We Need to Accept That Oil Is a Dying Industry


Skimming oil in the Gulf of Mexico during the Deepwater Horizon oil spill. Image: NOAA/flickr/CC BY 2.0
Skimming oil in the Gulf of Mexico during the Deepwater Horizon oil spill. Image: NOAA/flickr/CC BY 2.0
The future is not good for oil, no matter which way you look at it. A new OPEC deal designed to return the global oil industry to profitability will fail to prevent its ongoing march toward trillion dollar debt defaults, according to a new report published by a Washington group of senior global banking executives.

By Nafeez Ahmed | MOTHERBOARD

But the report also warns that the rise of renewable energy and climate policy agreements will rapidly make oil obsolete, whatever OPEC does in efforts to prolong its market share.

The six-month supply deal brokered with non-OPEC members, including Russia, could slash global oil stockpiles by 139 million barrels. The move is a transparent effort to kick prices back up in a weakening oil market where low prices have led industry profits to haemorrhage.

The Organization of Petroleum Exporting Countries (OPEC), whose members include major producers from Saudi Arabia to Venezuela, have been hit particularly badly by the weak oil market. In 2014, OPEC had a collective surplus of $238 billion. By 2015, as prices continued to plummet, so did profits, and OPEC faced a deficit of $100 billion.

The immediate impact of the deal was a 4 percent price rally that saw Brent crude (the benchmark price for worldwide oil prices) rise to $56.64, its highest since mid-July. But according to Michael Bradshaw, Professor of Global Energy at Warwick Business School, a price hike would not solve OPEC’s deeper problems. In fact, it could speed up the transition away from oil.

read more