The COVID-19 pandemic, coupled with the turmoil in the oil markets, has created an unbalanced reality in the energy markets. The problem of oversupply and lowered demand is causing many to question whether the dynamics of the sector are upright and healthy. Still, the producers, of course, have other more urgent problems to deal with. Oil has grown significantly in the last century to become a cornerstone and a building block of modern nations, at what cost is a different matter of question. Whether we like it or not, especially in the last decade, it has come to create alternative regional economies based on the activity it generates. Numerous countries with hundreds of millions in population numbers rely on the commodity to fund their budgets, thousands of small towns took their financial lifeline through this sector. Enormous investments have been made for establishing working supply chains from infrastructure to transportation and indirectly, with the sheer size of this industry. Any immediate shock in this sector will have far-flung effects that go far beyond the scopes of the pure fossil-fuel industry.
The public perception of what oil is in the U.S. and the E.U. differs from region to region. Still, one thing is certain, the transition to greener energy sources will dominate the headlines in the industry, but the method to how is greatly disputed. Should it be done with the global majors engaging in the transition, or should they be left out? How fast can the shift in the balance take place?
With the COVID-19 forcing a large number of people to work from their home, ideas have also started to emerge in greater numbers across the mainstream media outlets. With the economic contraction, the pandemic has forced, an economic recovery and stimulus package is sure to be provided by the governments in especially the developed nations in due time. Running in line with the transition to the green energy plan, some have advocated that now is the perfect time to boost the spending for developing renewable sources and creating the much-needed economic activity in the energy sector. The fact that the oil industry is cash-strapped at the moment and has fewer options to counter such moves makes this an ideal solution for some. But it should not be forgotten that purely boosting a single developing sector in the face of another long-developed one will have significant implications and create a strong repercussion.
Millions of people globally rely on the oil industry for their paychecks and incomes. Besides, being a specialized sector, the unemployed people from the industry will have quite a few numbers of options in terms of industries to transfer to. Can the policymakers justify the consequences of their actions to these people, who will become voters in the next elections?
In the long term, such a move will create a strong anti-renewables movement that will bring together newer and bigger obstacles in the policy-making processes to come over if we want to diversify the energy mix. Abrupt and boldly outlined policies should not be followed amid the current crises. Well-thought-out plans that bring together the interest of all stakeholders should be the course of action if we want to forge new pathways in the current era of changing dynamics. Instead of pursuing shock and awe tactics to paralyze the oil industry, it should be deeply analyzed as to what factors and components of the sector can be transferred over to the renewables initially. Proceeding on with providing the stimulus to encouraging this transmission will not only serve to preserve the current employment opportunities and long-sought and gained experience but also serve as a force multiplier in the development of the supply chains with due regards to the expertise these companies and industries have.
We already know that the offshore oil & gas industry share numerous components with the offshore wind sector, and considering the depth and the urgency of our current situation, finding other common points of convergence should not be too daunting of a task. Whatever the results and end-decisions may be, the policymakers need to act fast if energy is seen as one of the leading industries to kickstart the economy back into action. In their decisions, it will be important not to substitute one sector for the other, although the weighting may change. We may be headed into an era with a different mix of energy, but we also should not forget what we have at the moment to work with.