Big Oil’s Radical Proposal: Curtail Consumption, Not Production

Yves here. Your humble blogger may be unduly cynical, but it is hard not to wonder about what looks like sound climate policy ideas from the very industry that benefits most from things not changing much. So why does Big Oil recommending what we regard as the only viable approach to averting climate disaster, radical conservation, a Trojan horse?

First and most important, the majors and their allies know that there’s a lack of political will to take the full-bore measures needed to make a serious dent in energy use, particularly since it’s the wealthiest who would have to make the biggest lifestyle changes. Second, and as a result, pushing an energy diet that few will follow seems aimed to shift priorities away from green energy, which is intended to and does eat away at fossil fuel use.

By Irina Slav, a writer for with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice

  • Big Oil companies have urged governments to focus on reducing demand for energy rather than limiting supply, suggesting it is more beneficial for the long-term goal of a net-zero world.
  • OPEC officials disagree with the notion of reducing production and investments in oil and gas, and emphasize reducing emissions instead.
  • While some perceive this stance as Big Oil’s attempt to preserve its focus on oil and gas during a period of record profits, others see it as a pragmatic response to the realities of energy demand and security

Last year, in the middle of an energy crunch, European governments called on their citizens to consume less energy. They also lashed out at Big Oil for making billions from the squeeze.

Now, Big Oil is the one calling for a reduction in energy consumption. Essentially, supermajors have suggested that people should use less of their products. But they don’t want to slash production.

The seemingly paradoxical message came out earlier this week from a conference in Vienna, where OPEC leaders met with their Big Oil counterparts from BP, Shell, and other oil companies to discuss the future of global energy.

As might have been expected in this day and age, the message to come out of the gathering was that everyone is committed to a net-zero world in the future but that right now, everyone was committed to ensuring there is enough energy for those who need it, regardless of the source.

What was, perhaps, less expected was the reported call from Big Oil for governments to focus on demand reduction rather than supply limitation as a means of enabling that net-zero world. OPEC officials, meanwhile, focused on the importance of energy security as they have done before.

“We must do everything we can to reduce emissions, not to reduce energy,” OPEC secretary-general, Haitham al Ghais said, as quoted by Euronews. “There is a misconception going around about reducing production and reducing investment in oil and gas, we do not agree with that message.”

One would assume the reason OPEC disagrees with this message is that it would lead to lower profits for its members. But according to Big Oil, the motive for switching from a focus on supply to one on demand will avoid even higher profits for oil producers. Not that the executives put it quite this way.

The report on that call comes from Reuters, which was once again refused access to the conference but quoted sources present there. And that call follows statements made by Big Oil executives that they will slow down with their pivot away from their core business.

From an activist perspective, Big Oil is trying to justify its renewed focus on oil and gas at a time when oil and gas are making record profits. From an energy security perspective, it is difficult to argue that reducing the supply of a commodity while leaving demand unchanged could only have one result: a sharp rise in the price of that commodity.

Of course, there is a case to be made that right now, despite stable and growing demand for oil, prices are depressed—but this is because factors different from oil’s fundamentals are running the show, as it were. These factors include GDP growth in big consumers, inflation, and central bank monetary policy. But there is also the perception that there is an abundant supply of oil that has contributed to the pressure on prices.

So, what Big Oil executives are basically saying is that governments—and activists—have got the wrong end of the stick: they are trying to reduce the supply of oil and gas without addressing demand. And that is an approach that is doomed to failure, as we saw last year when the same governments that berated Big Oil for its profits subsidized the consumption of Big Oil’s products to avoid riots on their hands.

Meanwhile, at another recent event, other Big Oil executives dared speak a truth that few leaders in the West would even acknowledge in private. That truth amounts to the fact that oil and gas are going nowhere in the next few decades, no matter what green transition plans governments are making.

“We think the biggest realization that should come out of this conference … is oil and gas are needed for decades to come,” is how Hess Corp.’s John Hess put it. “Energy transition is going to take a lot longer, it’s going to cost a lot more money and need new technologies that don’t even exist today.”

