Energy: A long-term fall in demand for oil

Energy: A long-term fall in demand for oil

 The historic toll of this year’s collapse in oil prices became clearer this week for ExxonMobil, said Derek Brower and Myles McCormick in the Financial Times. “The most valuable company in the world” not long ago, Exxon has seen its share price fall dramatically this year, and said it will have to “write off up to $20 billion worth of natural gas assets in western Canada, the United States, and Argentina.” It’s also cutting jobs and slashing spending by roughly 40 percent from its March projections, to rebuild a once-gilded balance sheet that recorded its third straight quarterly loss. 

Despite the warning signs, Exxon remains “convinced” it will “be rewarded by a recovery in prices” after the pandemic. The drop in oil prices this year isn’t “just another crashand- grow event,” said Tom Randall and Hayley Warren in Bloomberg.com. Demand will never return to where it was. Exxon isn’t the only energy company that has cause to doubt the value of its assets. French oil company Total SA says the world will reach peak demand for oil in 2030, OPEC says 2040—and BP says we passed peak oil demand in 2019. Federal Reserve chairman Jerome Powell agrees. After the pandemic, he said, “we’re not going back to the same economy.” The energy industry can finally see “the writing on the wall”: 2019 was “the high-water mark in oil history.”

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