To what extent are climate activists able to truly affect the day to day operation of the crude oil industry?

According to the United Nations, the ‘official’ definition of sustainability was developed for the first time in the Brundtland Report in 1987, describing it as “development which meets the needs of current generations without compromising the ability of future generations to meet their own needs.” However, it wasn’t until recently that the importance of the definition has been rapidly broadcasted on an international scale, as a cause of carbon dioxide levels reaching an all-time high in the last 800,000 years. This has consequently formed ‘environmental-activists’ who have attempted to take extreme measures to hamper the day-to-day operation of parties that contribute to the increase in carbon dioxide levels and adopt unsustainable production methods. Namely, the crude oil industry. Considering the $3.3 trillion worth of the oil industry, I questioned whether the efforts of activists would truly make a revolutionary impact on its day-to-day operation, considering its strong global and economic links...or is the business just too big to fail?

My passion for financial markets and economics caused me to explore this issue in detail, because the use of crude oil is concretely embedded in other businesses including transport and aviation which could be deeply hindered if activists manage to bring about a drastic change. Therefore, this essay aims to critically examine to what extent does today's awareness of environmental sustainability truly affect the day-to-day operation of the crude oil industry.

Main Issue

The widespread use of crude oil in several sectors caused a global reliance on its use and the industry has consequently been valued amongst the top 10 biggest industries by revenue in 2021. As a cause of having a multi-trillion dollar valuation and a strong global reliance on its use, the main issue is the consequent difficulty of activists to change the actual day-to-day operation of the industry. Despite the growing awareness of the industry’s ill-effects and unsustainable excavation methods, its day-to-day production continues, and global demand for oil has risen by 14.4 million barrels per day between 2006 and 2017.

Global Perspectives

As a cause of carbon dioxide emissions in the USA increasing by 150 million metric tonnes between 2017 and 2018, protestors have consequently taken to streets to voice their disapproval. For instance, in September 2018 over 30,000 protestors conducted a march in San Francisco to end fossil fuel extraction in the state. Furthermore, presidential candidates have politicized the issue of oil to sway voters, such as when Joe Biden said he would ban the Keystone Pipeline during his campaign. Consequently, the oil industry in the USA responded... but in a manner that did not affect their daily production of oil. For instance, the American Petroleum Institute (API) sponsored an advertisement campaign called “We’re On It” that promoted natural gas as a climate solution, shifting the focus from oil. According to the official website of the API, the campaign represents oil companies that have caused a catalysis to the climate crisis and are consequently advocating for a healthier environment, and are ‘committed’ to doing the same. However, according to an article by Desmog Blog, a platform that describes itself as a fact-checker for global warming misinformation campaigns, the advertisement by the API contained a false statement describing the United States to be leading the way in reducing emissions, whereas the U.S. carbon dioxide emissions rose 3.4 percent in 2018. The same article went on to describe how oil companies use these advertisements as methods to maintain a public relation (PR), and create little impact in reality.

The article on the API’s website naturally has a bias because the oil industry has caused damage, and the institute must consequently cover it up by underplaying its effects and focusing only on the positives. This is made apparent by the use of optimistic language such as ‘committed’ and ‘strong efforts.’ Considering Desmog Blog is an organization that campaigns against the oil industry, it is likely that its article also has a bias because it provides an unbalanced coverage of both perspectives. The API does not provide any credentials of the author of the article which causes the information described to lack authority as the author’s qualifications are ambiguous. However, Desmog Blog states that the author has a degree in Civil and Environmental Engineering from Cornell University. This makes the information have more authority due to his expertise and knowledge about the environment. Both articles are published in 2019, indicating that they do not fully reflect the changes that have occurred over the past year. However, since the article by Desmog Blog was published one month after the API’s article it is slightly more relevant as it contains details of affairs that occurred during a larger time period.

One con of the oil industry’s perspective is choosing PR over impact. This choice is caused by keeping the profitability of the business in mind. To create impact, the corporations would have to make decisions such as reducing their emissions. Emissions can be reduced either by reducing production or spending a large budget on research and development (R&D) to discover technologies to reduce emissions. Both these methods affect the profitability of the business by decreasing the revenue or by increasing the costs. Consequently, corporations are reluctant to make the change. However, one pro is that not all corporations prioritise PR over impact. According to an article by Time magazine, oil corporations including Shell, plan to expand into other energy methods. This indicates that their decision was caused by prioritizing the environment over their profitability. Consequently, Shell plans to strengthen its plastic business and diversify into electrical power to prepare a migration away from oil. It has prioritised impact over PR, by having spent a sizable budget on R&D to commit to reduce its emissions by 3% in 2021 and 50% in 2050.

