The coal industry crashed, but before it fell, companies didn't heed the warnings from nonprofit reports that the industry would most likely decline. But now, the same reports are saying that oil could be next, according to Fast Company writer Adele Peters.
"One of the biggest drivers right now is the potential for decreasing demand," says Danielle Fugere, president and chief counsel of As You Sow, the nonprofit that wrote both reports. "And that's driven by climate change… We're in a de-carbonizing economy. That's one of the flags for companies—are they adjusting to that?"
U.S. oil economies have taken on debt to invest in practices such as deep water drilling. But now 90% of proved reserves are run by countries like Saudi Arabia, China, Russia, and Iran, all of which have national companies bigger than Exxon or Shell.
"I want to make sure that people aren't reading our report to say that the oil industry will be gone in five years," says Fugere. "That's not what we're saying. Our goal is to help policymakers, investors, the public, oil companies, understand that changes have to be made, and they have to be made quickly." Investors should be asking oil companies for analyses of risk, says Fugere, and then asking how the companies plan to adapt and change over the next five, 10, and 20 years.
What will an oil crash mean for housing markets, like Texas, where the economy is largely dependent on the oil industry?