On one hand, the energy transition is real and here to stay. On the other hand, there are 280 million cars on the road in the U.S. today, 279 million of them running on oil, and the average lifespan of a vehicle is 12 years,” Bob Maguire, managing director of Carlyle Group, October 2020.
For the U.S. oil & gas industry, the struggle through Covid-19 might just be the “most unique year ever.” Thus, with the global economy set to contract 4.4% this year, extrapolating current problems into mid- and long-term forecasts should be met with skepticism. Even looking out a few decades from now, “the end of oil & gas” chant today is speculative, largely based on highly optimistic assumptions about alternatives and unproven technologies that have nowhere near taken root yet.
The reality is that even as we increasingly embrace renewables, oil & gas will remain essential for much longer than some are telling you. Shale has already installed America’s “energy independence” since development took flight in 2008. Sunken prices and demand from the pandemic are no doubt serious issues (e.g., leading to asset write-downs) but there is no indication of any huge structural shift across energy markets. In short, the need for more oil & gas has not somehow just gone away.