This illustrates that the difficulty to push the industry to change varies from corporation to corporation. One likely cause for Shell to have taken concrete action may be due to the company being headquartered in the Netherlands which might have stricter laws than the USA. Consequently, it was more likely to change its method as compared to the API.

In terms of a national perspective, India faces a different challenge altogether. As a cause of being a developing country, it is built upon the primary and secondary sector of its economy: which includes the oil industry. Consequently, the government is reliant on the industry, despite its unsustainable production methods, to solve India’s unemployment crisis and projects involving oil corporations have not decelerated. For instance, in January 2021, the Indian Oil Corporation announced a new refinery to be constructed in Tamil Nadu with an investment of INR 35,000 crores. The IOC also plans a $4.5 billion expansion of a refinery in Panipat by September 2024, indicating the oil industry is here to stay. As a cause of needing to provide employment, it is consequently less likely for the day-to-day operation of the oil industry India to be hampered. However, it is worth noting an exception of a protest that caused the construction of a new refinery to be deeply affected. In 2019, a joint venture was signed between Saudi and Indian companies to build an oil refinery in Nanar. This caused a protest by a local group which consequently coerced the government into moving the project to Raigad. Though protestors were able to prevent the construction of a new plant, it is questionable if they could have affected the daily operation of an existing refinery. The government would not listen to the protestors because refineries cost crores of rupees to build and being a developing country India cannot afford to waste such a large amount.

Comparison of Causes and Consequences

In India, the causes were of a lesser scale of seriousness to spark a need for decisive action. For instance in 2016 India’s carbon-dioxide emission were 1.8 metric tonnes, while the USA’s emission was 15.5 metric tonnes. Consequently, there was a greater need to lower emissions in the USA, hence a greater number of protests occurred there.

The more strict stance of the Netherland government may have caused Shell to conform to tighter laws, while as a cause of the government in the USA being more concerned with the country maintaining its ‘superpower’ status, it consequently allowed corporations to continue to dominate the oil game.

Furthermore, it is likely that protests in Netherlands achieved a larger consequence of causing Shell to diversify its root business, than protests in Nanar that consequently stopped the construction of the plant in one area but was simply relocated to another.

Course of Action

If countries focus on lowering consumption of crude oil, its demand will decrease, consequently decreasing its production. Countries must start reducing consumption by targeting the most used form of crude oil and finding alternatives, before moving onto its second most used form and so on. As a cause of around 44% of global crude oil being used as gasoline for transport, countries can consequently start by switching to alternatives of energy for transportation. In developing countries where infrastructure is an issue, the government can commence the use of hybrid vehicles which reduce the use of gasoline by working partially on electricity as well. This requires a lesser infrastructural development in terms of density of charging stations as compared to electric vehicles, which would be cost effective.

In developed countries such as the USA where the use of hybrid vehicles are more common, the government must seek to increase the density of charging stations in each state. Not only would this encourage the purchasing of hybrid vehicles due to an increase in the ease of charging the vehicle, but would also encourage the purchase of electric vehicles that are far more environmentally friendly.

Conclusion

Currently corporations are refusing to budge due to their size and lucrative profit turnovers- and are spending billions into impact-less methods such as beach-cleanups, to hush the climate conversation. It has formed a ‘climate conversation cycle’: when the protests garner too much media attention, corporations silence it by a temporary method, such as an advertisement campaign,until another protest occurs and the process repeats. Furthermore, the global demand for oil has risen by 14.4 million barrels per day between 2006 and 2017. This indicates that only a handful of corporations, such as Shell, have made the effort to diversify into other sources of energy, while others continue to increase their production of oil to meet this demand. Thus, mere awareness of the harmful effects of the oil industry has done little, except cause small hindrances to corporations when protesters take extreme measures. Since corporations continue their day-to-day operations of producing oil, I strongly believe that today’s awareness of environmental sustainability affects the day-to-day operation of the crude oil industry only to a small extent.

Reflection

Ever since my classmates had jumped onto the movement initiated by Fridays for Futures, I was convinced that the dynamics of the oil industry would change, as young children protesting captured the attention of the media. However, I was startled after a few months when everything around me simmered down and the media’s fascination changed from one thing to another. After writing this report, I realised that this was yet again another ‘climate conversation cycle’ I described above. The media backs corporations by diverting the attention of the public, thereby playing a key role in the ‘climate conversation cycle’. The situation was more to do with the politics of climate change rather than the actual issue the world faces today. I also realised it is imperative to rely on factual data and predicted statistics to see if optimistic commitments by corporations would be achievable, as well as refer to sources with multiple perspectives to avoid being entrapped in a single perspective.

