With oil prices enjoying a rebound, our poll last week asked readers for their opinions on the future of the industry.

While cleaner forms of energy such as hydrogen and renewables continue to advance, society at large is still enormously reliant on fossil fuels. The US fracking boom – coupled with Saudi Arabia’s reluctance to curb production – has kept the oil price deflated in recent years, but the black gold is once again on the rise, currently trading for about $75 a barrel. A return to $100+ in the near future could well be on the cards.
In light of this reversal of fortunes, we asked our readers about the long-term prospects for the industry. The poll saw a relatively even split between the three main options. Almost a third (31 per cent) believe that the industry will decline over time, but a higher proportion (38 per cent) think the industry will adapt to changes in the energy market, surviving on new channels of income. Although most of the petroleum giants are already invested in alternative energy solutions, oil & gas still makes up the vast bulk of their revenues, and a major shift away from fossil fuels is yet to materialise. This inertia has perhaps prompted a significant number of respondents (28 per cent) to believe that the industry’s fortunes will continue to fluctuate, as they have for decades. Just three per cent of readers chose the ‘none of the above’ option.
“While a change away from oil & gas to renewable energy etc is inevitable, we are still dependent on oil for various products & will continue to be so until an alternative is found,” said a reader named Dave. “There needs to be more innovation, pushing of boundaries, progress & invention of new technologies.”
Another commenter made an interesting point about the effect that a decline in the oil & gas industry would have across the huge supply chain that supports it.
“The bigger picture isn’t the O&G companies but all the businesses that support this industry, steel, valves, pipeline etc. and those that rely on the product – plastics, transportation (both vehicular and infrastructure – roads runways etc.),” wrote Chris. “The world is so tied to these hydrocarbons that when the end comes it could be catastrophic.”
Finally, an industry insider who went by the name giason put the fluctuating fortunes of oil & gas into context.
“Many industries would just die with the cost base change that oil and gas has had. In 2014 Brent crude was peaked at $114 a barrel, falling to a low of $28/barrel in 2016 (76 per cent reduction in price)”
“Oil and Gas has always been a boom/bust cyclic industry, I’m sure this will remain. Offshore Oil and Gas projects have huge project capex costs (typically in billions) , and unless that can be assured on the returns the industry will be slow to recover. We’re getting there, but it’s cost a lot of jobs in the process.”
The comments section will remain open for readers to continue the debate.
If as you say the oil & gas industry do change to other resources then don’t they stop being the oil & gas industry and become the other resource. I have voted that the oil & gas will decline but this is only based on the length of time the finite resource lasts. It could be 10 years or 100 years. Also the more people who start to worry about what we are doing to the planet the quicker the gas & oil industry will decline.
Oil will continue to grease the skids of progress. Now that is funny, I don’t care who you are!
I voted for ‘ in the long run…’ eventually the earth will run out of fossil fuel O&G but how long this will take who knows. The big players in the industry will diversify as some have already those that don’t will either be bought up or go to the wall – standard economic principles.
However, the bigger picture isn’t the O&G companies but all the businesses that support this industry, steel, valves, pipeline etc. and those that rely on the product – plastics, transportation (both vehicular and infrastructure – roads runways etc.). the world is so tied to these hydrocarbons that when the end comes it could be catastrophic.
Sorry for the doom and gloom, on a lighter note the world is still using oil but the rate is slowing and currently there is 50 years supply (isn’t there always!).
The demise of oil through depletion or change of fuel base has been predicted for almost a century now, yet it still dominates the present and foreseeable future of energy usage. Europe might spend a fortune on electrification / hydrogen and ruin established economies, but the rest of the world know what has driven the western world’s growth and will continue to take little notice of our economic-madness.
The Climate change lobby has little chance of changing the trajectory of oil usage unless they can provide some indisputable evidence that the climate is changing: not one of their outpourings has stood the test of scientific validation: just look at the NAAO homogenised temperatures as an example of this failure.
To think that the climate is not changing is ridiculous – Although Newtons 3rd law is about motion, it still applies to most things (also called common sense). Try running your car/motor bike/machinery in the garage with the door closed. You burn stuff, it gives off fumes and byproducts which have an effect on everything around it. The debate should be about the scale of change.
While a change away from oil & gas to renewable energy etc is inevitable, we are still dependent on oil for various products & will continue to be so until an alternative is found. There needs to be more innovation, pushing of boundaries, progress & invention of new technologies.
