There are a lot of new arrivals at the low-end of the energy cost-curve – but OPEC may yet adapt.
US shale and global solar / wind energy technologies are now competing strongly with the traditional oil and gas industry: these new technologies continue to grow in size and their costs are declining quickly due to scalability and learning effects.
The new players are also dispersed, decentralized and respond to market forces and pricing rather than any coordinated policies
This intense competition will force OPEC and other major national oil companies to rapidly change to compete on price rather than cost-plus market control.
A surprising outcome of this may be that OPEC along with the new energy technologies emerge as the dual winners of the energy transition.
Polar opposites in many respects, these two blocs have similarities in terms of self-organised decision-making, technological scalability and vast reservoirs of energy to rely on.
These are qualities that international energy companies, for all their financial and engineering heft, chronically lack – as likely losers, they will need to quickly develop exit and harvesting strategies.
Although unwelcome news inside the offices of many international oil firms, this is likely a good result for global energy consumers, and potentially a stable political outcome as both winners adjust to the new energy reality.