On Monday, Chevron made a significant announcement, revealing their intention to acquire oil and gas company Hess for a staggering $53 billion in stock. This move comes hot on the heels of Exxon Mobil’s own announcement less than two weeks ago, declaring their plans to acquire Pioneer Natural Resources, an oil company, for a substantial $59.5 billion in stock.
However, amidst these major acquisitions, the International Energy Agency (IEA) released its annual world energy outlook report on Tuesday. The report paints a future where global demand for coal, oil, and natural gas is projected to reach an unprecedented peak by 2030. This foresight aligns with what the IEA’s executive director, Fatih Birol, had indicated back in September. Birol emphasized the global transition to clean energy, characterizing it as an inevitable and unstoppable force. He stated that the question is no longer “if,” but rather “how soon,” this transition will occur.
Despite this, Chevron and Exxon’s recent acquisitions suggest a different outlook. Larry J. Goldstein, a respected figure in energy research, points out that these major non-governmental oil companies do not anticipate a rapid decline in oil demand in the foreseeable future. They are steadfast in their commitment to the industry, indicating a belief in sustained demand for the next two to three decades.
Ben Cahill, a senior fellow in energy security and climate change, echoes this sentiment, emphasizing that while debates about “peak demand” persist, current global oil consumption remains near an all-time high. The largest oil and gas producers in the United States envision a long road ahead for oil demand.
The IEA’s report also highlights that out of the projected $1.3 trillion investment in energy, just over $1 trillion will be allocated to fossil fuels like coal, gas, and oil. This apparent contradiction underscores the persistence of demand for fossil fuels, driven by factors such as global population growth and the burgeoning middle class in regions like Africa, Asia, and Latin America.
Shon Hiatt, an expert in energy economics, notes that oil and gas remain economically viable options due to their cost-effectiveness and ease of transport. This especially holds true in emerging economies, where the adoption of low-carbon energy sources may be financially impractical. Hiatt also points out that electric vehicles, while gaining traction, represent only a fraction of the broader transportation sector, which will continue to rely on fossil fuels.
Marianne Kah, a seasoned researcher in energy economics, emphasizes that despite the growing popularity of electric vehicles, demand for oil is projected to persist in sectors such as petrochemicals, aviation, and heavy-duty trucking. This underscores the enduring significance of fossil fuels in various facets of the transportation industry.