I am in the industry working for a Subsea Production System Supplier and probably the largest logging and well characterisation company (Schlumberger / OneSubsea). The low oil price put a lot of projects on ‘hold’ as the cost per barrel did not hit the economic recovery rate. As is usual with similar scenarios the Producers then put pressure on all suppliers to revalidate quotes and reduce costs. This led to a massive round (industry wide) of cost saving and optimisation measures, which has brought the cost to producers down (for new projects) allowing them to hit the economic production level. We are now seeing these projects ‘Turned back on’. However the industry is relatively slow with projects taking upwards of 2 years to come to fruition and start production (even for fast track).
Many industries would just die with the cost base change that oil and gas has had. In 2014 Brent crude was peaked at $114 a barrel, falling to a low of $28 / barrel in 2016 (76% reduction in price) and currently at $74 barrel (still over 26% down on the mean 2013/2014 value).
Oil and Gas has always been a boom / bust cyclic industry, I’m sure this will remain. Offshore Oil and Gas projects have huge project capex costs (typically in billions) , and unless that can be assured on the returns the industry will be slow to recover. We’re getting there, but it’s cost a lot of jobs in the process.
I voted Fluctuate.
I think it is the very long run before we lose hydrocarbons. Hopefully renewables, including nuclear (and including nuclear fusion), will be well established by then.
Only 6% of the total petroleum drilled goes to petrochemicals and plastics. So their higher value will always command a piece of the volume.
So on the contrary I am very optimistic about the future!
Ultimately someone, somewhere comes up with the means to efficiently harness the sun’s energy/tides/wind/water/air in order to produce energy efficiently at the right price.
When that happens the decline of the hydrocarbons industry is likely to be swift from an energy perspective though we will still require products that are derived from them.
I can run my home pretty close to energy neutral (i draw the line at breathing airconditioned air in a positive vacuum) and its great to be able to help stretch out those diminishing natural resources. But until the true renewables are effective, efficient and scaleable for the average joe, then the political impact on POO&G will always be king.
boom and bust are the inevitable consequence of the long lead time for new production – as detailed by giason. Oil and gas are going to be around for a long time yet if https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/630722/Energy_Flow_Chart_2016.pdf is anything to go by
Over 30 years ago the oil majors were placing themselves as Energy companies. Not just O&G. But they are still dominated by O&G so others are making the running on renewables and consumer-facing packages. I foresee M&A by the majors to catch back up when necessary.
Great to read these views: well argued and obviously based on detailed knowledge of the industries being assessed.
I would be interested to know the effect of ‘speculation’ -buying oil/gas that the purchasers have no intention of using themselves, but are simply ‘trading’: I was always told in cotton-trading (go to the Royal Exchange Theatre in Manchester and see the original trading floor) that most of the profits made throughout ‘my’ industry were made there, not by mills actually producing ‘stuff’.
Is it the same in Oil & Gas?
Most of the ‘profits’ from oil and gas are made by the government (which ever is in power) with the tax levied. Almost zero work in for maximum profit.
VMT Chris for this explanation. Where do shareholders fit in? though now-a-days they are probably just one element of stake-holders? I have contended for many years that taking funds from commercial operations and giving them to civil-servants is about the same as burying them in bottom-less pits. Is it the case that the only ‘true’ profits are made in the horse-race (in which the jockeys are the only movers and they only from side-to-side (shakers!) called the stock-exchange. 35,000 folk making nothing but money!
As India and China middle class want cars and the benefits that oil and gas offer, it will create a supply and demand problem, which will increase the price of this commodity. With the result of increase price of oil and gas, there will be an increase in invention of alternative means to produce electricity, with an increase of research and development, and eventually an answer to the worlds energy shortage will be found. It could be “Free Energy”, Magnetic energy, or simply a way of capturing cosmic , gamma rays and converting them to electricity, A form on Solar energy only much more powerful. What ever the answer, the oil and gas industries will decline, very quickly as the new source of energy is taken up.
We simple textile folk have always recognised that the real driver for the demand of what we offer is the difference between need and want. We all need textiles (and transport) to cover ourselves-from cradle to grave- BUT ITS WHEN INDIVIDUALS WANT different styles, colours, shapes of garments that the real demand sets in. Shortly thereafter, the supply will be developed as well.
I recall an argument in the early 70s at an institution located not a million miles from the White House in Washington (the World Bank) An extremely well known economist was rabbiting on about the need to increase the demand per capita for textiles in what we then called developing countries. He proposed to do this by lending vast sums to the governments of such areas to start to grow cotton and manufacture textiles. I asked him: “when did you last purchase underpants because you had not yet used-up your personal quota of fabric?” No answer.
“You buy additional textiles because you want, not necessarily need such: like the rest of the world does. Encourage fashion and style and good taste, and a wish to stand-out amongst individuals ..and the growth will follow. ” I assume? its exactly the same with vehicles?