Bibliography

Bureau, Our. “Indian Oil Announces New Greenfield Refinery at Nagapattinam in Tamil Nadu.” @Businessline, The Hindu BusinessLine, 29 Jan. 2021.Web. 25 Mar. 2021.

<www.thehindubusinessline.com/companies/indian-oil-announces-new-greenfield-refinery-at-nagapattinam-in-tamil-nadu/article33694556.ece>.

Chris Mooney, Brady Dennis. “U.S. Greenhouse Gas Emissions Spiked in 2018 - and It Couldn't Happen at a Worse Time.” The Washington Post, WP Company, 8 Jan. 2019. Web. 14 Feb. 2021.

<www.washingtonpost.com/national/health-science/us-greenhouse-gas-emissions-spiked-in-2018--and-it-couldnt-happen-at-a-worse-time/2019/01/07/68cff792-12d6-11e9-803c-4ef28312c8b9_story.html#:~:text=U.S.%20carbon%20dioxide%20emissions%20rose,devastating%20effects%20of%20climate%20change>.

“Climate Change: Atmospheric Carbon Dioxide: NOAA Climate.gov.” Climate Change: Atmospheric Carbon Dioxide | NOAA Climate.gov, 14 Aug. 2020. Web. 17 Mar. 2021.

<www.climate.gov/news-features/understanding-climate/climate-change-atmospheric-carbon-dioxide>.

“CO2 Emissions (Metric Tons per Capita) - India.” Data. Web. 21 Mar. 2021.

<data.worldbank.org/indicator/EN.ATM.CO2E.PC?locations=IN>.

“CO2 Emissions (Metric Tons per Capita) - United States.” Data. Web. 21 Mar. 2021.

<data.worldbank.org/indicator/EN.ATM.CO2E.PC?locations=US>.

“Company History.” Shell Global. Web. 21 Mar. 2021.

<www.shell.com/about-us/our-heritage/our-company-history.html>.

Desk, India Today Web. “Explained: Why India's Unemployment Rate Is Rising Sharply despite Economic Recovery.” India Today, India Today, 5 Jan. 2021. Web. 25 Mar. 2021.

<www.indiatoday.in/business/story/explained-why-india-s-unemployment-rate-is-rising-sharply-despite-economic-recovery-1756074-2021-01-05>.

Crumbley, Khaleef, et al. “7 Important Uses For Crude Oil And Why It Matters.” Bible Money Matters, 7 Jan. 2015. Web. 30 Oct. 2020.

<www.biblemoneymatters.com/7-important-uses-for-crude-oil-and-why-it-matters/>.

“Fact-Checking the American Petroleum Institute's New Ads Selling Natural Gas as a Climate Solution.” DeSmog. Web. 10 Jan. 2021.

<www.desmogblog.com/2019/10/16/fact-checking-american-petroleum-institute-gas-ads>.

Federal Office for Spatial Development ARE. “1987: Brundtland Report.” Bundesamt für Raumentwicklung ARE. Web. 25 Mar. 2021.

<www.are.admin.ch/are/en/home/sustainable-development/international-cooperation/2030agenda/un-_-milestones-in-sustainable-development/1987--brundtland-report.html>.

“Fridays For Future Is an International Climate Movement Active in Most Countries and Our Website Offers Information on Who We Are and What You Can Do.” Fridays For Future, 29 Jan. 2021. Web. 10 Feb. 2021.

<www.fridaysforfuture.org/>.

Holden, Emily. “How the Oil Industry Has Spent Billions to Control the Climate Change Conversation.” The Guardian, Guardian News and Media, 8 Jan. 2020. Web. 10 Oct. 2021.

<www.theguardian.com/business/2020/jan/08/oil-companies-climate-crisis-pr-spending>.

“Industry Market Research, Reports, and Statistics.” IBISWorld. Web. 21 Feb. 2021. <www.ibisworld.com/global/industry-trends/biggest-industries-by-revenue>.

Investopedia. “What Percentage of the Global Economy Is the Oil and Gas Drilling Sector?” Investopedia, Investopedia, 28 Aug. 2020. Web. 5 Oct. 2020. <www.investopedia.com/ask/answers/030915/what-percentage-global-economy-comprised-oil-gas-drilling-sector.asp#:~:text=According%20to%20market%20research%20by,operate%20oil%20and%20gas%20fields>.

Kusnetz, Nicholas. “Greenpeace Activists Avoid Felony Charges Following a Protest Near Houston's Oil Port.” Inside Climate News, 30 Nov. 2020. Web. 10 Feb. 2021.

