The Reality of Energy Transition vs. Investment in Fossil Fuels
Natural gas shortages in Europe and Asia, surging fuel prices in the U.S. and concerns over power-grid reliability are forcing governments to confront difficult choices around transitioning to low-carbon energy sources.
Saudi Aramco’s CEO warned of “chaos” unless governments stopped discouraging fossil-fuel investments. The Riyadh-based International Energy Forum called on companies to raise spending to US$523 billion a year by the end of this decade to stop the potential for an uncontrolled surge in energy prices and economic unrest.
The World Petroleum Congress in Houston this month saw a steady stream of senior energy executives speak to the same point: the world will need us for years to come, so let’s invest and produce, or risk more economically damaging price spikes or even social unrest.
“Investment is the greatest challenge the oil industry faces today,” said John Hess, CEO at Hess Corp. “Oil and gas are going to be needed for the next 10 to 20 years and a lot of it is going to be needed.”
Volatile commodity prices and growing inflation anxiety now must change the narrative around climate change and the ongoing need for fossil fuels in the immediate future.
As demonstrated by President Joe Biden recently when he asked OPEC and its allies to increase crude production just months after enacting a wave of anti-oil policies including cancelling the Keystone XL pipeline and floating a fracking ban. This mix messaging that governments around the world are touting are the basis of potential social and economic unrest.
“A halt in investment in oil and gas is misguided,” OPEC Secretary-General Mohammad Barkindo said. “Almost US$12 trillion in spending is needed between now an 2025 to ensure adequate crude and gas supplies, without which, the world will see long-term scars on energy security – affecting not only producers but also consumers.”
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