Oil executives say demand will rise, despite emphasis on renewables

FILE PHOTO: A view shows railroad freight cars, including oil tanks, in Omsk, Russia May 1, 2020. Picture taken May 1, 2020. REUTERS/Alexey Malgavko

NEW YORK (Reuters) – Oil demand is expected to rise over the next decade and the fossil fuel will remain to be a crucial part of the energy mix, even as renewables draw increasing attention, Hess Corp Chief Executive John Hess said at CERAWeek on Monday.

At the biggest gathering of top energy leaders, investors and politicians from around the globe, climate change and renewable fuels are taking center stage this year with oil companies trying to reorient their portfolios as the fossil fuel industry reels from the coronavirus pandemic, which destroyed fuel demand and caused the loss of thousands of jobs.

“We don’t think peak oil is around the corner – we see oil demand growing for the next 10 years,” Hess said. “We’re not investing enough to grow oil and gas in the future,” he said, explaining that prices would need to rise to support that investment.

While demand is likely to recover sharply after the pandemic, supply is going to be slower to resume, he said, as shale producers, in particular, operate conservatively to meet shareholder’s needs.

“I’m proud of being an oil and gas person,” said Repsol CEO Josu Jon Imaz. “We are going to need oil and gas in the coming years.”

An emphasis on renewable investment could trigger an oil price spike, said Maynard Holt, CEO of investment bank Tudor, Pickering, Holt & Co, speaking on a panel.

“The possibility that the world pulls a California is really high: you take the ball off of affordability and reliability and have a crunch,” Holt said, referring to California’s electricity crisis and shortage from 2000 to 2001.

Reporting By Jessica Resnick-Ault; Editing by Chizu Nomiyama and Marguerita Choy

source: reuters.com