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Predictions and Trends for the Energy Sector in 2020

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This item is part of the Predictions & Trends - Special Issue - 01/2020, click here for more

The year 2020 is likely to be a big year for energy as new trends set in motion last decade — like the pivot towards greater sustainability and new extraction methods targeting shale oil and natural gas — continue to develop and restructure the energy market.

Below, we'll cover the energy market outlook through 2020 — the winners and the losers, as well as how the year might change the energy sector's composition.

Market Outlook for 2020

The past decade saw steady and significant growth in new sources of fossil fuels — primarily shale oil, fracking and natural gas — as traditional oil sources grew more expensive and unstable foreign oil markets encouraged investors to look home for their fossil fuels.

In 2020, market signs and expert predictions suggest this growth will continue. However, the slowdown seen in the past few years is also likely to remain, resulting in higher overall oil prices. This trend may drive growth in other sectors, like offshore drilling.

At the same time, the US energy sector has seen significant growth in renewable energy. In 2019, renewables provided more energy than coal for the first time. This growth was, however, slightly outpaced by the rise of natural gas. 

The biggest winner of the growing interest in renewables has been wind power, followed by solar energy. New developments, like improved battery tech and offshore solar farms, are expected to speed up renewable growth through 2020. Other renewables, however, are beginning to lag behind. Hydroelectric growth, which has stagnated over the past few years, will likely remain flat due to increasing criticisms of the environmental impact of hydropower. Many experts also fear climate change may render some river flows too weak or inconsistent to provide significant or reliable power.

Further renewable growth may also face new challenges. For example, research suggests electric cars and renewable batteries may have a worse impact on the environment than fossil fuels. Nuclear energy, which is difficult to classify in the traditional renewable versus fossil fuel binary, is also expected to experience little growth in 2020.

The general attitude of investors seems to be that renewables are the future — but the future's still a long way off. In the meantime, oil will likely continue experiencing significant growth alongside renewable gains.

Energy Upsets May Be in Store

Sociopolitical changes could also do more than drive renewable growth — 2020 may bring changes that could have significant impacts on the energy sector.

Despite the growth in domestic energy sources, the U.S. is not close to energy independence and relies heavily on foreign oil sources — meaning renewed conflict in the Middle East and new sanctions on Iran may lead to higher prices on crude. However, oil investors haven't yet responded much to growing tensions in the region. The global oil and gas market must also contend with a rapidly changing world that has made data analysis and cybersecurity high priorities across the global economy.

At the same time, the results of the Democratic presidential primary could have significant impacts on fracking. Four out of 12 primary contenders, including two front-runners, have declared their intent to ban fracking if elected. All remaining candidates want to regulate or limit fracking in some capacity. The risk of a fracking ban or stricter regulations could significantly impact the shale oil market and may frighten away some investors.

The Energy Market May Change in 2020

In 2020, we'll likely see a recovery in the energy market after the slowdown towards the end of the 2010s. Some of the biggest gains will be seen in the shale oil industry — and the oil and gas sector overall, which has continually provided most American energy. Certain kinds of renewable energy will also likely see significant gains.

At the same time, pressure from outside the energy market — including conflicts in the Middle East and the potential for new regulations on fracking — may drive up oil prices and encourage investors to look away from fracking and Mideast oil sources to sectors like offshore drilling.

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Matt Chester's picture
Matt Chester on Jan 23, 2020 1:01 pm GMT

Despite the growth in domestic energy sources, the U.S. is not close to energy independence and relies heavily on foreign oil sources — meaning renewed conflict in the Middle East and new sanctions on Iran may lead to higher prices on crude. However, oil investors haven't yet responded much to growing tensions in the region. The global oil and gas market must also contend with a rapidly changing world that has made data analysis and cybersecurity high priorities across the global economy.

At the same time, the results of the Democratic presidential primary could have significant impacts on fracking. Four out of 12 primary contenders, including two front-runners, have declared their intent to ban fracking if elected. All remaining candidates want to regulate or limit fracking in some capacity. The risk of a fracking ban or stricter regulations could significantly impact the shale oil market and may frighten away some investors.

This is quite an important passage. It's true that the U.S. is a net exporter of petroleum for the first time, and the current leaders are touting that success, but that in no way means the U.S. is off its addiction to foreign oil and the urgency to get us off of these fossil fuels as quickly as possible still retains those geopolitical rewards (as well as all the economic and environmental ones as well!)

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