Shell wants to attract new investors by pitching itself as anything other than just an oil company.
In 2004, a mania grew in the financial and energy circles around the idea of peak oil. The notion that the world was running out of oil became a commonly held belief, which, in turn, helped push oil prices well above $100 per barrel.
Peak demand may or may come to pass—that is not the concern here. What we do know is that if the peak demand idea continues to gain popularity it will lead to a shortage of oil in the coming years and decades. The idea of peak demand threatens the global oil supply because it incentivizes and even excuses oil companies to stop exploring for and producing more oil.
But Shell is taking a major risk based on the idea of peak demand and environmentalism. Shell has decided to cut back on upstream development, the segment of the oil business devoted to finding and producing oil. Shell’s stock price results may look good now, but its decisions could lead to a major shortage of oil from Shell in the future. Oil is a business that requires long term planning, sometimes a decade or more out.
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