Biden trying to destroy our domestic oil production will hurt this country. It will take decades to make the grid strong enough for all electric energy system
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The head of OPEC warned that underinvestment in oil is a “dangerous” threat to energy security and dismissed the idea that renewables alone will be able to meet the future energy demand.
“The underinvestment in the oil industry is dangerous,” OPEC secretary-general Haitham Al Ghais said in an interview with CNN on Monday. “And I believe it is critical that the world gets this right, that by underinvesting, we are actually endangering energy security. The world will require at least $12 trillion of investments globally for the oil industry from now to the year 2045. There are serious possibilities that prices, the volatility will be increasing as demand grows.”
Mr. Ghais called underinvestment as one of the key factors that could push oil to $100 per barrel. Brent crude oil was trading at around $91 per barrel as of 04:40 p.m. EDT, up from around $71 in late June.
“We are talking about a global population, within the next six, seven years, by 2030, we’ll have over half a billion people moving into cities globally. There is no way on earth that we can meet this requirement for future energy demand by relying on renewables alone.”
He also criticized the International Energy Agency (IEA) for claiming that within the next six to seven years, “demand for oil could drop by as much as 25 or 30 percent.”
“Let me answer it this way by saying that 30 years ago, fossil fuels consumption was 80 percent globally. Thirty years on today, it’s still 80 or over 80 percent,” Mr. Ghais said.“So, to come and project that in five or six years, with all the challenges that are facing the introduction of electric vehicles, penetration of EVs globally, availability of critical minerals globally, and the geopolitical, the supply chain logistical issues, the sheer size and volume of electrification required globally to be able to move to an electric world—it’s a monumental challenge.
Underinvestment in oil is something that “keepme awake at night,” he said. “I say, if we worry about volatility today, I don’t know what it’s going to be like in the future.”
Saudi Aramco, the world’s largest oil company, also warned about the situation earlier this year. In an interview with CNBC in March, CEO Amin Nasser said that a “persistent underinvestment in oil upstream and even downstream is still there” in the sector.
Moreover, with maturing oil fields, “you need more investment,” he said, referencing the fact that costs of drilling keep rising as oilfields mature and become depleted.
The average decline rate of an oil field is around 6 percent, meaning that in an oil production system that is meant to output 100 million barrels yearly, “you need 6 million barrels just to offset decline.”
“So there is a need for investment. And policymakers and regulators and investors need to ensure that there is adequate available investment in the sector … Otherwise, it’s going to have an impact on supply over the mid-to-long term,” Mr. Nasser stated.
ESG Policies Puts Pressure on Oil and Gas
Mr. Nasser also blames the proliferation of environmental, social, and governance (ESG) policies for the underinvestment in the oil industry.
In remarks delivered during the Saudi Capital Markets Forum 2023 in February, Mr. Nasser said that ESG is “clearly a rising trend” in the capital markets. Though he feels ESG is a move in the “right direction,” Mr. Nasser expressed worries about these policies targeting the oil sector.