Shell declares an end to cheap oil

Despite recent defections of two other oil majors, Royal Dutch Shell PLC has opted to stay in an influential lobbying group that has focused on shaping climate-change legislation, Chief Executive Officer Peter Voser said.

Mr. Voser, speaking Thursday at the Wall Street Journal’s ECO:nomics conference in Santa Barbara, Calif., was asked why Shell remained in the three-year-old U.S. Climate Action Partnership (USCAP) after two of its peers, BP PLC and ConocoPhillips, pulled out last month. The partnership is a broad business-environmental coalition that had been instrumental in building support in Washington for capping emissions of greenhouse gases, and the defections came amid growing debate over climate change.

“We feel we can actually do more being inside USCAP to achieve the right outcome,” Mr. Voser said.

But Mr. Voser agreed with a growing number of skeptics who don’t believe a climate change bill will be passed on Capital Hill this year. Asked how much money he would put betting on such an outcome, the CEO smiled wanly and said: “I think I can spend my money somewhere else.” Earlier at the conference, Michael Morris, chairman, president and CEO of utility giant American Electric Power, had pegged the chances of a climate bill’s passage in 2010 as “less than 50%.”

“The timing will be longer than we expected, but we will do our part” in influencing the bill, Mr. Voser said. He added Shell favors a market-based system of controlling carbon emissions, and that “I would like to have a marketplace that works on a global scale.” Mr. Voser said he believed eventually there would be carbon legislation in the U.S. and many other parts of the world, despite the failure of the Copenhagen climate talks to achieve a consensus.

“I think this is a journey,” Mr. Voser said. “We need more time.”

When asked about the theory of “peak” oil in the world and whether that theory was now dead, Mr. Voser said “I think what is dead is cheap oil.”

You need more technology, innovation and will find oil further away from markets, Mr. Voser said. More will be spent to get oil and consumers will pay, both for oil and gas.

Mr. Voser also said oil price volatility is here to stay. More money is flowing into commodities and there are more players in the market.

Shell, meanwhile, has been moving to become more of a natural gas supplier and continues to invest in alternative energies like biofuels, he said. With global energy demand expected to double by 2050, Mr. Voser said the world will need many sources of fuel, including oil. He predicted electricity would be needed to power 40% of  the world’s automobile fleet by 2050, when he predicted it would double to two billion vehicles from one billion.

From the Wall Street Journal
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