<www.insideclimatenews.org/news/05032020/greenpeace-activists-houston-texas-oil-infrastructure>.

“Maharashtra Identifies Site for Saudi Aramco, ADNOC's Refinery.” Mint, 19 June 2019. Web. 10 Oct. 2020. <www.livemint.com/companies/news/maharashtra-identifies-site-for-saudi-aramco-adnoc-s-refinery-1560947942535.html>.

Oliphant, James. “Democrat Biden Says He Would Kill Keystone XL Pipeline.” Reuters, Thomson Reuters, 18 May 2020. Web. 3 Dec. 2020.

<www.reuters.com/article/us-usa-election-biden-keystone-idUSKBN22U2YZ>.

Reuters / Feb 27, 2021. “Indian Oil Plans $4.5 Billion Panipat Refinery Expansion by September 2024 - Times of India.” The Times of India, TOI. Web. 1 Mar. 2021.

<timesofindia.indiatimes.com/business/india-business/indian-oil-plans-4-5-billion-panipat-refinery-expansion-by-september-2024/articleshow/81245126.cms>.

“Rise for Climate: Thousands March across US to Protest Environment Crisis.” The Guardian, Guardian News and Media, 8 Sept. 2018. Web. 3 Dec. 2020.

<www.theguardian.com/environment/2018/sep/08/rise-for-climate-protests-san-francisco-new-york>.

Sönnichsen, Published by N., and Mar 22. “Global Oil Demand 2006-2021.” Statista, 22 Mar. 2021. Web. 25 Mar. 2021.

<www.statista.com/statistics/271823/daily-global-crude-oil-demand-since-2006/>.

Tiseo, Published by Ian, and Jan 8. “CO2 Emissions United States 2019.” Statista, 8 Jan. 2021. Web. 22 Jan. 2021.

<www.statista.com/statistics/183943/us-carbon-dioxide-emissions-from-1999/>.

Voices, Global. “Aramco Project: Indian Activists Fear Oil Refinery May Return, Hold Protest.” Business Standard, Business-Standard, 10 Aug. 2019. Web. 10 Jan. 2021. <www.business-standard.com/article/economy-policy/aramco-project-indian-activists-fear-oil-refin ery-may-return-hold-protest-119081000262_1.htm>.

Wagner, I. “U.S. EV Charging Stations and Charging Outlets.” Statista, 16 Feb. 2021. Web. 23 Mar. 2021. <www.statista.com/statistics/416750/number-of-electric-vehicle-charging-stations-outlets-united-states/#:~:text=In%20February%202021%2C%20the%20U.S.,plug%2Din%20electric%20vehicle%20sales>.

“'We're On It' – Industry Committed to Emissions Reductions.” Energy API. Web. 3 Jan. 2021.

<www.api.org/news-policy-and-issues/blog/2019/09/10/industry-committed-to-emissions-reductions>.

“What Is Sustainable Development?” Down To Earth. Web. 25 Mar. 2021. <www.downtoearth.org.in/classroom/what-is-sustainable-development-29774>.

Worland, Justin. “Why Fossil Fuel Companies Are Reckoning With Climate Change.” Time, Time, 16 Jan. 2020. Web. 30 Oct. 2020.

<www.time.com/5766188/shell-oil-companies-fossil-fuels-climate-change/>.

Comments (12)

  • Screenshot_20200324_165750.jpg Molly @ the BNC
    13 May 2021

    This is a brilliantly researched post victorious_tree! You mention that you think oil companies are doing small acts of good, such as beach clean ups, to hush the climate change conversation. Do you think the "build back greener" movement after the pandemic will have a positive effect on the actions oil companies take to become more sustainable?

    Reply to this comment
    1. global-conversation.png victorious_tree | Bombay International School | India
      Molly @ the BNC's comment 14 May 2021

      According to me, this year is crucial for the oil industry and could possibly be the turning point. The reason I say that is because last year mass layoffs and heightened cyclicality in employment had challenged the industry’s reputation as a reliable employer. Now, despite most countries regaining their strength and restarting their regular operations, those employees would be apprehensive of joining the oil companies back, fearing being laid off in the case of another COVID wave. This would make it hard for oil companies to conduct their operations at the same scale as pre-COVID times. Secondly, companies such as Tesla, who's stock prices have given staggering and record breaking returns to their investor during the pandemic have caught the attention of the public. If Tesla manages to stay in the limelight by accelerating their electric energy developments- investors would be ready to change their portfolio into renewable energy instead of the oil and gas stocks which had plummeted ducking the first COVID wave. Therefore, the actions of Tesla as well as the possibility of a third COVID wave are two factors that can drastically impact the odds of survival for oil and gas companies.

