Right now, the oil industry is facing a lot of uncertainty. When people around the world began to shelter at home to protect themselves from the COVID-19 pandemic, oil demand disappeared, and prices tanked to an extreme degree. And when Russia and Saudi Arabia kicked off a price war after a failed attempt to address the problem together, the industry found itself in even more trouble.
Now, it’s somewhat unclear where oil stands. On the one hand, there are signs that as COVID-19 is managed and controlled around the world, demand for oil is already returning. This is something we called attention to even in mid-May, citing a report that indicated Chinese demand had
Similarly positive for the industry is the price trend of late. Oil is on a steady rise, and has been more or less since that same point in mid-May when we began to analyse China’s reopening. The price has increased with relatively little interruption for almost two weeks at this point, which may well be a direct reflection of world economies beginning to stir. In the grand scheme of things it’s still a small sample, but it’s a meaningful one given recent context.
Even given these signs of optimism though, there are some who believe the coronavirus outbreak was something of a death blow to the oil industry. The thinking is not that it will collapse in one dramatic, devastating crash, but rather that it was damaged so severely that it won’t fully rebound. Production is being cut, storage is running low, and with the market potentially heading into prolonged chaos, the world may finally have incentive to move on, so to speak. Whether or not this is the case remains to be seen, but the idea does beg the question of what energy would look like in a world beyond oil.
Nuclear energy is still a polarising topic in some circles, but right now it is arguably the top competitor to oil in the near future. In the middle of the previous decade, a report on countries generating the most nuclear power showed that some, like France, were already moving toward producing 80% of their electricity via nuclear power. Such countries are few and far between, and many developed nations have only a handful of nuclear reactors right now. But if and when oil is phased out, there will be countries positioned to rely heavily on nuclear energy.
For all the attention it receives, solar power is still responsible for a relatively low portion of the world’s energy output. However, it’s also a growing sector. While solar panel instalment can be expensive, and backup power options aren’t usually as “clean,” reliance on solar power is still expected to grow. It’s not out of the question that more than 10% of the world’s energy could come from solar power sources by 2025.
Wind gets less attention than solar energy, and certainly presents its own challenges. Wind turbines are enormous in size and take up a great deal of space, not to mention they can be challenging to install. On the other hand, some angling for clean energy solutions see these challenges as potential job creators. We are also beginning to see more offshore wind projects taking shape in countries around the world. Ultimately, a wind power takeover is unlikely if not bordering on impossible. Like solar though, wind could supplement broader clean energy efforts fairly significantly in the near future.
Alternative Consumer Products
Consumer products can rely on a number of different energy sources already, but it’s worth noting that this is where we could see significant changes fairly quickly. A recent report on the outbreak’s effect on the oil industry
The oil industry’s demise is by no means certain yet, and many would still dismiss the notion entirely. Should oil struggle to recover for a long enough period of time though, some combination of the above could become dominant.