Thursday, June 20, 2024

Here’s Why The Oil Industry Doesn’t Think The End Of Oil Is Coming Soon

Politicians, especially in the developed world, are working to try and end the use of oil and other fossil fuels. These politicians, who worship at the Church of Climate Change, are pushing the world’s advanced economies to enact “net zero” which means there will be no net greenhouse gas emissions by 2050. Many of these same governments have gone even further and set a date for the end of gasoline and diesel power automobiles.

Well, the oil industry appears to think the end of oil is not coming anytime soon. You can draw this conclusion from the fact that it is investing and expanding oil refining capacity around the world.

From Bloomberg:

RBC Capital Markets LLC, an investment bank, reckons that net global refinery capacity will increase by 1.5 million barrels a day this year, and by another 2.4 million next year. The combined 2023-24 boost is the largest two-year increase in net global refining capacity in 45 years, according to the bank.

construction boom matters beyond the oil industry. For central banks trying to decide whether their campaign of interest-rate hikes has subdued inflation, the increased capacity offers some hope that gasoline and diesel prices will stay low

.The buildup is, in part, a fluke: Refinery projects got delayed over the pandemic, with many of them now coming online simultaneously in places such as Kuwait, Nigeria, Mexico and China. Happenstance or not, the increase nonetheless marks a turnaround for the oil industry. In 2021, net global refining capacity fell for the first time in 30 years as the pandemic forced some plants to close.

Exxon Mobil Corp. is emblematic of the new trend. Last month, it fired up the expansion of its plant in Beaumont,Texas. With 250,000 barrels a day of extra capacity, it is the largest addition in the US in more than 10 years.

Note that the U.S. is not building any new refineries. The capacity increase in this country is due to the expansion of already existing refineries.

The oil industry would not be making these capital-intensive investments if it believed that the age of oil was imminent. Otherwise, these new refineries around the world would be very expensive paperweights if oil was about to be replaced with electricity or hydrogen or whatever.

Who are you going to believe? Will you believe the financial investment decisions of energy companies or the anti-human dreams of politicians? The politicians are saying one thing while the energy companies, who deal in the world of supply and demand from actual customers, are saying another.

The energy companies appear to believe that we are not transitioning from oil anytime soon. Given the fact that electric vehicles are still not ready for prime time by all accounts and that hydrogen and biofuels don’t seem to be able to displace fossil fuels, the oil companies appear to be making the right decision.

Now if only our politicians can see reality.