The People Versus Conventional Energy: The Transition to Come
Guerra, Francisco III
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The past decade has seen growth in the spread of knowledge throughout the world about the dangers of climate change. The majority of the scientific community is in agreement that humans due to burning of fossil fuels have largely caused global warming, and conventional energy companies have been the root cause of this problem. It seems like political and civilian pressure to take climate change seriously and take action will spur oil and gas companies to move toward renewable energy sources. In recent years, some oil and gas companies have acknowledged climate change as a real thing and have invested in research and development toward sustainability and renewable energy. These companies are paying lip service to taking action against climate change by indicating culture changes, but the financial sections of their annual reports actually show that they are not slowing down the production of conventional energy sources. Clearly, the pressure from politicians and civilians has not been enough to make them change swiftly. However, price volatility in the market has a direct effect on their revenue, so increased future price volatility in addition to increased pressure from politicians and civilians might be sufficient to convince oil and gas companies to swiftly change to using renewable sources for energy. Corporations are ultimately most concerned with their bottom line—not public opinion or better outcomes for the planet. Therefore, the strongest argument in favor of moving to renewable energy is a combination of future revenue volatility and public pressure. I hypothesize that large-scale oil and gas companies, such as Exxon and Shell, are planning for a future where renewable energy will overtake oil and gas as the leading energy source. However, they will move slowly toward renewable energy sources until they become more financially enticing. My analysis will show that the increased scientific, political, and private sector pressure on oil and gas companies has resulted in the culture that acknowledges the reality of climate change and the need for cleaner energy. Yet I also show that the production of conventional energy and therefore these corporations’ main sources of revenue are not decreasing based on data from Shell and Exxon’s annual reports. I created a table that shows the parallels between oil and gas price volatility and Exxon’s revenue. In conclusion, I project that it will take a long time (perhaps more than 40 years) before oil and gas companies transition from conventional energy to renewable energy, unless there is a combination of a continuous increase in political/private sector pressure and oil price volatility to convince them to move more swiftly.