We've talked a lot about how the pandemic's impact has overlapped with climate concerns and now we can add the decline of the oil industry to the list.
A few weeks ago, the Australian Broadcasting Corporation reported that the price of crude oil turned negative, basically meaning many oil companies were (and continue to be) at a point where they would need to pay you to buy oil. This isn't the case all over the world but the international market is still seeing a major drop in petroleum prices, directly related to travel restrictions placed to help curb the pandemic. Even Shell's CFO, Jessica Uhl, admitted to investors her company is looking at "a major demand destruction that we don't even know will come back." There are a lot of schools of thought on whether this decline is here to stay, but one thing is for certain: climate advocates will be keeping an eye on this. In fact, this could just be the beginning of a bigger conversation!
First, we should mention that some prophesied the fall of the oil industry before the pandemic hit. Last summer, many questioned the industry's endurance, and oil companies themselves had different projections of their future output. This could be because, despite continued profit, investors appear to be less and less convinced about oil. And then the pandemic hit, amplifying the industry's rocky future. There's been job slashing, and there's been investment insecurity.
Since lock-downs first went into place it's been hard to deny the appeal of clear skylines evident in some of the world's smoggiest cities. Climate activists have been intrigued (while managing expectations) by the downturn of carbon emissions. And people have been enjoying this time of walking and being wholly present in the moment. It's as if we are getting a glimpse of what our environment could look like if we implemented the kind of long-term climate action many have been asking for.
But is all this enough to confidently declare the fall of the oil empire? Or, as countries slowly start to re-open, will governments move to bail out oil companies? Many, of course, are crying, please don't. Governments and fossil fuel companies should take advantage of this moment to finally transition to ambitious renewable energy schemes, which could help us reach goals set during the 2016 Paris Agreement. I personally have not heard anything in regards to solar panels possibly not existing in the future, but oil? When more and more consumers are opting for greener transportation methods, can the future of oil be as economically sound as it once was? At the end of the day, nothing right now is certain. Which, if you're a glass half full kind of gal like I am, could mean that now, more than ever, when the industry is at a brink of uncertainty and the case for fossil fuels remains dubious at best, is the time to proactively push for systemic change. In fact, I would even argue that it's in times of uncertainty when we are best positioned for bold and creative transformations, imagining new possibilities, and diversifying investments in shifting technologies.
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This happened during the Great Depression and again during the Great Recession, when Steve Jobs gambled on rolling out the iPhone. Studies show companies that invest in research, development, and acquisitions during recessions often see more favorable results than companies that choose to just make budgetary cuts and maintain what they already have in the hopes of returning to business as usual once the storm passes.
So while oil tycoons continue to sit on tanks of unused petroleum and make cuts to production as the general demand for supply comes to a crashing halt, I would suggest it might make sense for them to use this down time to explore better eco-options. It may also make more sense for world governments to pump funds into renewable energy as opposed to an industry that may or may not exist in the future due to a global effort to push out fossil fuels.
Right now is a time of opportunity. And I think the case for renewable energy can be better made now than ever before.
Written by Danielle Schmidt
Danielle Schmidt is a California-based film producer and freelance writer passionate about increasing climate literacy and its coverage in the media. She is a past recipient of the Center for Asian American Media's Student Film Award, and has worked in the TV/Film industry for over eight years. She is currently developing a documentary following eight different walks of life navigating the climate movement during this heightened era.