Don’t expect big oil to fix the energy crunch 14 October 2021
POWER CUTS in China. Coal shortages in India. Spikes in electricity prices across Europe. A scramble for petrol in Britain. Blackouts and fuel blazes in Lebanon. Symptoms of dysfunction in global energy markets are everywhere.
In recent days the mayhem has pushed oil prices in America above $80 a barrel, their highest level since late 2014. Natural-gas prices in Europe have tripled this year. Demand for coal, supposedly on the slag heap of history, has surged. The chief executive of one commodities-trading firm says he comes into the office at 5am in order to get the latest news on blackouts in one Asian country or another. And winter, with its need for heating, has yet to arrive in the northern hemisphere.
A few years ago producers of fossil fuels would have responded to such price signals by swiftly ramping up output and investment. In 2014, with crude above $100 a barrel, Royal Dutch Shell, a European supermajor, put more than $30bn of capital expenditure into upstream oil and gas projects. It then splurged $53bn on BG Group, a British rival, to become the world’s biggest producer of liquefied natural gas (LNG).
Not this time. Climate change has led to unprecedented pressure on oil and gas firms, especially European ones, to shift away from fossil fuels. As part of Shell’s long-term shift towards markets for…