The United States obtains its energy consumption from five main sources: petroleum, natural gas, coal, nuclear, and renewable or green energy. In 1950, energy use in the United States was dominated by petroleum and coal. In 2019, almost 70 years later, oil was still number one, natural gas was in second, renewables in third and coal in fourth. The use of renewable energy has increased steadily over the past decades, and in 2019 it was the third most consumed primary energy source in America. In short, there is a wave of support for cleaner fuels. Yes, things do change and change is rarely easy. Which countries will be most affected by this transition to renewable energies? What will America’s energy complex look like in 20 or 30 years? While it’s hard to tell, here are a few things to watch out for.
Clean energy is coming
Basically, the green energy movement seeks to reduce CO2 emissions. Which country produces the most CO2? Look no further than China. According to the International Energy Agency, China is responsible for nearly twice the amount of CO2 released into the atmosphere compared to the United States. . As the clean energy movement gains momentum, how will America’s energy complex change? Could this mark the end of the internal combustion engine?
VE: not your father’s car
In 2019, oil provided 91% of the energy used by the transport sector and 34% of the energy used by the industrial sector. Thus, the transport sector was the most dependent. With the growing popularity of electric vehicles, contempt for petroleum, and the rise of alternative green energy sources, crude oil consumption may continue to decline. Recently, General Motors
Oil companies must adapt
How two of the world’s largest integrated oil and gas companies, Exxon and Chevron
As the energy sector seeks a new, more profitable business model, we may see several mergers and a few more bankruptcies. Rather than reinventing the wheel, the biggest oil companies could be looking to acquire some of today’s clean energy providers. Usually, when one company acquires another, the stock of the acquired company increases.
Which countries are at risk of losing?
To understand which countries might be affected the most, we need to cover a few facts. According to the US Energy Information Administration, the United States was the world’s largest oil producer in 2019, providing 19% of the world’s supply, followed by Saudi Arabia (12%) and Russia (11%). The United States was also the world’s largest consumer of oil in 2018 at 20%, followed by China (14%).
Which countries will be hardest hit by the transition to renewable energies? Most likely Saudi Arabia, Russia and Iraq, as these are the biggest exporters of crude. Specifically, in 2019 Saudi Arabia earned 68% of its revenue from the sale of oil, while Russia received just over 50% of its revenue from oil exports. Although the United States is the world’s fourth largest exporter, it should fare better as its economy is more diversified. That doesn’t mean there won’t be pain.
Energy jobs in the United States: prepare for the change
What about energy jobs in the United States? According to the 2019 US Energy and Jobs Report, in 2018, more than 1.1 million people were working in the US “fuels” sector, which includes extraction and mining; petroleum refineries; and companies that support the manufacture of machinery for coal, oil and gas extraction. Oil and natural gas, two sub-groups, employed 603,000 and 271,000 people, respectively. Considering a total US labor force of around 150 million, the percentage of jobs in this industry is relatively low. However, this is hardly comforting for those affected.
The global transition to clean energy
Any transition to a new world of clean energy would likely not follow a consistent and simultaneous pattern from country to country. First, there will be disagreement between countries. In addition, in countries where the government is heavily dependent on revenues from oil exports, they will need to replace lost oil revenues before making such a transition. The old motivation for profit will certainly be a top priority.
How will the drop in demand affect the price of oil? Historically, when supply remains constant and demand decreases, the price also drops. Will the supply remain constant? I doubt the supply will decrease because for that to happen, the biggest oil producing countries would have to agree on their individual and collective production. As demand decreases, each country will have to decrease its production, which will lead to lower incomes. It will probably not be so smooth, as countries put their interests ahead of others. Countries that depend heavily on oil revenues can resist change. However, if global oil consumption and production falls, the supply-demand curve may not be strongly affected and the price of oil could avoid extreme movements.
For those of you who work in the petroleum industry, there is a faint glimmer of hope. Specifically, petroleum is used in many aspects of everyday life. According to the International Association of Oil and Gas Producers, it’s used in cosmetics, furniture, electronics, agriculture, clothing, and even toys.
While I am yet to predict the death of the oil and gas industry, compared to its glory days, it appears to be heading towards sustaining life.