Naturally, this would be a welcome opportunity for a climate advocate to argue that Big Oil is trying to save its bacon when the world is turning vegan, but even that climate advocate would be hard-pressed to explain why, if the world’s moving away from hydrocarbons, China is building coal plants and India is building refineries.

The truth is that the world is not moving away from hydrocarbons. Demand for oil has hit 102 million barrels daily. Demand for gas is soaring, too, notably from transition poster continent Europe. U.S. oil consumption is also growing after a drop in 2020—the lockdown year.

There may be something, then, in a call for addressing demand for oil and gas instead of calling for less production. But addressing demand with a view to essentially discouraging it will be tricky—and also highly unpopular among voters. Germany is a good example worth studying by other transition-minded countries. It shows that forcing the transition down people’s throats does not usually yield the expected results.

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  1. ComradePuff

    This makes sense seeing as the vise of western imperialism is losing its grip on the rest of the world. Since they can no longer really control supply, might as well go after the “demand” which would likely resemble a sort of covert sanctions on populations in the guise of climate change / green energy policy. This could be banning gas appliances, rationing, building code regulations etc, but I suspect it would probably also have some big-tech component, such as smart meters which would control thermostats or water temperature.

    Having said that, I can’t really see how this would be effective outside of rich western countries. But we are talking about the same sort of Big Brains who thought sanctions on Russia would destroy their economy…

    1. herman_sampson

      The rich western countries are the major contributors to climate change – the trick is to make the rich cut their demand but NOT at the expense of the working class: $10 a gallon gas and free and convenient public transportation (in the city and suburbs). I don’t have a solution for the rural population.

      1. Scramjett

        Buses and EVs? The point, on the transportation side at least, should be to reduce cars and driving so that only the people who need to drive are driving and let the bulk of the remaining trips be covered by other means (walking, biking, and good public transit). Then the remaining cars can be electrified. You can make rural towns walkable and provide good bus/train connections. So, even if vehicle ownership is still necessary in these places, car trips are still reduced.

        1. endeavor

          PHEV vehicles with a 100+ mile range for electric only and a 5 gallon fuel tank would suffice for the vast majority of rural drivers like me. Even at $10 a gallon.

      2. giandavide

        yes, the poor people that live in peripheral areas are never considered when taking about trasitioning out from fossil. That’s one of the reasons why trasitioning is doomed to fail, it’s focused only about richer people that live in big cities that are the main ecological threat of our eras. surely less people living in these ecological monster would means less demand. but you cannot ask a liberal to drop away toxic urbanization, it’s in their dna

  2. Tim

    Am I going blind? ““We must do everything we can to reduce emissions, not to reduce energy,” OPEC secretary-general, Haitham al Ghais said, as quoted by Euronews. “There is a misconception going around about reducing production and reducing investment in oil and gas, we do not agree with that message.”

    They didn’t say reduce demand, they said reduce emissions. 2 different things. What exactly that means is beyond me though. Possibly change in the makeup of fossil fuels (less coal more gas), and implementing newer technologies and regulations that do a better job of cleaning up the emissions generated by fossil fuel burning sources, carbon capture plans etc.

    At least they said the quiet part out loud that government won’t: We aren’t doing nearly enough to eliminate fossil fuels in the next few decades like the wishful thinkers want to believe.

    1. Scramjett

      Carbon capture? That is their favorite “reduce emissions” tool. Mostly because it allows people to keep being addicted to fossil fuels.

      1. giandavide

        people are already addicted, it’s our econic system. it’s incredible that are so many people that thinks that is possible to change cultural values of a cultural and economic system without changing it.

  3. Scramjett

    I suspect they’re looking to the big tobacco playbook. When western countries started cracking down on tobacco addiction, the tobacco companies responded by selling it to the so-called “global south.” They were making record profits selling tobacco at a time when tobacco use was at its historical lowest level in the western world. They exploited the limited view of the citizens of the western world and their ignorance of countries outside their own (I was guilty of this too and it took a comedian for me to realize it).

    It would not surprise me at all if they allow the western world to “go green” while bullying/forcing smaller countries in the southern hemisphere into buying oil/gas to “industrialize,” much like big tobacco did in bullying/forcing those same countries into buying cigarettes.

