The foundations of the oil and gas industry are under assault from all quarters. The most immediate cause is the coronavirus, of course: Global lockdowns have eviscerated demand for transportation fuel, and a global recession is applying even more pressure.
But long-term trends have been undermining the business model for years. Fracking, a method of extracting oil by injecting chemicals and liquids into underground shale formations, has essentially capped the price of oil—and profits—leaving the industry with billions of dollars in unprofitable investments. The oil and gas sector, once worth a combined $3 trillion, is now worth less than Apple.
It’s a stunning fall. Companies that once sailed on a sea of expensive oil now face an uncertain future in a diminished market for petrochemicals, plastic bags, and niche energy applications. Today, the question may not be what the future looks like for oil and gas firms. It’s if a future exists at all.