Big oil might really see a decade of change in one year

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When the industry is in secular decline, recessions accelerate trends.

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A common phrase that has become received business wisdom in this pandemic crisis is that 10 years of change will happen in one year.

Some of the early returns on this are mixed.

Shares of Zoom (ZM), for instance, have gone up a lot as people do more video calls. Amazon (AMZN) and Netflix (NFLX) shares have outperformed amid increasing demand for at-home deliveries and at-home entertainment.

But not all changes forced upon us because of shelter-at-home policies and concerns about public health seem likely to stick around.

Working from home, for example, is fine for a bit. And indeed, some tech companies like Twitter (TWTR) will give employees the option to work from home on a permanent basis. Other tech leaders including Google (GOOGL) CEO Sundar Pichai, however, have expressed some skepticism that distributed workforces will be the rule instead of the exception in the future.

And with the arrival of summer and broad state reopenings in the U.S., we see consumers returning to restaurantscasinos, and traveling. In recent weeks, airline, casino, and cruise stocks have rebounded sharply as investors cast doubt on the idea that our post-COVID future will look nothing like the past. And this coming despite the virus still spreading at a faster rate in several states.

But for industries already in the midst of secular upheavals, the coronavirus pandemic does indeed seem to be an accelerant for permanent change in the way that pundits predicted.

Few industries entered like the 2020s facing a decade of transformational change quite like big oil.

And the industry’s pandemic response has indeed been swift and large-scale.

On Monday, BP (BP) said that it would lay off 15% of its workforce, or about 10,000 of its 70,100 employees, according to Reuters.

Reuters added that BP CEO Bernard Looney told staff, “It was always part of the plan to make BP a leaner, faster-moving and lower-carbon company.” A BP spokesman added that the pandemic “amplified and accelerated” BP’s transition plans, according to Reuters.

Other companies in the energy space including Chevron (CVX) and Royal Dutch Shell (RDS-A) among others have also announced planned reductions in their workforce.

Goldman Sachs strategists highlighted commentary from Schlumberger’s (SLB) earnings call in a report last month after management told analysts that, “we have accelerated our remote operation and automation of some of our operations. In the month of March, we had more than 60%, 6-0, 60% of our drilling [operations]…that were using remote operation.”

Because while the price of oil has rebounded over the last six weeks following the unprecedented move into negative territory in April, the industry is still facing a future in which demand for oil will be lower while demands for reducing negative climate impacts will be higher.

The rally in stocks like Nikola (NKLA) and Tesla (TSLA) — while certainly part of a mania sweeping through the retail segment of the market — can also be seen as part of a future in which the shift to clean energy is less talk and more action.

And a future that may indeed bring a decade’s worth of changes to big oil in the next year alone.

This article was originally posted on finance.yahoo.com/news/.

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