Will O&G companies pay just as well when they turn renewable?
This is more of a "research" question that I was thinking. Everyone knows O&G to be a well-paying industry similar to tech or finance but it's also one of the only major industries to have an expiration date. Disregarding when O&G stops being relevant when major oil-based corporations turn into "energy" corporations with focuses outside of fossil fuels, will they still pay high wages as they do now?
There will be far less field-work as opposed to oil fields right now but there will still be a lot of engineers, tradesmen, truck-drivers, etc. Will they still get above-average wages compared to other industries? Or is it only fossil fuels that allow workers in O&G to get above-average wages?
Would this affect auxiliary workers like accountants, marketers, finance teams, etc? Will accountants working at Shell suddenly get less raises when the company's become sustainable? What about O&G investment banks/oil-based investment jobs?
Just like O&G industry is completely dependent on commodity prices, so is the renewable energy industry on subsidies and tax credit. In other words, both industries are cyclical; one of them because of supply/demand factors, and the other because of public policy (e.g. Biden admin passed ITC/PTCs which are tax credits for solar and wind projects).
To your question, the pay in O&G has been absurdly high and renewable energy pay won't nearly as much, at least for the foreseeable future.
What about when O&G become the minority in energy? When over 50-60% of our energy is produced by non-fossil fuels, would energy prices for consumers just fall because renewable energy is far cheaper and energy companies would just become way smaller than they are right now?
I'm not a sage so I can't predict the future. What I will say is that if O&G does become a minority, it will be a huge opportunity for private equity companies who don't care about ESG. In fact, PE firms are already buying and selling high carbon producing assets despite backlash in the media (which has quieted off because PE firms pay journalists to hush up) and achieving 50-60% IRR (look up articles on what Carlyle is doing with their assets).
So, if you don't care about what the ESG crowd thinks, you can make a lot of money in O&G.
Unsubsidized wind and solar were cheaper than fossil fuels in 2019 before the recent gas price explosion, and 95% of new energy installations by 2025 will be renewables. The coal mines are never coming back.
https://www.forbes.com/sites/jamesellsmoor/2019/06/15/renewable-energy-…
https://www.iea.org/news/renewable-electricity-growth-is-accelerating-f…
this is a joke. I work in the industry. "renewables" are straight trash. they don't provide shit for power, ruin a city-sized plot of land, & without (arguably earnings pump & dump style) tax equity financing, they wouldn't exist. a gas plant sits on only a few acres of land, bangs out 1,000mw all day long for dirt cheap (esp here in the marcellus) without bankrupting the country to do it.
Tell that to BTU (Coal miner) stock price dating back to 2019 timeframe and the price of Newcastle Coal ~$400. Have made a fortune on the back of fading Forbes headlines
Large integrated energy companies will use their legacy O&G business units to pay for renewable projects. It’s their cash cow and won’t be going away anytime soon, contrary to what the news or politicians may try to say.
CCUS, Hydrogen, Renewable fuels (SAF, RD, BD), RNG, solar, wind and so on and so forth will be financed through their standard business. My expectation is that pay will still be high as these companies need all hands on deck for some of the emerging technologies in the field.
The scale of the O&G business unit at these large integrated companies are so gigantic and the renewable projects will be a drop in the barrel for a long time, pun intended. If you get curious, look at the targets for some of the integrated companies for investment in renewable projects. Maybe a few billion in a handful of years, right? That’s chump change and there’s simply not enough viable renewable projects to go around right now. It’s still an emerging industry and won’t make up a significant portion of the overall portfolio in these businesses for a while.
RNG is really not that clean (per certain scientific reports) and has been around for decades. It's just a re-branding effort that has led to Shell/BP/other companies to enter the market to take advantage of RINs and LCFS policy.
You’re probably right, I haven’t really done much research into that space. I was just trying to highlight some of the types of projects that are showing up in the portfolios of energy company operations.
FWIW more wind and solar leads to higher price volatility in the energy markets, and storage isn't that great - and won't be for years.
So it's hard to predict how energy markets will look going forward.
Hey look on the bright side, that will also mean the oil billionaires and oligarchs go extinct. Imagine a world with no Bushes, Kochs, Saudi royals, Putins, Maduros, Saddams.
One thing people seem to forget is that crude oil has more purposes than just fuel. Plastic, lubricant, paint, some medicine, asphalt, etc. are all products of crude oil, and those will exist forever. Oil is likely not going away, but perhaps the major contributors to emissions will become greener (cattle farming, ocean shipping, power generation).
That being said, it is nearly impossible to predict things beyond a 5-year horizon. Nobody in 2002 predicted the iPhone, and nobody in 1995 predicted a stock market bubble.
Molestiae enim assumenda ipsa deleniti ipsa. Nemo saepe blanditiis nam aut non est deleniti. Consequatur voluptas et nobis sed dolorum vel. Recusandae quia enim similique nesciunt enim velit possimus. Ab tempore architecto et eligendi fugit ducimus voluptas. Amet sunt qui laborum consequatur est iste sit. Quidem recusandae sapiente eveniet temporibus et harum autem.
Facere aut illum voluptates incidunt. Ut nobis nulla et omnis molestias inventore quae. Ea accusamus sed modi natus ratione pariatur. Tempora tempora dolor pariatur ducimus.
Similique reprehenderit incidunt aut ut minima voluptatem eveniet. Quasi necessitatibus facilis corporis eum quis. Reprehenderit repudiandae vel error molestiae cum aliquam laborum. Accusantium dolore officia consequuntur.
Voluptatem non impedit aut ut. Hic sed repellendus et esse delectus dolor facere. Et voluptate dolorum reiciendis nesciunt aut quidem quia. Est error magnam asperiores non reprehenderit et ullam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...