2011: Now Trending in Energy
07 January 2011
In the US, the three most significant forces that will shape the energy sector in the coming year are the economy, the new political order in Washington, DC, and the fallout following the BP oil spill.
There is a direct correlation between the economy (US and global) and energy demand. While the US economy may remain stagnant, growth in Asia – particularly China – translates into greater energy demand and a related rise in oil prices. Should the economy continue to stagnate, energy demand will remain flat as well. But if the economy begins to accelerate, we should see a growth in demand for all forms of energy–oil, gas, electricity, etc., and an associated rise in their cost.
Despite public enthusiasm around renewables and biofuels, these subsectors should be challenged in the coming year as the resurgent Republican party in Washington will show less enthusiasm for the tax incentives and subsidies that have historically supported the development of these emerging technologies.
And finally, the BP spill, and to a lesser degree the pipeline incidents involving Enbridge and PG&E, will lead to greater political and regulatory scrutiny–even with a divided Congress.
From a communications and reputation standpoint, energy companies will need to focus on two priorities in 2011: demonstrating their value to quality of life, the economy and the environment; and convincing consumers, voters and policymakers they deserve their trust. This will be particularly true for oil and gas companies, but will also apply to the rest of the sector.
Meanwhile, for all companies in the extractive industries (oil, gas and coal), safety will become a strategic message.
While still important, the debate over climate change will take a back seat to the more acute debates over deepwater exploration, oil sands development, the recovery of shale gas through hydraulic fracturing, and the siting and safety of pipelines.
Developers of renewable energy projects (notably wind and solar), will also be challenged by the NIMBY (Not In My Backyard) syndrome, as communities may push back on the siting of projects, as well as with their cost.