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Dear Millennials, Big Oil Is Not Your Enemy

Oil

Oil and gas is, apparently, the latest industry that millennials have marked for death. They don’t want to work in the industry because it’s dirty, difficult, and dangerous. Accurate as this may be, that millennial perspective is far from the whole story of oil and gas.

On the face of it, especially to millennials, the oil industry is only about making as much money as possible by pumping and selling as much oil as possible, harming the environment irreparably in the process. But that’s a rather narrow view. It seems all too easy set aside the fact that thousands of everyday products are either entirely or partially derived from petroleum and natural gas.

Yes, that Super Bowl commercial had it right, whether we like it or not. To be fair, some of the products made from oil derivatives do have greener substitutes, but certainly not all—including some important ones such as heart valves and synthetic fibers. And the alternatives are not always rosy either. The alternatives to synthetic fibers happen to be cotton, hemp, wool, and—not to put too fine a point on it—leather and fur.

Now, some millennial authors argue that the fossil fuel industry must die and that millennials would be only too happy to help that happen. But as dirty as it is, the fossil fuel industry is a survivor. Its business model—at least the model of those that tend to survive every price crash—is sustainable in the most general sense of the word.

Related: Daily OPEC Oil Prices Now Public For The First Time Ever

One mark of a sustainable business model is the diversity of applications for its products. Another is one that recently received a major boost: technological innovation aimed at enhancing production efficiency and lowering production costs. When the new price normal is half what it used to be three years ago, you can either go on an innovation spree, or you can sink. This innovation, odd as it may be, is actually helping environmental sustainability.

It’s pretty simple: as business strategist Peter Bryant puts it, what’s good for the business is good for the environment. Bryant, partner at business consultancy Clareo, has three decades of experience in energy, among other industries, and is co-author of a report that reviews what’s in store for the forward-thinking oil and gas industry players. What’s in store for them is more technology, simpler processes, and higher productivity. All of this will curb the negative effect the industry is having on the environment, says Bryant, because the oil and gas industry’s road to internal sustainability runs parallel to environmental sustainability.

True, environmental sustainability has not been the primary drive for innovation, but now that the industry’s focus is geared toward efficiency gains and lower production costs, a reduction in carbon dioxide emissions, for example, is a logical consequence. Another such consequence is reducing the amount of resources such as fuel and water used in developing oil and gas fields on and offshore. A third one is making sure you extract everything you can extract from existing reservoirs before moving on to new ones. This is good for business as it costs less, and it is also good for the environment as it conserves resources and lowers emissions.

Activist shareholders have had a role to play, too, and so have regulations, strengthening the oil and gas industry’s motivation for change, be it unwillingly. This motivation has led to Big Oil investments in renewable energy and in carbon capture and storage initiatives—we’re talking hundreds of millions of dollars poured into green energy and sustainability research, which is not bad at all for an industry that in the public eye is the opposite of green. Some Big Oil companies are vocally backing a carbon tax in the United States, too.

At the same time, Big Oil is quickly steering into renewables. In addition to leaders such as Total and Statoil, which have been expanding into wind and solar power for some time, Shell recently announced a $1-billion annual investment in renewable initiatives, and its chief executive, Ben van Beurden, said his next car will be electric. A renegade, perhaps? Related: Shortage Of Fracking Crews Slows The Shale Boom

For those entrenched in the old assumptions that the world cannot survive without any fossil fuels, this growing shift to renewables could indeed look like reneging. For those at the far end of the opposing camp, this would appear to be rats leaving a sinking ship. The reality is that oil is a business. It is not an ideology and it is not a cause. It is a business—and businesses, if their owners want to keep them going, are adaptive systems.

The renewables drive is still gaining momentum, spurred forward by regulations and tech innovation. If pro-green regulations continue expanding and tech innovation keeps its current pace—or even intensifies—oil could become obsolete before the end of the century, at least as a source of fuel for vehicles and power plants.

