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Cheap Oil Muddles Energy Transition

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Oil prices are expected to rise again.
  • Why it matters

    Why it matters

    Germany shouldn’t be sidetracked by oil-price developments in its push to renewable energies.

  • Facts

    Facts

    • GE operates 2,000 thermal power plants in Germany.
    • Electricity generation accounts for one-fourth of overall energy consumption in the country.
    • The global demand for energy will double by 2050.
  • Audio

    Audio

  • Pdf

General Electric, which builds energy plants, and Shell, the energy and petrochemicals group, want to earn money from Germany’s transition to renewable energies and intelligent distribution. Stephan Reimelt, the chief executive of GE Europe, and Peter Blauwhoff, the head of Shell Deutschland Oil, explain why that is easier said than done.

Handelsblatt: Mr. Blauwhoff, the price of oil was still $110 (€104) a barrel a year ago, then it fell to under $50 per barrel, rising up to $60 at the beginning of the year, only to collapse again. What should consumers expect next?

Mr. Blauwhoff: That’s the million-dollar question. If you look at the fundamental data, the price of oil must go up again.

Why?

Blauwhoff: In recent years, demand rose by about one million barrels per day each year – even during difficult economic times – to a 91 million recently. At the same time, the capacity of developed reserves decreased by four or five million barrels per day. The gap that had to be closed with the exploration of new fields amounts to five to six million barrels per day.

But with the current low oil prices, won’t corresponding investments stop?

Mr. Blauwhoff: As our CEO recently said, we are taking a cautious approach, but will be careful not to overreact.

But will we soon see prices above $100 again?

Mr. Blauwhoff: I can only repeat myself here. We expect that the price of oil will increase again in the long term. How quickly that will happen is difficult to say.

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