The Demand for Oil in the Face of Renewables, Electric Vehicles

When my father passed away not too long ago, he left me some ExxonMobil (NYSE: XOM) stock that he had been accumulating for half a century or so, doggedly refusing to sell; he wasn’t big on paying capital gains taxes. Shortly I’ll be the owner of this part of his gift to me.

Of course, this conjures some important questions. Obviously, holding it would put me in a strange and ironic position, i.e., rooting for the success of an oil company while advocating for renewables and working hard to bring clean energy to fruition.  Thus, I suppose I’ll sell it all and invest in a portfolio of stuff from http://www.altenergystocks.com/.

But even if I didn’t find myself on the horns of that dilemma, I’d be on a different one: What’s the most likely scenario for the market price of XOM? I’m not an expert in the traditional energy industry by any means, but it seems to me that most of the folks in the financial chat rooms are missing the most important point: the world’s changing demand for oil.

Yes, there are huge emerging markets for liquid fuels in India and China as an exploding middle class can’t wait to get its hands on its first automobiles. And yes, the "easy" oil is gone, as anyone can infer from the falling production of most of the world’s largest oil fields. This means that only the big boys with the equipment and scale to go after the unconventionals (e.g., shale oil and tar sands) cost-effectively will be able to play in the oil industry of tomorrow.

But I have to think that those betting on the success of the oil industry for even the next decade are whistling in the dark. More people each day are recognizing that extracting and consuming fossil fuels is simply not sustainable – for a great number of different, independent reasons. Whether the concern is national security, war, terrorism, peak oil, healthcare, global climate – or the dozens of other forms of long-term environmental damage, the world is catching on quickly: the oil industry -- even with money and power coming out its ears -- is in its death throes.

So how long will it continue to stagger around the arena like some enormous bleeding bull? I’m not sure anyone can say. But I note that there are 42 different alternate fuel vehicles at this year’s Los Angeles Auto Show. Want to drive a few? Here’s a list. The idea of electric vehicles in production quantities is no longer a dream; it’s here. And the incursion of clean energy, as amply documented here every day on Renewable Energy World, is just another matador, coming at it from another direction. 

I have to think it’s only a matter of time before the XOM chat rooms start to wrap their wits around this. Even if it weren't for my ethical issue, I wouldn’t want to be holding on when that happens.

Craig Shields is editor of 2GreenEnergy.com, and author of Renewable Energy - Facts and Fantasies (published by Clean Energy Press - 2010)