Published On: Mon, Jul 31st, 2017

The modern world still runs on oil, says HARVEY JONES

This has wreaked havoc across the sector, hitting jobs, exploration, profits, company share prices and dividends.

Crude has been driven lower by a combination of slowing economic growth in China, greater energy efficiency, the spread of renewables such as wind and solar, and the shale revolution in the US.

This has thwarted attempts by oil cartel OPEC to cut production late last year in a desperate bid to keep the profits from black gold gushing.

OPEC’s problem is that every time the oil price climbs above $50, wildcat US shale drillers turn on the taps to take advantage, adding to the glut and driving prices down again.

The oil industry has to deal with yet another threat, the political push towards electric cars across Europe, and now the UK.

Many are sceptical about Environment Secretary Michael Gove’s plans to ban all petrol and diesel vehicle sales from 2040, wondering where all the electricity is supposed to come from.

Some estimates suggest we need the equivalent of 10 new Hinckley Point C nuclear power stations to meet the demand.

However, the direction of travel is clear, especially as wind and in particular solar power become cheaper.

Nobody should write off UK majors such as BP and Royal Dutch Shell just yet: the modern world still runs on oil.

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