      Reply to this comment
  • global convo icon.png selfassured_night | Kyambogo College School | Uganda
    13 May 2021

    The oil and gas are far from being clean energy source . the extraction of nature gas also release methane , it release in small quantities than carbon dioxide .87 time more powerful in trapping heat in the earth atmosphere

    Reply to this comment
    1. global-conversation.png victorious_tree | Bombay International School | India
      selfassured_night's comment 14 May 2021

      Yes, while I agree with you that the oil and gas industry have polluting methods in terms of CO2 emission and environmental destruction, we must also understand the extent to which these two industries are intertwined with our daily lives. For instance, you and I both would struggle to have electricity, travel, or cook food using LPG- if crude oil production were to stop today. On a macro scale, large scale production of steel, goods, and FMCG products would also halt- leading to falling GDPs. Also, there are many countries where electricity is yet to make its presence in villages and are only there in urban cities. In that case, it would not be fair to begin increasing the density of charging stations for electric cars in cities - in arrival of electric vehicles- while people in villages are struggling to have their basic needs met. But yes, as you suggest that the oil and gas industry are unclean, an alternative must be found and developed in first world countries where this is financially possible. Let us support the works of Tesla that aims to do just that, and hopefully the rest of the world can be inspired and advocate the green initiative!

      Reply to this comment
  • Streatham-Wells-logo-250x250.jpg energetic_rambutan | Streatham Wells Primary School
    14 May 2021

    Selfassured_night, thank you for mentioning methan, I will make my own post about that. And excellent report victorious_tree! I love how you researched all of this! It has taught me much!

    Reply to this comment
    1. global-conversation.png victorious_tree | Bombay International School | India
      energetic_rambutan's comment 23 May 2021

      I am glad to hear that! I would love to get your opinion on the situation. Do you thing the oil industry can collapse or is it too big to fail?

      Reply to this comment
  • Cheam Common logo admirable_camel | Cheam Common Junior Academy
    20 May 2021

    That is truly a brilliant post victorious_tree. The amount of effort you have put into that is amazing. I agree that the oil industry is much too big to fail. I think that a good way to sort out both the issue of the energy crisis, and the environmental disaster is to cut down the oil companies' links to more developed countries, and to allow it to spread into less developed countries who need energy. I hope that you find this comment helpful.

    Reply to this comment
    1. global-conversation.png victorious_tree | Bombay International School | India
      admirable_camel's comment 23 May 2021

      Thank you so much! Yes, I absolutely agree to your proposed course of action

      Reply to this comment
  • Hammond School logo jazzed_beaver | Hammond Junior School C
    21 May 2021

    Wow, this is amazing!!!! It is amazing how much effort and time you have put Into this post!
    Well done

    Reply to this comment
    1. global-conversation.png victorious_tree | Bombay International School | India
      jazzed_beaver's comment 23 May 2021

      Thank you so much. I would love to het your opinion on the topic. How has the oil industry impacted your country?

      Reply to this comment
  • Ormiston Sudbury Academy methodical_lime | Ormiston Sudbury Academy
    25 May 2021

    The Netherlands currently have a target to reach 95% or 100% by the year 2050. Shell claiming to aim for 50% by the same year may show a more relaxed system of government among the USA to reach the goals of smaller countries. It is likely representative of the larger country needing more of a transition to reach the same goal as of the quantity in housing and business, though this should scale at an even amount compared to the wealth made over said smaller countries. The Netherlands aiming for 95% at worst is showing of their ability to change to more sustainable sources and their commitment to the given chance.
    I believe that more economic countries such as the USA, UK or even Canada need to take the initial actions to reach a more sustainable form of energy supply. Canada, however, already has a mere 7% of it's energy generated through coal and 15% generated through Radiation. The majority of Canada's energy is generated through Hydro power at 60%.
    We should all aspire to generate the majority of our energy in a sustainable way, with Radioactive energy being a potential "stepping stone" to reach this goal. If we simply shut off fossil fuel energy, then we won't have the structure in place to give sustainable energy immediately.

    Reply to this comment
  • global-conversation.png victorious_tree | Bombay International School | India
    29 May 2021

    Thank you for your comment. Shell is actually a British-Dutch company- being incorporated in England and being headquartered in the Netherlands. That might suggest why its emission goals aren’t as high as the Dutch benchmark of 100%, because it is part British too- and England’s goals may be a lower percentage. Hence the 50% emission cut rate of Shell could be a midpoint of the goals of both the countries.

    Reply to this comment

You must be logged in to post a comment