The Rise and Fall of the Fossil Fuel Industry

2021 has shaped up to be rather a surprising year for the fossil fuel industry. After the sudden quarantine of vast swaths of the world through 2020, the shuttering of businesses, and the general loss of revenue, large fossil fuel giants are getting hammered from citizens, government, and even their own investors.

The world has been powered by these companies for centuries, and for a long time have seemed untouchable. Fossil fuels seem so necessary for our day to day lives, and so flush with cash, that standing up to them did not seem possible.

To understand why fossil fuels are in decline now, it’s worthwhile to see where they came from, and how they rose to the position of power they are in today.

Before there were fossil fuel companies

Civilization rose up long before fossil fuel was a popular source of energy. People still harnessed power, through the strength of animals, water, and wind. All of humankind’s energy needs, through one method or another, were defined by the ability of nature to create.

To generate heat, people depended on wood they got from the forest. In order for horses to pull loads for people, they had to be fed through grains, hays, and grasses grown through photosynthesis. Eventually, all forms of energy used by humans depended on sunlight in some way.

Just before the industrial revolution, busy cities hosted as many as 50,000 horses as well as their human counterparts. Far from being healthy, this situation lead to vast amounts of poorly disposed of poop, that went on to spread disease.

This all changed in 1698 when the first steam engine was built. While rudimentary, this paved the way for steam pumps, and eventually more advanced steam engines to be built. In 1800 when the Boulton and Watt patent for a steam engine ran out, new engines advanced the usefulness of coal powered steam.

Coal power reduced the need for horses, and greatly improved sanitation. Railroad systems that spanned across Europe made travel easier, and improved commerce. Knowledge of these machines quickly spread.

Soon, steam powered engines were helping countries prosper. France, Germany, Switzerland, and eventually the USA all quickly adopted plans for railways and factories. Coal helped them to achieve more than anyone could have done before, because it was a reliable source of stored energy that allowed humans to do more than the original confines of the sun allowed.

The Height of Fossil Fuels

Industrialization allowed for rapid growth of the human population. In 1700, the population was just 670 million. 300 years later, the population has grown to over 7 billion. Fossil fuels provided many benefits. They allowed for reliable heating and eventually cooling, easy and fast transportation, and allowed for the growth of the economy.

Oil farther pushed the ability of countries to grow, and to improve the lives of everyday citizens. Although oil is less common than coal, but nearly twice as energy dense. It allowed for more refined use of energy and helped push us to where we are today.

With the help of many inventors along the way, from Michael Faraday to Edison, modern electricity changed the lives of humans once again. Modern electricity as we know it became part of our culture, and the bulk of fossil fuel use went from direct use in machinery, to a stable source of energy for creating electricity.

The first nail in the coffin

Fossil fuels were a miraculous invention that greatly improved the lives of everyday people, and it’s safe to say most people were not aware of the down sides of fossil fuel use until over a century of fossil fuel burning later.

Thanks to fossil fuels, fewer horses were needed, which meant less fesces building up around towns and cities. It also meant more reliable heat sources, lighting, travel, and commerce. Yet as early as 1883, scientists were beginning to connect burning of coal with a warming climate.

In an article published in 1912, the discussion of greenhouse gasses and their effects on the environment could be mistaken for something from 2012. Yet for the most part, life continued as normal until 1972.

At this time, ExxonMobil, a fossil fuel company, was largely seen as a pioneer in climate change research. They invested huge amounts of money into studies investigating climate change and possible causes. By 1977, they had an answer.

James Black, the lead scientist heading their research, sent Exxon a sobering message. “In the first place, there is general scientific agreement that the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels.”

It’s perhaps not surprising that ExxonMobil chose not release this information. At the time, the world was being heavily pushed to think the world was cooling, and Black’s information flew in the face of that. It’s possible that they didn’t know for certain—yet, anyway.

A swiftly warming planet

Over the next few decades, more evidence began to pile up. In 1999, Michael E. Mann, Raymond Bradley, and Malcom Hughes created a damning graph showing the unnatural spike in global temperatures.

The evidence for the graph included a variety of different methods, including tree rings and ice cores, to help go back as far as possible. While skeptics went crazy trying to disprove it, especially claiming it did not go back as far as another unusually warm period during the middle ages, the graph did cause public pressure on fossil fuel companies to start making changes.

More nails for the coffin

Although scientists and environmentalists had been calling for rapid decarbonization for some time, the fossil fuel industry managed to avoid any serious damage until 2019. Even the Paris Climate agreement, which is designed to help stop dangerous levels of manmade climate change, didn’t put a dent in the fossil fuel industry, due to careful wording that didn’t explicitly mention them. It wasn’t government action that put the brakes on the industry, but Covid-19.

In late 2019, Covid-19 began infecting people in Wuhan, China. The disease quickly spread throughout the world, causing lengthy lockdowns around the globe. Factories shut, businesses closed, people stopped driving, and the demand for oil abruptly dropped off.

By April of 2020, oil futures were trading below $0 per barrel. This would be only the first of many setbacks for oil companies. As the year wore on oil companies would report huge losses, some for the first time in over a decade.

These setbacks were just the beginning. In May into June 2021, three environmental activists from Engine No. 1 won seats on the board of Exxon, despite efforts to stop them. They did so by winning support from pension funds and other large shareholders.

Other companies would also get rebuked, with Royal Dutch Shell receiving a court order to decarbonize faster, and Chevron receiving shareholder demands to act on climate change.

Finally, after protests and repeated stops and starts, the Keystone pipeline designed to pump oil down from Canada was canceled by the company trying to push it through.

This is by no means an exhaustive list—in the last year many major investors have divested from fossil fuels, and more are being pressured to do so.

Too soon for the final blow?

One way or another, big oil is going to change. How quickly, and in what direction, still remains to be seen. NPR speculates that big oil has one of three choices—a gradual decline, a rapid collapse, or a pivot to sustainability.

At this point, most European fossil fuel companies are looking towards renewables, while American companies are looking toward carbon capture.

There’s no doubt that big oil will have to change, the question is will it be in time. As of now, the price of oil has rallied, even as an oil spill pools on the west coast of the USA. Even so, many people are defunding fossil fuel companies, moving to clean energy, and saying no without government intervention.