    Wouldn’t be the first time big oil used big tobacco’s playbook.

    1. giandavide

      another example of the perceptive distorsion tied to being upper class: thinking that people using car are addicted, and never putting in consideration that they could live in peripheral areas and they got no choices. indeed from lebon in the 19th century poor people were considered in a pathological way, and it’s the same today with theses talks about addiction

  4. converger

    If the fossil fuel complex was serious, this tired misdirection play would, at a minimum, be accompanied by a consensus industry commitment to fully internalizing carbon emission costs, directing all of the resulting trillions of dollars per year towards climate damage recovery and fundamental long-term infrastructure change, and immediately refusing to accept all global fossil fuel industry subsidies. That saves them the trouble of digging up every last dinosaur toenail on Earth, and we can all move on to fixing things. By their logic, everybody wins!

    Go ahead. I’ll wait.

    1. giandavide

      our economic system doesn’t work this way. it’s always more ridiculous, everything it’s turning in a manichaean discussion about who’s the bad guy

  5. N Light N

    I’ve been to this amusement park before (or, the house-of-horrors?). Big oil suggests that we reduce consumption! As if big oil is concerned with our well-being – sure…that’s as believable as another episode of Fantasy Island. Let’s use cigarettes as an analogy.

    We were originally advised that cigarettes weren’t harmful; but, we eventually learned the truth. What did big tobacco do? They, and their political accomplices, continued producing cigarettes, but significantly raised the price per-pack – hence, profit maximization! Big oil’s suggestion that we reduce consumption is the prelude to increasing the price at the pump – as the petro-dollar wanes, the predator billionaire class intends to recoup their losses at the expense of the consumer (it’s what they are accustomed to doing, and the American public helps to subsidize endless wars). Further, as it seems the U.S. is intent on maintaining its unjust rules-based international-order (until the west gives up its plans to preserve its domination), they will need copious petroleum to drive their war machines. Right? Those tanks and cruisers run on oil, not on solar-power.

    It’s all about world money, world power, and world taxation. Speaking of taxation, it’s beyond time for those profligate-billionaires to stop hiding their profits on those island archipelagos, and begin paying their share of income taxes (that includes you, Betsy Devos et al.)!

  6. Ignacio

    To tell the truth I am sympathetic to the concept of demand destruction. The question i how to do this without impacting disproportionately on some whose activities depend highly on fuels/energy. One thing is when you voluntarily pledge to reduce your energy usage and a different thing is when you are forced to do so. Simple measures such as rising indirect taxes will find lot’s of opposition. I think this was Macron’s strategy. Some other and may be more interesting measures are directed to limit fuel usage (or prohibit it) in certain circumstances/places, for instance, the city centre, then expand the “centre”. If these are politically difficult, the perceived benefits might overcome initial pushback if properly done. The limits imposed might become more stringent with time.

    1. Henry Moon Pie

      Me too. It’s basically a hot potato game. Governments point the finger at Big Oil, and Big Oil points it right back.

      Here’s an old-is-new-again suggestion just as a first step. Let’s reduce the speed limit to 50. It’s true that the last time that was implemented in the 70s in the U. S., there was widespread resistance aided by the CB radio. They even made movies about how to evade it. But the President could give a speech from the Oval Office about how we need to pull together and be less selfish (transcript).

      The real third rail of American politics is gasoline prices. No one since Carter has even attempted to tell the American people that this profligacy is destroying us and our planet. The politicos tremble at the thought. Big Oil knows this as well as anyone. They helped to promote Happy Motoring for a century. They’ve sabotaged public transport so that most Americans have little alternative to the private automobile. And even worse, American corporations have spread the Happy Motoring addiction around the world.

      We’ve been led into a box canyon, a journey we’ve joined with enthusiasm. Sensible people would turn around and try something different, but in the American spirit of double down, we’re going to scale the cliffs instead without any climbing gear instead. Shoot sulfur in the sky every two years! Then we can keep driving and flying and diving to the depths. Life is about “experiences” and convenience and comfort!

      There will be plenty of “experiences” in the future, but less and less convenience and comfort for the overwhelming majority of us humans.

