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What Does the Future Hold for Oil and Gas?

Since plunging in 2014, oil prices have rebounded to trade at a level that industry experts would call, a fair price. However, despite the continued growth in global demand for liquid fuels, the long-term future continues to look bleak with prices expected to fall further. Even the depletion of oil reserves across the globe won’t be able to boost oil prices in the long-term because as highly expected, renewable energy sources will have taken over.

But is the journey to the day we are completely able to sustain global economies with green energy a smooth sail? Hardly, in fact, global economies will continue to rely on fossil fuels for decades because, despite the rapid growth of renewable energy, there are still very firm growth catalysts for the oil and gas market.

Why oil and gas industry will thrive for decades to come

The oil and gas market is one of the few markets that have the luxury of not being affected by the price elasticity of demand. In other words, as long as the global population continues to grow, demand will continue to increase regardless of how high the price of oil is. This leads to the first major growth catalyst for the oil and gas market.

Increasing demand for oil and gas: In countries like India, there are only about 4 cars per every 100 people, according to an article published on Forbes. The ratio is even lower in several developing countries. And with a rapid shift from low-to-middle class in terms of living standards in the emerging markets, there is a significant chunk of the population that will be pushing to own a car within the next few years. This will only drive the demand for oil and gas higher, given the limited supply of electric vehicles globally.

Untapped oil and gas resources: While it is true that the global oil and gas deposits will eventually get depleted, there are several reserves spread across the world that are yet to be utilized. Some of these reserves reside in developing countries that have been constrained due to the lack of economic and technological means to explore and drill oil for export. This means that even as some of the world’s leading oil and gas producers run siphon their wells dry, the emerging market will be ready to take over for decades to come.

Adoption of new technologies: Technological advances have made it possible for companies to explore, and drill oil more feasibly and quicker. Cutting down the cost of oil production is one of the primary factors that will drive growth in the market because companies will now be able to research new markets for exploration, while at the same time maintaining healthy bottom lines for their shareholders. Now, we are seeing companies taking a more aggressive approach to offshore drilling, which has further widened the production capacities of several companies.

Enter Blockchain: The emergence of blockchain is seen as a crucial accessory for companies looking to streamline their data analytics units, while at the same time harmonizing trade between oil producers and equipment manufacturers, as well as, in the downstream energy market. By embracing blockchain technology, companies will be able to “reduce the risk of fraud, error, and invalid transactions in energy trading, make financial transactions more efficient, facilitate regulatory reporting requirements, and enable interoperability,” reports Offshore Technology.

The impact of blockchain technology has revolutionized many markets. And from the perspective of oil and gas, it is already making significant changes in one of the most crucial arms of the market. In the commodities markets, countries like Venezuela have already launched their blockchain based cryptocurrencies “Petro Coin”  in a bid to stimulating economic growth while nearly every crude oil broker is adapting their crude oil trading platforms to blockchain technology. As such, trading crude oil both in the mainstream, commodities and in the CFDs markets are becoming more efficient, decentralized and secure. This provides enhanced access to the oil and gas market, either directly or indirectly thereby continuously boosting its popularity.

Conclusion

In summary, the oil and gas market continues to thrive despite the growing popularity of renewable energy. While the campaign against climate change will continue to challenge the long-term future of oil and gas, it will be several decades before green energy finally takes over from fossil fuels.

As such, the future of oil and gas promises continued growth with emerging technologies playing a crucial role while the global population growth and the rise of the middle-class will continue to drive demand.

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