Exxon Mobil and Chevron, the two largest U.S. oil companies, pledged last month to spend more than $50 billion each to buy smaller companies, deals that would allow them to produce more oil and natural gas for decades.
But a day after Chevron announced its acquisition of Hess, the International Energy Agency (IEA) released a report concluding that demand for oil, gas and other fossil fuels would peak in 2030 as sales of electric cars and the use of renewable energy.
Large oil companies have reinforced their commitment to extracting oil and gas and processing them into fuels. And, with few exceptions, they aren’t spending much on alternatives like wind and solar power or electric car batteries.
But IEA officials believe oil companies are making a bad bet, citing the rapid growth of renewable energy and sales of cars, scooters and other electric vehicles. One in five new vehicles sold this year will be battery-powered, compared to one in 25 in 2020.
Oil executives dismiss IEA forecasts and say the world will need their products for a long time.
“I personally don’t agree, Big Oil doesn’t agree, OPEC doesn’t agree, everyone who produces oil and gas doesn’t agree,” said Scott Sheffield, chief executive of Pioneer Natural Resources, which Exxon has agreed to buy. for 60 billion dollars. “Who is going to replace the jet fuel? Who is going to replace petrochemicals?”
Some energy experts see risks for companies in the recent deals. Oil prices are relatively high now. If prices fall sharply, a strong possibility if the IEA is correct about demand, oil companies will have financial difficulties.
The IEA agrees that some demand will persist for some time, but at much lower levels. That will drive prices down, making it difficult for many companies to compete with big producers, like Saudi Arabia, that can produce oil very cheaply.
With the exception of some European oil companies, such as BP, Equinor and ENI, most companies are not investing much in electric vehicle charging, nuclear power, wind farms or batteries.
“I see this wave of mergers and acquisitions more as industry players trying to squeeze every last drop out of the existing business model than as part of a transition to the future,” said Mark Brownstein, vice president of the Environmental Defense Fund.
By: CLIFFORD KRAUSS
BBC-NEWS-SRC: http://www.nytsyn.com/subscribed/stories/6972321, IMPORTING DATE: 2023-11-06 19:40:06
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