Oil Markets Will Face A Supply Crisis Before Demand Peaks

The year 2020 was a watershed moment for the fossil fuel sector. Faced with a global pandemic, severe demand shocks, and a shift towards renewable energy, experts warned that nearly $900 billion worth of reserves–or about one-third of the value of big oil and gas companies–were at risk of becoming worthless.

Big Oil appears to have mostly resigned itself to this fate.

Last year, British oil giant BP Plc. (NYSE:BP) sent shockwaves through the oil and gas sector after it declared that the world was already past Peak Oil demand. In the company’s 2020 Energy Outlook, chief executive Bernard Looney pledged that BP would increase its renewables spending twentyfold to $5 billion a year by 2030 and “… not enter any new countries for oil and gas exploration.”

BP–company that doubled down on its aggressive drilling strategy right after the historic 2015 UN Climate Change Agreement–finally appeared to throw in the towel, saying, “..concerns about carbon emissions and climate change mean that it is increasingly unlikely that the world’s reserves of oil will ever be exhausted.“

BP went on to announce one of the largest asset writedowns of any oil major after slashing up to $17.5 billion off the value of its assets and conceded that it “expects the pandemic to hasten the shift away from fossil fuel

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