A record number of oil and gas companies became insolvent last year, according to a new study by accountancy firm Moore Stephens, which found 16 oil and gas companies went insolvent last year, compared to none at all in 2012.
The After oil prices fell from about $120 a barrel to under $50 for most of the past year, smaller firms in the sector were unable to cope, Moore Stephens found.
Environmentalists have warned of massive loss of jobs in the sector unless people were retrained to work in the new industries of the 21st century, as it becomes clearer that fossil fuels can no longer be burned because of the effect on global warming.
Thierry Lepercq, head of research at French energy company Engie, recently told Bloomberg that the growth in renewable energy could push the cost of oil down to as low as $10 in less than 10 years. “Even if oil demand continues to climb until 2025, its price could drop to $10 if markets anticipate a significant fall in demand.” Lepercq added: “The promise of quasi-infinite and free energy is here.”
Dr Doug Parr, chief scientist at Greenpeace UK, warned the ultimate demise of the fossil fuel industry would create “desolate communities” unless the Government took steps to help the country move to a low-carbon economy. “As the warnings from climate science get stronger, now is the time to realize that the future is not in fossil fuels,” Dr Parr said.
“It’s also time for Government to recognise that we should not leave the workers stranded, but provide opportunities in the new industries of the 21st century.”
Engie, the world’s largest private power production company, is increasingly investing in renewables and selling off coal-fired power stations and fossil fuel exploration rights.
The firm recently carried out research which found the Provence-Alpes-Cote d’Azur region, home to about five million people, could save 20 per cent on energy costs by 2030 by switching to 100 per cent renewable sources.
However Joseph Dutton, an associate research fellow with Exeter University’s Energy Policy Group, said fossil fuels would be around for some time to come.
“There’s a real battle between fossil fuels and renewables in power generation,” he said. “But in terms of renewable transport, we are so far behind where we need to be to tackle climate change. In fuels and chemicals, I think fossil fuels are set to remain for the foreseeable future,” Dutton said.