Decades ago Tom Peters suggested that companies would be well advised to “stick to their knitting “ – to do what they had expertise and experience in. BP is an Oil and Gas corporation. Over the years it’s been pretty good at the task of finding, producing, refining and marketing hydrocarbons. That’s what it does. That’s its knitting. And the odd blip aside that’s what it does well.
The future for oil and gas is not as bleak as the pessimists argue. Let’s take gas first. Across the Northern hemisphere countries have a domestic gas usage for heating and cooking that cannot be unraveled for decades. And won’t be. Virtually every home in Northern Europe has central heating fired by a gas boiler. That is not going to change for a long time – if ever. The mix in power generation is changing and, yes, renewables are playing an increasing part. But we will still have gas fired plant turning out electricity for quite a while. In times of financial stress will countries really want to abandon efficient gas driven electricity generation and invest in wind turbines? Not as much as people think – at least not for quite a while.
And oil? The oil specific uses will remain so. Ships, whether they carry containers or cruise passengers, will continue to be driven by fuel oil. Aircraft will fly only on kerosene. There may be fewer flights – but the planes, like the ships, will run on oil. Personal transport mostly likewise. Despite the plethora of battery driven or partly battery driven cars available most of the car park runs on petrol and diesel. And will continue to do so. Unless and until an electric car has the range, the refuelling simplicity and the cost of a petrol driven car most of us will continue to choose the latter. The same applies with trucks and buses – these may not be oil specific but petrol and diesel powered vehicles will be in the majority for a very long time. And remember your electric car has to get its battery charged – and at the moment the electricity to do that comes substantially from gas-fired power stations!
Change in energy consumption comes from technological advance. Aircraft and ships and automobiles are far more efficient than once they were. The greatest contribution to reducing hydrocarbon consumption comes from the hidden renewable – efficiency improvements.
BP’s expertise is in hydrocarbons. The record they and other oil and gas corporations have with renewables is patchy at best. Twenty years on from saying they would be “Beyond Petroleum” they aren’t. Low production cost crude oil and gas will be attractive so long as the consumption infrastructure is there. It will be. Stick to the knitting !