In October of this year, just 9 weeks ago, when oil was at over $90 a barrel, Shell CEO Ben van Beurden expressed his confidence that oil would return to what he described as “very robust” pricing. He said that the oil price had been remarkably stable and that in the short term, Shell has a trading strategy to inoculate itself from the swings and “maybe even make money out of it.”
In view of the immediate subsequent slump in the oil price and the anticipated disastrous impact on Shell, he may now wish he had been less confident about the prospect of actually making money out of a downward swing.
One of his recent predecessors, Jeroen van Der Veer, made an even bigger howler some years back. On 25 January 2008, almost exactly 6 years ago, he warned Shell staff in an internal email that demand for oil and gas would outstrip supply within 7 years.
I passed the leaked email on to the newspapers and articles were duly published by The Times and the Express, which reported his warning that “After 2015, easily accessible supplies of oil and gas will no longer keep up with demand.” In other words, he predicted that we would now be facing the prospect of *”Peak Oil” – a turning point event in world history forecast long ago by a Shell geologist Marion King Hubbert.
I can only speculate that both Shell CEO’s obtained their predictions from Shell’s scenarios team, which is paid to gaze into the future.
Seems that someone needs a new crystal ball.
*”Peak Oil” is the point in time when the maximum rate of extraction of petroleum is reached, after which the rate of production is expected to enter terminal decline.