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When 2020 began, even with oil prices relatively strong, many industry analysts were predicting it was the beginning of the end for oil and gas. The Houston Chronicle reported on January 5th that, “concerns are mounting in the oil and gas industry that peak demand is not only coming, but coming faster than anticipated, all as the shale boom begins to slow, companies slash jobs and Wall Street turns its back on the energy sector after years of generating lackluster returns.” And then the pandemic hit and the Saudis and Russians decided to take advantage of the downturn. With supplies still high and demand declining, the industry may never be the same again.
Oil and gas prices went through the floor in April and May — at one point oil futures trading was in negative territory — meaning sellers were paying people to take their oil rather than the other way around. Meanwhile, the future is much brighter for renewables. Ellen Hughes-Cromwick a Fellow at Third Way told ODP, “Clean energy will not fall down on an oil sword even as those prices collapse in the commodity markets. In fact, investors are voting with their feet: wind, solar, and renewables Exchange Traded stock market funds are still gaining value while oil stocks are getting hammered.”
In February, during the show “Squawk Box,” CNBC Market Analyst Jim Cramer said oil and other fossil fuel stocks had “the stigma attached to investing in tobacco companies.” According to Cramer, young people’s views are having an impact — “This has to do with new kinds of money managers who frankly just want to appease younger people,” Cramer said. “We’re starting to see divestment all over the world.” By the end of the third quarter, ExxonMobil reported a net loss of $680 million, compared to a $3.2 billion profit at the same time last year. The loss may prove to be the industry’s largest write-down in over a decade. ExxonMobil in 2013 was the largest company in the world, but since 1980, its global workforce has plummeted from 390,000 employees to less than 70,000.
Bankruptcies and government “welfare” for fossil fuel companies were plentiful. In what one tax watchdog called a “stealth” bailout, dozens of oil and gas companies took advantage of provisions in the CARES Act to write off losses right away and get an immediate tax refund against prior years’ earnings going back to 2018, according to Bloomberg News. Eventually, despite the bailouts, some of the largest oil and gas drilling companies went under — companies like Valaris — because they were drowning in debt due to plummeting prices and too much borrowing against future production.
The end really could be near. In the space of a few decades, oil and gas companies will be like the hard rock mining companies of the 19th century — their empires will crumble, but their dirty environmental legacy won’t fade anytime soon. We will be dealing with cleaning up their messes for decades.
Scaling production of EVs in the U.S. will require a ramp-up in domestic battery production. Now there’s good news on that front. A battery factory in Georgia can move forward after LG Energy Solution and SK Innovation (South Korean companies), two of the world’s biggest electric vehicle battery manufacturers, settled a dispute.
Why This Matters: The dispute threatened U.S. production of EVs. SK has contracts to produce batteries for electric Ford F-150 pickup trucks and Volkswagen SUVs.
by Ashira Morris, ODP Staff Writer Right now, 95% of American public school buses run on diesel fuel, but that could soon change thanks to part of the Biden administration’s massive infrastructure proposal. The new Clean Buses for Kids Program would electrify at least 20% of the country’s iconic yellow school bus fleet. It would […]
by Amy Lupica, ODP Staff Writer In February, the governors of Pennsylvania, New York, New Jersey, and Delaware voted unanimously to ban fracking in the Delaware River Basin, but Republican-led lawsuits are seeking to stop this action. The ban prevented the natural gas industry from blasting up to 4,000 wells in the basin, serving a blow to the […]
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