The Oil Industry Faces A ‘Crisis Of Confidence’
The oil industry is starting to feel the pressure of climate change.
Oil executives, by and large, have not been swayed to change their business practices despite years of warnings about the climate crisis. However, they are beginning to listen to shareholders who are demanding change, while also seeing policy risks looming just over the horizon.
The annual IHS CERAWeek Conference in Houston is usually a gathering of oil titans who meet to celebrate their business. A backslapping affair, the event doesn’t spend too much time worrying about climate change.
This year is a bit different. There has been palpable anxiety about the future. Shareholders are putting pressure on companies to report their risks and exposures to climate change. At the same time, oil executives are worried that shifting technologies, pushed along by government policy, will threaten future oil sales.
Norway’s Equinor sounded the alarm. Eldar Saetre, CEO of the Norwegian oil company, said that the industry faced a “crisis of confidence,” and that companies were not doing enough to plan for the epochal change that is beginning to unfold. “We need to drive this as an industry, to be part of the solution and not be dragged into a low-carbon future,” Saetre told the Wall Street Journal. Some companies are taking action, but “there is definitely denial within companies and in boardrooms, as well as ignorance and an unwillingness to act.”
Last week, Norway’s $1 trillion sovereign wealth fund proposed a divestment from oil exploration companies, an event that may turn out to be a significant moment in history, marking the beginning of a difficult chapter for the oil industry.
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