This group brings together the best thinkers on energy and climate. Join us for smart, insightful posts and conversations about where the energy industry is and where it is going.

Post

Is the Oil-and-Gas Industry Undergoing a Transformation?

Robert Stavins's picture
Professor & Director John F. Kennedy School of Government, Harvard University

Robert N. Stavins is the A.J. Meyer Professor of Energy & Economic Development, Director of Graduate Studies for the Doctoral Programs in Public Policy and in Political Economy and...

  • Member since 2018
  • 169 items added with 137,038 views
  • Dec 8, 2020
  • 205 views

It is probably fair to say that there are some environmental advocates, at least in the United States, who consider the oil and gas industry to be the moral equivalent of tobacco companies, that is, simply out to maximize profits, without any consideration given to the broader, social implications of the use of their products.  Furthermore, some such critics may paint the oil and gas sector with a broad brush –ignoring ways in which the various companies may differ from one another. 

My guest in the latest episode of my podcast, released today, Spencer Dale, and – more to the point – his employer, may provide a counter-example.  Spencer is Group Chief Economist of BP, the multinational oil & gas company based in London, where he leads BP’s global economics team.  As readers of this blog will know, in these podcasts – “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program – I talk with well-informed people from academia, government, industry, and NGOs.  Spencer Dale has had very significant experience in two of these realms – government and industry. 

In his current role at BP, Spencer Dale manages the company’s global economics team, and is responsible for advising the board and executive team on economic drivers and trends in global energy.  He previously served in a number of roles at the Bank of England, including as executive director for financial stability, a member of the Financial Policy Committee, and ultimately Chief Economist.  You can hear our complete conversation here.

The swift and sharp decline in oil demand experienced in recent months, driven by the global coronavirus pandemic and policy responses to it, has had profound impacts on the oil and gas industry, due to falling prices and reduced revenues.  But Spencer Dale notes that it may also create opportunities for companies and countries to support the transition to cleaner energy sources as they strive toward net-zero emissions in the coming decades.

“I think the pandemic has highlighted the fragility of the planet and the unsustainable way in which we are living on the planet today. Moreover, the scale of the government interventions we are seeing around the world give us an unprecedented opportunity to use those government interventions to boost the economy in such a way that the growth we see going forward is greener and more sustainable than it otherwise would have been,” he says.   

Spencer predicts that the COVID-19 pandemic will continue to take its toll on oil demand as people and businesses conclude that they and their employees can work just as productively at home as in an office, and can save considerable amounts of time and money via reduced business travel.

“I think the far greater impact on oil demand is not through these behavioral changes, however, it’s through the economic impacts,” he says. “Hopefully the pandemic will be brought under control within the next year or so, but the economic scars from the pandemic are likely to last far longer, and in particular, those economic scars are likely to fall disproportionally on emerging markets around the world.”   

Dale says he is proud of the leadership role BP is playing in the industry by pledging to reach net-zero emissions by 2050, and by shifting its business profile away from being an “international oil company” toward being an “integrated energy company.” 

“The nature of energy demand is likely to shift materially over the next 20 to 30 years, away from fossil fuels,” he observes. “And that’s to be replaced by very significant growth in renewable energy led by wind and solar power, and so we want to pivot away from those fossil fuels into a wider energy company.”

Dale also acknowledges the difficult challenge facing policymakers as they try to revive their economies and address the threats posed by climate change.

“If you ask governments today, with levels of unemployment…going back to levels not seen since many decades, if you ask them to trade off near-term jobs versus long-term climate issues, that’s a hard challenge,” he states. “But there doesn’t need to be a tradeoff between those two. You can design smart policies which are both good for long-run sustainability and also generate jobs in the near-term.”

All of this and more is found in the latest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.”  I hope you will listen to this latest discussion here.  You can find a complete transcript of our conversation at the website of the Harvard Environmental Economics Program.

My conversation with Spencer Dale is the 18th episode in the Environmental Insights series, with future episodes scheduled to drop each month.  Previous episodes have featured conversations with:

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

The post Is the Oil-and-Gas Industry Undergoing a Transformation? appeared first on An Economic View of the Environment.

Read More

Robert Stavins's picture
Thank Robert for the Post!
Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.
More posts from this member
Discussions
Spell checking: Press the CTRL or COMMAND key then click on the underlined misspelled word.

No discussions yet. Start a discussion below.

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »