Photo: Ben Stansall (Getty Images)
We’re halfway through 2020, and I think we can all safely say it’s been a pretty terrible year. There’s been so much terrible stuff in the past two months alone, I can’t even remember the bad stuff that happened in January. But I’m sure it sucked.
So I’ll take minor bits of good news where I can get it. And the latest is Shell writing down $22 billion on its balance sheets, making it the latest oil company to acknowledge that things are probably not going back to the way they were.
The company announced it expected the dip in value to be driven by both its oil and gas sides of the business on Tuesday. The problem, for Shell and other fossil fuel companies big and small, is that the pandemic has cratered demand. The price of oil dipped into negative territory for a hot second in April, and the fallout has continued. Shell follows in the footsteps of BP, which did the whole write down thing in mid-June to the tune of $17.5 billion. The Shell announcement came the same week Chesapeake Energy, the company that led the fracking boom in the U.S., declared bankruptcy after years of riding high on debt.
While the coronavirus has certainly spurred the industry’s free fall, there are signs this may be the start of a permanent decline. Even before the pandemic, the fracking industry was looking at some bills coming due that it was in all likelihood going to be unable to pay. And Big Oil stocks that have traditionally led the stock market had lost ground. That was underscored this week when Tesla’s stock price surpassed Exxon’s. Symbolic? Sure. But these are signs in the real world oil ain’t coming back.
In May, Shell foreshadowed what was to come when its C-suite level executives told investors the coronavirus has caused “major demand destruction that we don’t even know will come back.” When the pandemic recedes, the climate crisis still looms large (hell, it’s looming large even as the pandemic rages). Digging up more oil and gas is simply not an option in the coming decade, and the world—and the oil industry—is increasingly waking up to that.
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Watching the oil industry’s rapid decline is a marvel to behold after decades of climate activist pressure did almost nothing to budge it. While it’s good news in the sense that it edges the world closer to keeping the climate habitable, it’s bad news for oil and gas workers. Shell and BP are among oil companies trying to become “energy” companies. What exactly the shape of an energy company looks like remains to be seen, though it’s worth noting oil companies’ climate plans are of questionable repute at best. The one thing that is clear: People will lose their jobs.
Shell has been offering voluntary buyouts. BP also announced it was laying off 10,000 workers. While the company was nice enough to give them laptops, that a laptop is not a job, nor is it a long-term solution. Letting capitalism do its thing is a surefire way to screw workers (see: coal, cars, history). Governments need to stop trying to bring oil back by funding a dirty recovery and come up with a plan to help fossil fuel workers transition to the economy-to-be. Shell is only the latest oil company to flail, but it certainly won’t be the last.