The political influence of Big Oil weakens as governments adopt green energy

The handshake between then-British Prime Minister Tony Blair and Muammar Gaddafi in the desert in 2007 was not the only moment when the Libyan leader strengthened ties with the old enemy. It was also a strong symbol of the role of the “Big Oil” in foreign policy.

During the same voyage, BP concluded a significant intelligence deal that concluded its efforts to encourage the UK government to re-establish ties with the late North African dictator while opening up huge hydrocarbon resources on the doorstep of Europe.

The struggle for fossil fuels has plagued geopolitics for decades, ranging from conflict’s relationship between the West and the Middle East to the North Stream 2 gas pipeline from Russia to Western Europe.

But now the relationship between the Western oil companies and their governments is changing dramatically as governments commit to getting green fossil fuels. A move that quickly came together in April when US President Biden invited him to an international meeting Climate Summit put pressure on countries to reduce emissions.

“There has always been the idea that geopolitical power is heavily linked to the availability of oil,” said Greg Pridy, a former US energy analyst. “Even in the United States, there was a late understanding from the Obama administration that large manufacturers abroad have strategic potential. But all that is changing. “

The then Prime Minister of the United Kingdom Tony Blair left for Libya with Muammar Gaddafi in 2007. The meeting was a symbol of the role of “Big Oil” in foreign policy © LEON NEAL / AFP via Getty

Last month, the shift was done with a hammer when: International Energy Agency issued a report arguing that if the world were to reduce greenhouse gas emissions to zero by 2050

Even before the report, oil companies cut back on risky investment, fearing oil consumption could peak in the next decade.

But in countries where oil leaders could once have played almost as much of an role as ambassadors in dealing with foreign leaders, their influence is waning. Critics once complained about the “revolving door” between governments and “oil groups” when officials left industry to take up positions in industry. But governments no longer want to see foreign fossil fuel companies back while pushing for a domestic agenda based on renewables, analysts say.

In the United States, the world’s largest oil producer and consumer, the Biden administration joined the Paris Agreement, canceled the Keystone XL pipeline և offered unprecedented investment in clean energy. Internationally, White House puts pressure on other countries to stop funding coal projects abroad last month The G7 countries have promised to do so by the end of this year, as he did at the Climate Summit.

“With the change of government in Washington, I think we’ve probably seen the twilight of the US government’s love affair with oil companies,” said Helima Croft, a former CIA analyst who conducts commodity research at RBC Capital Markets.

“In the past, maintaining resource availability in Washington was seen as a potential issue, but now it is less focused on energy transitions and climate change.”

But trying to make a global transition to renewables is a difficult task, observers warn.

Major oil companies say that while they were supported but never relied on their governments to help them access resources, they are welcomed in many countries.

But industry figures suggest that politicians risk losing global influence by weakening ties with domestic oil and gas companies and removing developing countries from fossil fuels. For example, the United States should use its vast hydrocarbon resources to support potential allies who might otherwise rely on countries like Russia, they say.

“At the moment, there is geopolitical competition with China for economic influence in many parts of the world,” said a former senior US national security adviser who now works for a major US oil company. “The United States has advantages with its LNG resources, but it seems less willing to use them.”

Railway workers built in China in China.  Oil groups say Western countries are unable to use their energy assets to compete economically with Beijing

Railway workers built in China in China. Oil groups say Western countries do not use their energy assets to compete economically with Beijing © Luis Tato / Bloomberg

Jason Bordoff, a former special aide to Barack Obama and director of Columbia University’s Center for Global Energy Policy, said there was still little time for global oil demand.

“The IEA roadmap was quite impressive, emphasizing what needs to be changed, but it was also surprising, saying that nothing has changed yet. “Demand for oil is still growing,” Bordoff said.

He said the role of natural resources in foreign policy would develop along with the transition to energy. The potential for batteries or the availability of hydrogen, such as alternative fuels, meant that the relationship between the “governments” of the major producers of raw materials would change rather than disappear.

“Even if all the problems of energy geopolitics were solved with hydrocarbons, the transfer of energy will undoubtedly create new ones,” he said.

After all, high-level political support cannot protect oil companies from events. Blair may have paved the way for BP, but his investments in Libya have not paid off, and the ensuing civil war in 2011 thwarted his plans. In 2018, the company sold half of its share of the exploration rights to the Italian Eni.

“There has always been an interesting relationship between the government and the big oil companies, but I have never been so sure how the impact went,” said Professor Paul Stevens, a prominent member of Chatham House.

“But with oil output. “Companies are fighting backlash. The government can not do much for them.”

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