Peak Oil is You
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Page added on June 2, 2014
BP And Royal Dutch Shell After Peak Oil
The oil industry used to be a no-brainer investment. There seemed to be an infinite supply of oil, and with more and more people owning cars, demand — and thus oil prices — were rocketing. This meant that oil companies would be booming.
But has anyone asked the question: what happens when the oil runs out? Oil companies such as BP (LSE: BP.L – news) (LSE: BP) (NYSE: BP) and Shell (LSE: RDSB.L – news) (LSE: RDSB) (NYSE: RDS-B.US) are already finding that their production is falling. They are now scouring the furthest reaches of the planet for oil, from the Artic to the Gulf of Mexico and the South Atlantic.
Oil is increasingly difficult to extract
But any oil they do come across is increasingly difficult, and expensive, to extract. And the Macondo tragedy shows what can happen when the oil industry tries perhaps a little too hard to find more oil.
The world is already beginning to adjust to life after oil production has peaked. 25% of Toyota Yaris’s sold are now hybrids. We have already seen the hybrid go from being a glimpse of the future to entering the mainstream of motoring today.
This is all part of a trend towards higher fuel efficiency and finding ways to reduce our reliance on oil — this is a trend that is just getting under way. The days of the gas guzzler are long past.
The next step is the plug-in hybrid, and we are just seeing the first cars offering this technology appear on the market. The advantage of plug-ins is that we already have the infrastructure in place, in terms of a national electricity network. We just need to provide accessible sockets.
A future of more choice
Alongside this other technologies, such as fuel cell cars, are also being developed. What is emerging, I think, is a future where people have more choice about what sort of car they will drive. Some people will own hybrids. Some will own plug-in hybrids. Some will own fuel-efficient diesels. And, if you’re feeling nostalgic, wouldn’t it be great to drive a traditional petrol-driven sports car?
That’s why I think that oil prices, and oil demand, won’t suddenly fall off a cliff. But this is an industry in transition. I suspect that BP and Shell are retrenching, reducing the amount they spend on exploration and refining, and focusing more of their attention on areas of growth: gas, fracking, oil sands and perhaps renewables.
But, just as the TV industry had a future even after the dawn of the internet, the oil industry certainly has a future as well. But this is a future where they will no longer have the road to themselves.
16 Comments on "BP And Royal Dutch Shell After Peak Oil"
Plantagenet on Mon, 2nd Jun 2014 5:15 pm
I sold my RDS-A shares awhile back. Others may choose to invest in the oil majors, but IMHO there are better places to invest.
bob on Mon, 2nd Jun 2014 5:59 pm
Invest in the stock market? Really? You think you will ever see that money again…especially in 10 years time….
Yeti on Mon, 2nd Jun 2014 7:33 pm
Yeah, can’t believe how strong BP stock has been of late. Wouldn’t touch it with a ten-foot pole though.
Bob, then what do folks without their own plot of land to invest in do? I’m not saying they should get in the market, I guess I’m just pointing out how screwed savers are right now. CD’s don’t yield enough to protect against inflation and most people are too financially illiterate to do anything more sophisticated than to buy an SPX ETF and hope for an up year.
My working in finance for the last 20 years has really helped me to truly appreciate the potential impacts of The Limits to Growth, but understanding those potential impacts is really messing up my trading cause shit just don’t make no sense. 30% up last year, really?
Sorry, too much grog for a Monday.
GregT on Mon, 2nd Jun 2014 7:55 pm
“then what do folks without their own plot of land to invest in do?”
Buy tangible physical assets. Whatever YOU think will be worth something after the crash. Or learn skills that will be needed that can be bartered for food.
chilphil1986 on Mon, 2nd Jun 2014 8:18 pm
I’m contemplating shoving everything I have in the TVIX for a month or so when it starts going south. Then pull it out and buy gold with it. Hopefully it will be enough to buy land with at that point. Really just a wing and a prayer, though.
chilphil1986 on Mon, 2nd Jun 2014 8:22 pm
When I say ‘going south’, I mean middle of 2008 scale of ‘going south of cheese’ south.
Makati1 on Mon, 2nd Jun 2014 8:49 pm
More techie dreams of saving the world…lol. New cars? Who is going to buy them? The last middle class American on his/her way to the bottom? What oil? The financial system is about to crash into oblivion and the author talks about plenty of oil. Yes, and it will stay in the ground, forever, not be used in … “a traditional petrol-driven sports car”.
Davy, Hermann, MO on Mon, 2nd Jun 2014 9:03 pm
Chil, forget the market games just get with prepping now! Gold and land are a great idea then work on the tools to work the land.
chilphil1986 on Mon, 2nd Jun 2014 9:10 pm
Oh, the prepping is already underway, Davy. Fortunately, the land I want to buy is family land. It’s just that having the title in hand would be so much easier than having to compete with everyone else once SHTF. I’m saving up as we speak, but trust me, I REALLY need the house of cards to stay stacked for another five years at this rate…hence, the last ditch financial games should it come crashing down before then.
*SHRUG*
Davy, Hermann, MO on Mon, 2nd Jun 2014 9:17 pm
Yea, there is lot to be said about continuing to dance the dance and position oneself. The main thing is you have a plan. A plan is the key because it shows attitude and attitude will get you through this.
pat on Tue, 3rd Jun 2014 12:39 am
the limits of everything are converging at once and to have effects of total collapse, its not very far, expect as early as 2015. the stepping stone or the tinder for the fire, the limits will be the PO the ff oil as the world see huge downfall of resource in year 2015 when the many economys see collapse and many not making it.
peterjames on Tue, 3rd Jun 2014 12:58 am
Its not just the limits of everything Pat, its also the results of using everything. The last time that co2 levels were above 400 ppm, the sea levels were 30 metres higher. Just imagine a nice little ice shelf slip into the ocean in either greenland or the antarctic. Everyone believes that mother natures response to global warming will be a nice slow process. Scientists always take great interest when huge icebergs are calved off, or glaciers melt away quicker than thought, for the very reason they werent predicted.
Davy, Hermann, MO on Tue, 3rd Jun 2014 5:13 am
Peter, I read a fascinating book a few year back called “The Ice Chronicles”. The book looked at the past climate history revealed through ice cores. If there is one thing abnormal and that is our so called “normal” climate. The world has been characterized by extremes and abrupt changes. I think this is what is happening now.
Juan Pueblo on Tue, 3rd Jun 2014 12:03 pm
I am going to love this future with better cars and more options. Can’t wait!
On a more serious note, investing in land, food, water, safe storage and shelter, wood, skills, and your local community is a good way to start. It is also very important to get any medical or dental care you need ASAP.
I don’t believe the current stock market bubble will last another 5 years. But I want BAU to last as long as possible.
Carpe Diem
Davy, Hermann, MO on Tue, 3rd Jun 2014 12:34 pm
Juan, I second the medical/dental effort now! In the future what is considered a little issue now could be life threatening.
Patrick on Wed, 4th Jun 2014 9:48 pm
Although I’m not ready yet, at all, I can’t wait until BP and Shell are both bankrupt. And yes definitely a future of more choice: on foot, on foot, or on foot. At least I have the (right) knowledge (rain water, permaculture), and a 4-acre land in Spain. I just need a bus, a plane, a subway, a train, a bus and a car (lol) to go to it. Or walk 305 hours according to google maps (1481km)…