Big Oil could be hit with a wave of oil company bankruptcies
The stock market giveth and the stock market taketh away.
A new report by the auditing and consulting firm Deloitte warns that a third of publicly traded oil companies could go bankrupt this year. Auditors looked at 500 natural gas and oil production companies around the globe and found that 175 are at high risk of going under. Collectively, the companies owe more than $150 billion to creditors.
“2016 will be the year of hard decisions,” said Deloitte’s John England in a statement. “We could see [exploration and production] bankruptcies surpass Great Recession levels as companies struggle to remain solvent.”
Doesn’t sound so bad to me. Oil companies have profited off the land for far too long, at huge cost to the rest of us. Besides, transitioning away from oil and toward clean energy wouldn’t just help address this small climate change problem we’ve got going on — it could help replace the jobs lost when oil companies go bust. A 2015 report found that moving to a renewable energy economy would add a million jobs in the U.S. by 2030, two million by 2050, and would increase the GDP by $290 billion — all while growing household income.
But before you start rejoicing at the death of Big Oil, note that the reason these companies are failing is because is oil prices are so low, which isn’t exactly good for the planet. Economic evidence suggests the less you pay at the pump, the more people tend to drive, for instance, and investment in clean energy is less appealing when gas is so cheap. And even though some of the world’s largest oil producers — Chevron, Exxon Mobil, and Occidental Petroleum — reported record low earnings in 2015, those “record lows” still meant profits of $4.9 billion. They’re hardly in danger of chapter 7.
Regardless of the cause, could these mass bankruptcies be another sign that the age of Big Oil is coming to an end? Here’s hoping.