Why Clean Energy Isn't Ready to Displace Oil
Giant North American midstream operator Enterprise Products Partners (NYSE: EPD) has felt the pinch of falling energy prices. Although that's been driven by the economic shutdowns used to slow the global spread of the coronavirus, it also has some energy-industry players, and clean energy advocates, suggesting that the end is nigh for oil.
But that may not happen quite as soon as some people think. Here's Enterprise Products Partners' take on the issue, which suggests oil's death is greatly exaggerated.
In early 2020 a key U.S. oil price fell below zero. There were some very specific technical reasons for that frightening drop, but for a moment energy companies were basically paying customers to take oil off their hands. The bigger-picture issue, and the reason why oil prices still remain moribund today, is that COVID-19 has led to a significant drop in demand. That's pushed the supply/demand equation in the energy sector way out of balance, with unused oil and natural gas piling up in storage. Until all of that stored material is worked off, oil prices will likely remain weak. In fact, energy prices are so low today that drillers are having a hard time remaining profitable. Many, particularly in the U.S. onshore space, have fallen into bankruptcy, including one-time giants like Chesapeake Energy.
Source Fool.com
