Publications: Notes at the Margin

September 22: A Day of Infamy for Hydrocarbons? (September 28, 2020)

 

"A date which will live in infamy." That's how President Franklin Roosevelt, speaking to the US Congress, described December 7, 1941, the day Japan launched a devastating surprise attack against American military installations in Hawaii. Last week, the global fossil fuels industry might have experienced its own Pearl Harbor. Indeed, for those with financial interests in the industry's survival, September 22, 2020, may become a date that will live in infamy. Why September 22? Because two events happened on that day that could spell doom for oil and gas.

 

First, China’s President Xi Jinping spoke to the United Nations General Assembly. In his speech, he promised that his country would have "CO2 emissions peak before 2030 and achieve carbon neutrality before 2060."[1] This pronouncement worsens the outlook for fossil fuels drastically, particularly coal and oil, over the next two decades.

 

Second, Elon Musk and Tesla held their "Battery Day." In his presentation, Musk promised to introduce an electric vehicle costing $25,000 by 2022. The prospect of a low-priced EV seriously threatens the future growth of petroleum-based transportation fuels.

 

Historians will note these two events, possibly citing September 22 as the beginning of a rapid transition away from fossil fuels. The transformation will likely be accompanied by much higher prices caused by collapsing production. Also, BP and others have said that, to maintain output levels over the next ten years, $4 to $9 trillion must be invested in oil exploration. Events before September 22 guarantee that these funds will not be available. Consequently, the oil industry, along with coal and natural gas, will suffer capital starvation and, sooner rather than later, "death" from the lack of sustenance.



[1] "Full text: Xi Jinping’s speech at the General Debate of the 75th session of the United Nations General Assembly," CGTN, September 23, 2020 [https://tinyurl.com/y69r7zzj].

 

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