      1. Scramjett

        I think speed limit reductions will see strong and angry blowback, regardless of any speech a president makes. Especially in places like Texas, Alaska, California, and many of the larger states west of the Mississippi. Even some urbanists and safety/climate activists may point out that speed limit reductions would give you more bang for your buck in urban and suburban areas than the relatively smaller number of trips between cities. I think I’ve read somewhere that something like 80% of all trips are less than 40 miles (GMs logic for the range of the Chevy Volt).

        You’re absolutely correct to call out the complicity of the government and oil & automotive industries to force Americans (and Canadians) into car dependency and auto addiction. The Dutch and many European cities avoided that fate, just barely, by literally rioting against plowing motorways through their cities. We, on the other hand, bulldozed our cities for the car. I don’t see us going back on that anytime soon.

        Side note to your point of exporting “Happy Motoring” around the world: I got a chuckle when mayor Pete wanted to “educate” other countries about our “lessons learned” on transportation infrastructure. If he really wanted to help, he would make a bigger difference by providing those countries with a copy of the Dutch CROW manual. Don’t see that happening, because then all those automakers would lose money on their EV investments!

      2. cnchal

        > Let’s reduce the speed limit to 50

        I walked by a Chevy Traverse yesterday. What a gigantic pig. Lets reduce the size of these road tanks. It’s not about what we drive anyway. It’s why we drive. What drives us to drive? At root, debt.

        Probably the moar debt one has, the moar driving there is to service that debt. Do you really want your fellow humans trapped in a car, crawling along at 50?

        1. giandavide

          i strongly agree with debt theory. I’m not indebted and i don’t use car much, i can choose to work near home and i got a relatively low ecological impact. the reduction of speed wouldn’t be respected by anyone and its benefits are doubtful cause are doubtful the savings.

  7. ChrisFromGA

    I’m going to challenge the assertion that oil and gas demand is growing.

    I’m pretty sure it never surpassed the 2018-19 peak, after the big drop during 2020.

    Other readers may have a better handle on it than I do.

  8. Another Scott

    I think there might be a couple of factors that are driving Big Oil towards conservation. First, conservation is presented as an alternative to a big emphasis on wind, solar, and storage. From my observations, the big players in these industries (developers, owners, technology companies, and manufacturers) have relatively sophisticated lobbying and publicity organizations, especially towards liberals. In some states, the political power of developers, owners, and manufacturers, is seemingly stronger than those of traditional energy companies (Big Oil, traditional utilities). Conservation, especially radical conservation, is one alternative to the technological solution that wind and solar offer. Big Oil might recognize that if renewables win, its financial prospects might be more limited than under a conservation scenario.

    Relatedly, Big Oil might think that it will be better positioned in a smaller oil and gas market than other small players. If the market is small and shrinking, fewer companies might want to chase projects, leaving the best opportunity for the established players. Look at Big Tobacco, Altria is still making money hand over fist despite fewer smokers in the US. Would it be able to keep its market share and profit margins if other companies wanted to start manufacturing and selling cigarettes? Pushing conservation might enable Big Oil to increase its profits relative to other oil & gas companies.

  9. David

    As for me, this idea is absolutely logical and understandable for many reasons, and the first of them is the environment, which has been suffering for two centuries because people have been actively extracting oil, the second is the discovery of new energy sources that can easily and for many years close the energy issue, the third reason – probably one of the main ones in general – is money, it is much easier and more economical to use an energy source that does not need to be extracted from the bowels of our planet, so the price will certainly be lower. But when I, as an artist, hear that oil will be produced less and less, I immediately think of the essential oils images that I actively use and I am not jokingly worried about whether there will be enough resources to produce them. So, to summarize, the decline in oil production is actually good news, but we will need to adjust to the new realities, but it’s all for the best.

  10. Synoia

    Big oil’s bright shiny object – Make the users fix big oils problem..and delaying the enemy.

    Did they also produce a road map on how this would be implemented?

    Cunning and dishonest deflection by Industry. Did they also produce an implementation road map, I see no mention or recommendations form Bog Oil.

  11. Ben

    At some stage it will take one barrel of oil to produce one barrel of oil and that will be the end and that will sooner rather than later.

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