Crumbling Empire: The Messy Demise of the Fossil Fuel Industry

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Crumbling Empire: The Messy Demise of the Fossil Fuel Industry

The writing is on the wall for the fossil fuel industry, even though special interests are making a nasty—but ultimately futile—last stand.
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Green Builder Media CEO Sara Gutterman

Green Builder Media

Tuesday, November 17, 2015 - 6:30am

CAMPAIGN: Ethical and Sustainable Living

CONTENT: Blog

Fossil fuel companies might just look back at 4Q15 as the moment in time when they were dealt the fatal blow that finally forced them to release their stranglehold on our economy. With plunging oil prices, increasing carbon emissions regulations, and rapidly growing pressure from competitive clean energy solutions like solar, the economics of big oil are undeniably and irreparably changing.

While our global energy system will likely remain dependent on fossil fuels for decades to come (and fossil fuel companies still benefit from trillions of dollars in long-established government subsidies each year), movement towards renewables and clean energy solutions is accelerating at an exponential rate.

Advanced extraction technologies and techniques will certainly help oil and gas companies maximize remaining reserves (BP estimates that there are still 4.8 trillion barrels of recoverable oil resources in the world), but the combination of increasing emissions legislation, climate action, and growing public disenfranchisement will impact the extent to which those reserves will be used.

Furthermore, as oil prices continue to drop (the price of a barrel of oil has been cut roughly in half since June 2014), solar and wind become highly attractive, even reaching price parity (and beyond) in some U.S. markets. The continued decline in component costs for renewable energy systems, efficiency improvements (solar panels will soon reach a 30% efficiency rate), smart grid evolution, and advances in affordable storage technologies to solve intermittency issues will further to enhance the economic appeal of these solutions.

Expanding regulations, like Obama’s Clean Power Plan, will also unequivocally effect the oil industry. As countries, companies, and cities set increasingly stringent emissions and efficiency targets, renewables will continue to trump fossil fuels. And, the growing interest in carbon pricing and cap-and-trade programs will further spur a transition to a clean energy economy.

Ambiguity about future policy against drilling in environmentally sensitive areas, such as the Arctic, is also wreaking havoc on big oil. Shell recently reported a $6.1 billion loss on its 3Q15 earnings (216% lower than 3Q14!) due to the cancellation of its exploration activity in offshore Alaska and protected areas in Canada, which was partly attributable to the vague regulatory environment.

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Keywords: Environment | Energy | Green Builder Media | Sara Gutterman | climate change | environment | fossil fuels | sustainability

CAMPAIGN: Ethical and Sustainable Living

CONTENT: Blog

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