Effects of Decarbonization/Environmental Regulation on Prospects for O&G TradingSubscribe
I've noticed that the conversation in the energy industry over the last couple of years has really started shifting towards decarbonization and sustainability. Regardless of what anybody's personal beliefs are, all of the major O&G companies are facing stiff pressure from shareholders and lawmakers to reduce emissions. In addition, places like New York City, California and many European countries have pledged to be carbon neutral by around 2040. This trend will only continue elsewhere, and if it happens, it seems like demand will decline fairly quickly. I know that in some cases these goals seem unrealistic given current trends and technology. But it's impossible to know where renewables will be in 20-30 years.
My question is how O&G traders will fit into this trend of decarbonization. I can imagine that there may be opportunities from O&G companies trying to optimize their assets in an increasingly complex supply chain with shrinking demand. Is this true, or will there simply be less desk seats as demand goes down?
IMO 2020 is a good example of this, where trading heavy fuel oil seems to be an opportunity after regulations are set:
But how long will this last?