Are the wheels falling off the oil industry?

I had a conversation last week with Tessa Beach with the US Army Corps of Engineers (USACE) about the disposition of the San Francisco Bay to Stockton dredging project – a $58M taxpayer-subsidized project designed ostensibly to bring Alberta Tar Sands to the Phillips Petroleum Rodeo refinery. I called because I had read in Oil & Gas Journal that Phillips 66 had decided to convert the refinery to a renewable fuels refinery, tuning cooking oil, and soy and vegetable oils into gasoline, diesel, and jet fuels for the California market.
Ms. Beach told me that they were “laying the pencils down” on the project. This is a good thing, because, as I mentioned in our critique of the project’s Environmental Impact Statement, that every step of the way – from Alberta to Rodeo, the project was traversing a very destructive, and contentious transit.
The same week that Phillips announced the Rodeo revision, they also announced the planned closure of their Santa Maria refinery. This could be due to the depressed price of oil, which the industry has been having a hard time lifting, keying into the growing wave of bankruptcies, and the growing appeal of renewable fuel in the face of the looming climate catastrophe.
There are other signs that the industry is ‘on the ropes.’ Earlier this month BP announced that they will be converting to renewables, and reducing their carbon footprint 40% by 2035, and Royal Dutch Shell will be expanding into the North Sea with wind power. Perhaps the Majors don’t want to be seen “holding the bag” once the growing climate disasters become indisputable?
In another positive development, Goldman Sachs, JP Morgan, Morgan Stanley, Citi Bank, and Wells have pulled their financing out of Arctic oil. I’m sure they had been penciling this out for a while, but when oil futures went to -$40 a barrel in March, the inherent Ponzi scheme of the industry was revealed; as long as investors put money into the market, money would come out of it.
While it is 30 years too late, we may be saved from the worst as the wheels fall off the industry.

 

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