A total of 62 million households are expected to use off-grid solar energy in 2018. What kind of impact will this have on the oil and gas industry? The U.S. oil and gas industry performed well throughout 2017 and analysts are optimistic regarding prices and production for 2018. The crude oil price has been stable at around $50 a barrel for most of 2017. This price should slightly increase to $52 a barrel for 2018. Gas prices are projected to go down.
Oil and gas production will also increase due to regulations and demand. The production of crude oil should increase by 906,000 barrels a day throughout 2018, and the production of natural gas will grow by 5.14 billion cubic feet per day during the year.
The Limited Impact Of Off-Grid Energy
In spite of its increasing popularity, off-grid energy won’t have much of an impact on the oil and gas industry. The price and availability of off-grid energy have an impact on electricity production, but this doesn’t translate into a negative impact for the oil and gas industry.
Crude oil is largely unaffected by electricity prices since only 1 percent of electricity is produced from crude oil in the U.S. and only 5 percent of all electricity around the globe is made from crude oil.
It is possible that off-grid energy could have a negative impact on the gas industry and contribute to driving prices down since 27 percent of electricity consumed in the U.S. comes from gas. An affordable and convenient source of off-grid power represents an alternative to electricity produced with natural gas.
However, the impact of renewable energies and off-grid power are fairly limited due to the size of the oil and gas industry and to the fact that these companies are actively investing in renewable energies. Between 2000 and 2010, major oil and gas companies invested a total of $9 billion in clean energies. And even though some homeowners are completely off the grid, a lot of households adopt solar power but keep relying on their local utility company to store the power they generate and get an energy credit instead of having to invest in an expensive battery system.
A Stronger Impact Is Felt When It Comes To Investments And Government Subsidies
Renewable energies have a negative impact on the oil and gas industry in some countries where subsidies and tax advantages make clean energies more competitive. Legislation is also changing to favor clean energies while the oil and gas industry has to conform to more regulations.
It is also interesting to note that major oil and gas companies are losing revenues from investors who prefer renewable energies. Investing in clean energy stocks is often seen as more ethical. Some investors choose to purchase clean energy stocks to diversify their portfolio while others replace more traditional investments on the oil and gas market with renewable energy investments since this sector is growing at a faster pace compared to the slow but steady growth of major oil and gas companies.
Off-grid energy has a limited impact on oil and gas prices and production since these resources are used by different markets. However, renewable energies are negatively affecting the oil and gas industry when it is competing for government subsidies and investors’ money.