Will Oil Prices Stay Low Forever?
Aug 28 2017 Read 817 Times
The oil industry is notoriously volatile, with prices continually rising, falling and stabilising. But now, Royal Dutch Shell has confirmed suspicions that oil is on track for a permanent slump. In preparation for an oil demand peak by the end of the next decade the British-Dutch multinational has started to invest heavily in renewable power and the electric vehicle industry.
Shell boss Ben Van Beurden has openly admitted that the oil major has now changed its company mindset to a “lower forever” oil price environment. It’s backing its new philosophy with a “fit for the forties” motto that’s designed to help it to adapt to the struggling oil market that’s failed to stabilise above the $50/barrel mark.
Shell spearheads renewable energy
Van Beurden has also confirmed that over the next year Shell will be working on plans to heighten its presence in renewable energy, as well as the electric vehicle market. This newfound sense of environmentalism falls in line with the latest pledge from the UK to ban the sale of internal combustion vehicles by 2040.
According to Van Beurden, Shell welcomes the “absolutely necessary” ban and is already preparing for a “very aggressive scenario” which see oil demand peak in the 2030s. If the prediction comes to light the apex would arrive a full decade earlier than original forecasts issued by the International Energy Agency.
Leaning hard on the ‘New Energies’ division
Shell is under no illusions, with plans to invest £760 million a year on its ‘New Energies’ division. It was set up last year to develop hydrogen fuel cells and biofuels that could eventually help the aviation and shipping industries to minimise their heavy reliance on oil.
The company is making good headway and is already the largest trader of renewable power in the US. As well as its existing solar and wind power assets, it’s also looking at potential roles as a system integrator or aggregator of renewable power.
Of course, Shell isn’t putting its reputation on the line. The oil major has admitted that it’s wary of venturing too far into unknown territory, with Van Beurden assuring investors that its low-carbon electricity forays will be “deliberately capped at a moderate pace”.
“I’m sure we will make mistakes, but I don’t want them to be big mistakes,” he said.
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