be: deny… until you die. “Oil industry executives talk a lot about how their industry will rebound from the coronavirus pandemic, but the truth is, their business is in secular decline in the long run,” writes the Houston Chronicle. “No matter who wins the November election, we must find new companies to replace the oil and gas industry in Texas to avoid economic decay.”

Fortunately (ish) for the oil industry, however, they are not the first energy sector to come out of the US economy. For a little history lesson, American oil doesn’t need to look any further than the American coal sector. “Elders like to say that the oil industry has had tough times before and every collapse is followed by a boom. […] Once the price of crude goes up, Texas will roll in the silver again, ”the Chronicle report continues.

“Do you know who was talking that way?” Executives of coal companies. And we all know how this story ended.

Related: Main Oil Tanker Equinor Stops Drilling In US Shale Patch

Also noting a contrast between the United States and Europe, the Houston Chronicle writes: “As CEOs of European oil companies have announced their intention to switch from oil to natural gas and eventually to more fuel-friendly forms of energy. climate, the US oil industry continues to demand government bailouts. and protections. The coal companies did the same and looked for where they were. “

In this context, recent articles on the shale sector emerging from the pandemic stronger than ever and $ 100 barrels shale oil on the horizon is a worrying reminder of when Peabody Energy Chairman and CEO Gregory Boyce said in 2011 that coal was about to be bigger than ever and scoffed at the suggestion that natural gas would deviate from coal in the US energy mix. “We are in the early stages of a long-term supercycle for global demand for coal, with hyper-growth driven by skyrocketing energy needs,” he said in a now laughable quote.

The message to America’s oil executives is straightforward. Those who do not learn from history are doomed to repeat it. It’s time to evolve to face a changing global energy industry, not to squeeze in – and get left behind.

By Haley Zaremba for OilUSD

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