Successful energy companies in the years to come will be the ones that meet consumers’ needs — not necessarily those that produce the most oil and natural gas or electricity, a leading industry consultant said last week.
Joseph Stanislaw, who co-founded Cambridge Energy Research Associates in 1983, now heads The JAStanislaw Group LLC, and he is an independent senior adviser to Deloitte’s Energy & Resources Group. Speaking to the 2007 Deloitte Oil & Gas Conference in Houston, Stanislaw said governments and producers are moving quickly to answer the call for more energy — and changing to meet the consumers’ needs.
“There’s an old saying in the energy business: ‘The stone age did not end because the world ran out of stones, and the oil age will not end because the world runs out of oil,'” he said. “Never has this rung more true than today…History might remember 2007 as the year we established a new energy horizon. We can now imagine what the world might look like after oil, in two generations.
“We can now envision living in a world of dramatically changed consumption patterns, in which new end-use technologies are powered predominately by alternative sources: more efficient cars that run on low-carbon electricity, green buildings, a bias for local production, utilities that profit by saving energy rather than selling it. And instead of seeing our energy future with fear and trepidation, we are beginning to perceive this new world as one that is full of promise, and a potential engine for economic growth.”
Energy issues have gone mainstream because of their effects “on our wallets, on foreign policy, the environment and climate change…Conservation isn’t sacrifice, it’s opportunity. The amount of investment that will be made in the coming decades in these areas will be enormous.”
Conventional oil and gas will be needed for decades, but there is now a worldwide perception by consumers that long-term changes are needed, Stanislaw noted. Energy consumers “are, in effect, on the frontier of discovering new energy reserves, since energy not used is arguably the best, cheapest and least environmentally damaging source of supply.”
What triggered the change in perspective? Stanislaw pointed to Hurricane Katrina, which stormed through the Gulf of Mexico in the summer of 2005. It may have been a wrong perception, but Stanislaw said many people viewed Katrina as the product of world climate gone wrong. The ensuing disruption to U.S. oil and gas capacity and production following Katrina was a shock to a lot of people, he said.
Cementing that perception about world climate were reports issued by the United Nations’ Intergovernmental Panel on Climate Change, the unexpected success of “Al Gore’s hyperventilating An Inconvenient Truth,” foreign governments’ use of energy as foreign policy tools and the rising costs of the war in Iraq.
“The convergence of concerns about climate change and energy security over the past two years has allowed us to cross the threshold of awareness,” Stanislaw said. “For the first time in history, citizens around the world believe that they as individuals can make a difference — through their own actions — in confronting a global crisis.”
Many people don’t subscribe to the notion of man made climate change, but more individuals appear willing to change their behavior when they connect climate change to energy security, Stainslaw said.
“If you address climate change and energy security, then you’re addressing…poverty, you’re addressing development, sanitation, clean water, you just go down the list.” He aid individuals seem to sense that changing their habits may have more meaning than saving a few dollars, for example, by purchasing more fuel-efficient vehicles or turning down their thermostats.
“This is really the first time in history that every single individual makes a difference,” Stanislaw said. “People are saying they’re prepared to, but they’re asking, ‘Help me to do it, help me find those products with the lowest carbon footprint.'”
A lot of companies are entering the climate change market, and some will make a difference, he said.
“We’re fortunate that people are getting caught up in the heady stuff, that there’s a willingness to rush in,” Stanislaw said. “There’s a tendency to become complacent once you recognize a problem.” There are “so many entrepreneurs chasing so many different ideas, thinking they will be the next saint…There will be a lot of losers in that, but there will be some big winners, too.”
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