Sector spending billions on M&A even as IIEA says oil demand set to drop from 2030
A portion of the ExxonMobil Baytown Complex in Texas. Exxon Mobil and Chevron are spending tens of billions of dollars buying oil and gas assets, betting that the International Energy Agency’s predictions of declining oil demand are wrong.
Officials at the IEA, which the United States and its allies created during an oil crisis in the 1970s, think the oil companies are making a bad bet. They point to the stunningly fast growth in renewable energy and sales of electric cars, mopeds and other vehicles – 1 out of every 5 new vehicles sold this year will be battery-powered, up from 1 out of every 25 in 2020.
“I personally disagree, the majors disagree, Opec disagrees, everybody that produces oil and gas disagrees,” said Scott Sheffield, CEO of Pioneer Natural Resources, which Exxon agreed to buy for $60 billion two weeks ago. The IEA, Sheffield added, misunderstands “the demand for our products.” FILE — Gas prices in Huntington Beach Calif., June 4, 2022. Oil executives say consolidation will help them invest more in carbon capture and sequestration and hydrogen, to reduce their carbon footprint.
The IEA agrees that some demand for oil will persist for a while, but at much lower levels. That will drive down prices, making it harder for many companies to compete with large producers, such as Saudi Arabia, that can produce oil at a very low cost.