To oil or not to oil
“Sometimes glass glitters more than diamonds because it has more to prove.”
By now, even astronauts on the International Space Station and hitherto undiscovered tribes in the Amazon have learned that Big Oil made two Big Acquisitions in the past couple of weeks.
The deals naturally drew a lot of media attention and a lot of comments and attempts to analyse what all this actually means. Unsurprisingly, opinions split down the line between “Big Oil is betting on a losing horse, again” and “Oil is here to stay.” Also unsurprisingly, the former camp was louder than the latter.
The deals happened to coincide with the release of the IEA’s latest World Energy Outlook, in which the agency reiterated its expectation that oil, gas, and coal demand will peak before 2030 because it is dedicated to keeping us amused.
The IEA seems really, really certain this forecast will pan out. So very certain, indeed, that its head, Fatih Birol, took the time to comment on the two megadeals.
“Looking at the world today or tomorrow, no one can convince me that oil and gas represent safe or secure energy choices for countries and consumers worldwide,” Birol told the FT, going on to add that such deals posed a “risk for our climate but also have some business risks as the world may not need an increase of oil production”.
Don’t you just love the word “may”? It’s a hedgier hedge than the annual Mexico oil hedge. And honestly, did anyone think Birol could say anything else when his own agency had just published a report saying oil demand will drop before the decade’s over and now those annoying supermajors are doing massive takeovers?
Imagine the frustration. These deals are a potentially major threat for the transition messaging especially as they come amid intensifying pain for wind and solar — the supposed replacements for oil and gas.
To say the situation is awkward and requires immediate damage control is to put things mildly. So, Birol and partner media are doing damage control. And it’s just the beginning. Because “glass glitters more than diamonds because it has more to prove.” Expect the “oil’s going down, we swear” rhetoric to intensify as it floats further away from reality. The fear is real.
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