We spend a lot of time talking about the environmental benefits of renewable energy and planning for the eventual demise of fossil fuels. However, the uncomfortable truth is that, for all its wicked ways, the international oil and gas industry is booming.
Having fallen to under $20 at the height of the pandemic last year, the price of crude oil at the time of writing is well over $70 a barrel – a huge recovery by anyone’s standards. Returning to pre-pandemic values means that corporate profits will once more be flowing and that tax revenues will rise to replenish Government coffers emptied by economic disruption and the necessary hand-outs resulting from COVID-19.
For all the solemn pledges made by politicians at gatherings like G7 in Cornwall, the reality is that, according to estimates from the International Labour Organisation (ILO), nearly 6m people are directly employed by the petroleum industry with over ten times that number of jobs supported indirectly. The exploration and production sector alone employs 4m people across 350,000 businesses.
The statistics are staggering and, while cutting carbon emissions may be essential for the long-term health of planet earth, you cannot simply shut down such a vast wealth generator at a stroke. The loss of revenue and livelihoods on this scale would lead to catastrophic social consequences; the transition away from fossil fuels will take careful planning and time.
According to Forbes, the domestic oil and gas boom in the US is set to continue and experts are predicting that 2021 is shaping up to be a record-setting year for the industry. It could even be the biggest year yet for the controversial shale sector with revenues expected to reach a record $195bn.
The boom, which is expected to run into 2022, has also led to a sudden outbreak of corporate M & A activity in the belief that there is still big money to be made. Still scarred by the impact of the pandemic, this has encouraged a lot of US oil and gas companies to run a tighter ship, controlling costs whilst also cutting back on capital expenditure. Understandably, they have no wish to be taken over by predators when they are at their most vulnerable and in sight of financial recovery.
Easy to pass judgement from the sidelines, but it remains a difficult balancing act for anyone connected to the oil and gas industry in the current climate – especially for companies which have a duty to the planet but also to employees and shareholders.