BP plc (ADR) (NYSE: BP) Expects Global Demand for Oil to Peak in The 2040s
BP plc’s (NYSE: BP) head of upstream operations Bernard Looney recently stated that not every barrel of oil will be drilled from the ground. According to Looney, oil is facing stiff competition from other alternative sources of energy that are deemed to be more environmentally friends as opposed to oil.
BP plc expects global oil demand to peak in the mid-2040s.
The company is focusing on natural gas production.
The company faces stiff competition from renewable energy sources.
The oil major is under significant pressure from environmental activists who believe that the increasing demand for fossil fuels globally is harmful to humanity. Many governments are implementing strict regulations that favor the use of renewable energy sources as opposed to fossil fuels, which jeopardizes the future prospects for oil majors such as BP.
However, US oil majors such as Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX) are operating in a more favorable regulatory environment as compared to BP. The Donald Trump administration has been rolling back many of the Obama-era environmental regulations that favored renewable energy sources as opposed to fossil fuels.
Shale oil production in the US is at an all-time high despite the numerus environmental hazards associated with the extraction of shale oil reserves. However, other major economies such as China and European countries including the United Kingdom are creating regulations that favor renewable energy sources.
Looney further reiterated that BP is shifting its focus to natural gas as a way of competing with renewable energy sources, while also making investments in renewable energy companies. BP recently invested in FreeWire, a company focused on car-charging solutions.
However, despite its shifting focus, BP recently made two new oil discoveries in the UK North Sea at Capercaillie and Achmelvich. The two blocks are expected to double the company’s production in the North Sea to 200,000 barrels per day by 2020.
The company is also implementing cost cutting measures with the target of operating profitably even when global crude oil prices decline to $40/bbl.
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