Gas, the bridge fuel, will continue to be in demand for the duration of the transition to renewables, which will take decades. In other words, oil and gas won’t just disappear and the companies that extract them and refine them won’t just pack up and fade into oblivion; they will change. Some of them might even transform into renewable energy market leaders. What millennial wouldn’t want to work for a renewable energy market leader?

By Irina Slav for Oilprice.com

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  • Nick on August 09 2017 said:
    Oooh, a multi-millionaire who could buy a new car every day of the week, claims his next car will be electric! I'm convinced. And some are backing a carbon tax, while knowing there's no way in hell one will be implemented by this administration. Gutsy.

    "what’s good for the business is good for the environment"

    Which is why the car manufacturers and oil companies are complaining to Trump to get some of the fuel efficiency standards set by Obama lowered.
  • Jeff on August 09 2017 said:
    As you point out there are many products that can't be reproduced with alternative materials. Our society is entirely dependent on oil for food preservation (packaging), medical supplies, transportation, etc. The problem is this is a very dirty industry, with large corporations more than willing to cut corners, exploit regions, and pull out as soon as the wells run dry leaving ruin in their wake.

    The point is we have to reduce our reliance on oil significantly. Our energy production needs to come from renewable resources, because oil will inevitably run out and we have no alternatives for things like most of our medical supplies and packaging. So we need to preserve as much as we can for those needs until we can develop alternative materials to meet those needs.

    We have known about this need to get off of oil as an energy source for more than 50 years. The fact that the big oil companies have only started investing in renewable energy sources in the past decade or so shows their greed at the expense of the planets needs. The fact that they can't attract young talent should be incentive for them to clean up their act and show that they are truly dedicated to helping to provide a livable planet in the future. Start signaling that you are changing in this area and the millennials will come around.

    Until then I hope they struggle, I hope their profits fall, and I hope they recognize their past greed and malicious behaviors have put them in this situation. Don't complain to us that we will no longer accept unacceptable behavior.
  • zipsprite on August 09 2017 said:
    Either doesn't understand the consequences of, or understand the causes of global warming; Or probably more likely, doesn't really believe it is happening.
  • JohnB on August 10 2017 said:
    I certainly don't see oil as an enemy. But the investment firms do. They think its a useless commodity. Seriously ive never seen such delusion from financial analysts. Hydrocarbons really are amazing. Everything from pharma to food can contain them or use them. Fuel is only a small slither of its value. I recognize that oil will be critical to growth and to humans for decades to centuries to come. What I really see is disdain from the sector members and financial sector itself. You should write an article to them reminding them what the most important commodity in the known universe is.
  • Shane on August 12 2017 said:
    "The alternatives to synthetic fibers happen to be cotton, hemp, wool, and—not to put too fine a point on it—leather and fur."
    All Items that can be renewed and harvested responsibly and sustainably. Oil can not do any of these things.

    I also like how the dinosaur author thinks "harming the environment irreparably in the process" is a "narrow view". Like all dinosaurs the oil barrons need to realize they are going to be extinct soon and let the next generation do what it wants. Everything changes like it or not, just because the money is good people can't wrap their minds around making money in a different way. Look at coal things changed in the world and only the people who couldn't accept change and embrace new opportunity suffered. majority of the workers have found employment in other fields understanding that you can't avoid death in any industry or form of life.
  • JLB on August 13 2017 said:
    Interesting comment by Jeff above. He hopes the oil industry fails and profits sink. In other words he hopes for a global recession, an energy crisis and high unemployment. Why?
  • geo on August 15 2017 said:
    Big Oil is not hiring enough millennial's that's the main problem. Over the years, big oil have cried and cried and cried that there wasnt enough talent to hire from. Now, they won't hire that millennial talent pool they begged for. So instead, they are moving on to other industries. I see this first hand every single day as a millennial with a recent MS in petroleum engineering.

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