Why Would an Oil Company Want More Limits on Gas-Powered Cars?

The story

The CEO of Shell, one of the world’s biggest oil companies, wants the United Kingdom to ban internal-combustion vehicles even sooner than the country’s current commitment of 2040.

Ben Van Beurden, Shell’s CEO, also recently said that his next car will be electric, while his company and rival BP have been buying up electric vehicle charging assets.

Why on earth?

Van Beurden explained that a more ambitious target would bring clarity, change consumer attitudes, and make it easier for Shell to make investment decisions going forward.

He’s talking about global efforts to reduce greenhouse gas emissions, the driving force behind climate change. The topic has been an important factor in some of Shell’s recent decisions.

The company announced last year that it was selling a $7.25 billion stake in Canada’s oil sands in order to double down on businesses “where we have global scale and competitive advantage.”

An expansive report in Fortune offered the following details regarding Shell’s strategic pivot:

“Internal studies by a group of analysts within Shell known as the ‘scenarios’ team had concluded that global demand for oil might peak in as little as a decade—essentially tomorrow in an industry that plans in quarter-century increments. Hastening the peak was an onslaught of increasingly competitive fossil-fuel alternatives, from solar and wind power to electric cars, whose prices were dropping far faster than Shell executives had expected. When the oil-demand peak came, Shell believed, petroleum prices might begin a slow slide, dipping too low to cover the costs of oil-sands production.”

By contrast, the U.S. is currently poised to relax vehicle emissions standards, and is slated to withdraw from the Paris climate agreement that provides a global framework for reducing greenhouse gas emissions.

What do you think?

Is Shell seeing the writing on the wall, and should the U.S. follow suit and take stronger action to reduce greenhouse gas emissions? Or is this just corporate posturing that shouldn't impact U.S. policies aimed at easing such rules? Hit Take Action to tell your reps what you think, then share your thoughts below.

—Sara E. Murphy

(Photo Credit: Plug'n Drive via Flickr / Creative Commons)