Tech entrepreneur Elon Musk told reporters in Norway on Aug. 29 that, while sustainable energy sources should be developed, the world must continue to extract oil and gas in order to sustain civilization.
After Musk arrived at the conference venue, he told reporters he had come "in appreciation for the support of the Norwegian people for electric vehicles" and thanked them for their "tremendous support."
He added that, at the conference, he was planning to provide "ideas for a transition to a sustainable energy world," including the possibility of expanding wind power generation in the North Sea, the body of water between the UK and Norway.
'We Need Oil and Gas'He was asked if he believes oil and gas should continue to be used.
"Realistically, we do need to use oil and gas in the short term because otherwise, civilization will crumble," Musk said. "In order for civilization to continue to function, we do need oil and gas," adding that "any reasonable person would conclude that."
Not only should oil and gas should continue to be used to keep civilization running, Musk said that further exploration "is warranted at this time."
Use of fossil fuels should continue at the same time as ongoing efforts around "accelerating the advance of sustainable energy," he added.
'Starved for Capital'U.S. oil and gas producers face a shrinking supply of capital, a hostile regulatory environment, and shortages of materials and labor that altogether present significant hurdles against new drilling.
“There’s probably a third as many banks today that are willing to provide revolvers and ABLFs to [oil and gas] service companies compared to what there would have been six years ago,” he said.
Banks and investors have been cutting back financing for new fossil fuel projects, driven by both economic and political factors.
Aside from the ESG movement, the oil and gas industry is also coming out of a period of over-investment in new fracking projects a decade ago, with many investors now looking to take a more cautious approach.
“I don’t think you’re ever going to see capital flow into this industry the way it did in 2012 through 2014,” Gallegos said.
“Investors have made it clear: ‘We’re not here to fund your growth just for growth’s sake; if we’re going to give you money, you’re going to have to demonstrate a pathway toward generating returns where we’re seeing something back as investors,’” he said.
Gasoline prices surged to record highs under President Joe Biden while U.S. crude oil production during his first year in office was 9 percent below 2019 levels and even below 2020 levels when the pandemic shock was at its worst.