News (here and here) of the decline of the prospects for the oil industry continue with reports that some oil producers have seen the writing on the wall for their industry and are now investing in a range of renewable energy businesses. At the same time we hear that Saudi Arabia is diversifying its economy away from oil. Nevertheless Exxon, the most conservative of oil companies continues making Abbott-esque statements like cutting oil production was “not acceptable for humanity.”
We should applaud and encourage those companies that looking to change, even if it might seem a bit late and only when the economics, rather than other more communitarian considerations, became impossible to deny. We should invest our own money in them – superannuation, for instance – and require governments to do likewise.
I think it is also worthwhile reviewing our attitude to the ‘recalcitrants.’ It is easy to stand on the boundary and throw rocks but I am inclined to say that a dose of understanding of their position is worth it, not least because we are all partial complicit in its coming about.
The oil industry and its partner the auto industry must be two of the least technologically agile we have. There has not been significant change in the core technology of the auto industry – the reciprocating petrol engine – for near on 100 years. You can’t convince me viable alternatives have not been found (and probably squashed). So by and large the oil industry has not needed to change either. We know from organizational behavior in other industries that this kind of change is hard, really hard.
So, there are generations of industry culture tied up in the technology of the early 1900s and people are not going to just turn on sixpence to do it differently. Why? They are scared. Scared that they will not, as an industry or as people, survive in an environment they do not understand. But that would be to miss an important point, which is that they are also an energy industry. What they have and know very well – better I expect than many energy technology start-ups – is how to deliver energy into the user community including industry, large and small business and consumers. They know how to distribute, market, sell and how to manage customer relationships in ways that the success of the renewables sector will depend.
If we support them we will also create community relationships that celebrate courage to make positive business change. That will give a more agile energy sector a social licence of great value to them and to the community generally. That is why I think we should be investing in them, and demanding that our governments do the same.