• About
    • Which Energy Mix is this?
  • Climate News Network Archive
  • Contact
The climate news that makes a difference.
No Result
View All Result
The Energy Mix
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
No Result
View All Result
The Energy Mix
No Result
View All Result
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
  FEATURED
Danske Bank Quits New Fossil Fuel Financing January 23, 2023
Extreme Warming Ahead Even as Worst-Case Scenarios Grow ‘Obsolete’ January 23, 2023
Notley Scorches Federal Just Transition Bill as Fossil CEO Calls for Oilsands Boom January 23, 2023
IRON OXIDE: New Battery Brings Long-Duration Storage to Grids, 750 Jobs to West Virginia January 23, 2023
BREAKING: GFANZ Banks, Investors Pour Hundreds of Billions into Fossil Fuels January 17, 2023
Next
Prev

Oil and Gas Business Model Trips Up on Falling Demand

March 16, 2015
Reading time: 2 minutes

 

For all the factors that have contributed to the dramatic drop in the price of oil, analyst Michael T. Klare says the most important could be the “complete collapse” of a business model that calls for immediate, all-out exploitation of every available source of fossil fuel.

For the decade before the price crash, Big Oil operated “according to a business model that assumed an ever-increasing demand for its products, however costly they might be to produce and refine,” Klare writes. “This meant that no fossil fuel reserves, no potential source of supply—no matter how remote or hard to reach, how far offshore or deeply buried, how encased in rock—was deemed untouchable in the mad scramble to increase output and profits.”

  • Be among the first to read The Energy Mix Weekender
  • A brand new weekly digest containing exclusive and essential climate stories from around the world.
  • The Weekender:The climate news you need.
New!
Subscribe

The strategy worked for a time, racking up record profits or companies like ExxonMobil and Chevron. But now, “with demand stagnant and excess production the story of the moment, the very strategy that had generated record-breaking profits has suddenly become hopelessly dysfunctional.”

Klare traces the origins of the strategy to a landmark speech in which Chevron Chairman and CEO David O’Reilly declared the end of the era of easy access to energy.

“For top industry officials like O’Reilly, it seemed evident that Big Oil had no choice in the matter,” he writes. “It would have to invest those needed trillions in tough-oil projects or lose ground to other sources of energy, drying up its stream of profits. True, the cost of extracting unconventional oil would be much greater than from easier-to-reach conventional reserves (not to mention more environmentally hazardous), but that would be the world’s problem, not theirs.”

But then, oil prices began running off a cliff. “The production-maximizing strategy crafted by O’Reilly and his fellow CEOs rested on three fundamental assumptions,” Klare writes: “That, year after year, demand would keep climbing; that such rising demand would ensure prices high enough to justify costly investments in unconventional oil; and that concern over climate change would in no significant way alter the equation.

“Today, none of these assumptions holds true,” not least because “climate change can no longer be discounted in any future energy business model.”



in Climate & Society, Community Climate Finance, Energy / Carbon Pricing & Economics, Fossil Fuels, Oil & Gas

The latest climate news and analysis, direct to your inbox

Subscribe

Related Posts

United Nations
Air & Marine

Salvage of $20B ‘Floating Time Bomb’ Delayed by Rising Cost of Oil Tankers

January 27, 2023
57
RL0919/wikimedia commons
Finance & Investment

Danske Bank Quits New Fossil Fuel Financing

January 23, 2023
2.2k
@tongbingxue/Twitter
Ending Emissions

Extreme Warming Ahead Even as Worst-Case Scenarios Grow ‘Obsolete’

January 23, 2023
290

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

Trending Stories

EcoAnalytics

Albertans Want a Just Transition, Despite Premier’s Grumbling

January 23, 2023
248
United Nations

Salvage of $20B ‘Floating Time Bomb’ Delayed by Rising Cost of Oil Tankers

January 27, 2023
57
RL0919/wikimedia commons

Danske Bank Quits New Fossil Fuel Financing

January 23, 2023
2.2k
@tongbingxue/Twitter

Extreme Warming Ahead Even as Worst-Case Scenarios Grow ‘Obsolete’

January 23, 2023
290
Weirton, WV by Jon Dawson/flickr

IRON OXIDE: New Battery Brings Long-Duration Storage to Grids, 750 Jobs to West Virginia

January 23, 2023
511
Rachel Notley/Facebook

Notley Scorches Federal Just Transition Bill as Fossil CEO Calls for Oilsands Boom

January 23, 2023
271

Recent Posts

Sergio Boscaino/flickr

Dubai Mulls Quitting C40 Cities Over ‘Costly’ Climate Target

January 24, 2023
89
hangela/pixabay

New UK Coal Mine Faces Two Legal Challenges

January 24, 2023
46

Gas Stoves Enter U.S. Climate Culture War, Become ‘Bellwether’ for Industry

January 22, 2023
75
Jeff Hitchcock/flickr.

BREAKING: GFANZ Banks, Investors Pour Hundreds of Billions into Fossil Fuels

January 23, 2023
498

Exxon Had the Right Global Warming Numbers Through Decades of Denial: Study

January 17, 2023
226
willenhallwench / Pixabay

Ontario Greenwashes with ‘Misleading, Illegitimate’ Emission Credits

January 16, 2023
314
Next Post

Old King Coal is sick – but not yet dying

The Energy Mix - The climate news you need

Copyright 2023 © Energy Mix Productions Inc. All rights reserved.

  • About
  • Contact
  • Privacy Policy and Copyright
  • Cookie Policy

Proudly partnering with…

scf_withtagline
No Result
View All Result
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behaviour or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}