Managing the Tide of Green Revolution: OPEC needs to evolve to stay relevant

oil challenges

Every living thing in the universe tends to evolve in order to guarantee its own survival that includes the Covid-19 virus that has been wreaking havoc across the globe at many levels, including those of the beleaguered oil industry.

Even the virus in question, despite the absence of a ‘brain’ in the biological sense, appears to be evolving, because the latest data shows it’s not as ferocious as it was during the First Wave of the pandemic.

That means it has evolved, not necessarily in Darwinian sense, taking millions of years, for a purpose: to guarantee its survival for the next few years or even decades; it simply does not want to destroy its host, us, the human beings.

In short, it is not as 'stupid' as it has been portrayed to be, due to lack of what we have in a corresponding, anatomical sense. It holds the whole world hostage, while remaining at microscopic level, until its goal is achieved - hardly an inverse ingenuity.

In this context, there is a humble lesson to be learned for the OPEC, the organization of the oil petroleum exporting countries.

At a time when the countries that rely on oil revenues to balance their books in the presence of plummeting oil prices, more often than not, the solution that the OPEC usually coming up with, has been the enforced production cuts.

The organization has failed – or deliberately ignored – to think that the move has always been against the instincts of those who govern the countries in question, because the latter know it’s easier said than done.

Production cuts may have brought about the intended goal in the short run too – keeping the oil price stable. The strategy - if you can brand it that way - however, is clearly not working in the long run and it is there for all to see.

The OPEC must have got a rude awakening this week when the British government announced that it does not want vehicles powered by petroleum products after 2030 on the British roads, in a decade.

It’s a pretty ambitious plan and only history will tell how feasible it is. The fact of the matter, however, is that the Green ambitions are very much alive and kicking.

In the presence of these monumental challenges, the OPEC cannot afford to just focus on production cuts, something that its members reluctantly embrace, perhaps as a last resort; getting into an intense PR exercise is not the answer either. 

It must invent a visionary blue print for the future of the organization from the top that can effortlessly permeate downwards to face up to the inevitable realities. It needs folks of Steve Job’ calibre at the decision making level, if the organization that has been in existence for over 6 decades - in order to stay relevant.

Otherwise, it may well face the challenges that the old Soviet Union faced in the 80s.  There is a risk of the organization collapsing from within.

Some members of the organization, such as the UAE, are not strict conservative idealists any more.  The way they developed diplomatic ties with Israel against all odd is a classic example that progressive thinking is rife in the region as never before in the history.

These countries may not toe the line of the OPEC for ever. They may stubbornly refuse to buy the well-hackneyed ‘solution’ – the production cuts – at some point in the future.

The encouraging news is that there will still be a place for fossil fuels, even beyond the next decade, despite the dreams of Green enthusiasts; the existing alternatives have not crossed the redline to be irreversible; nor are they good enough to be serious substitutes.

I cannot imagine a world without fuel pumps – or pump attendants staring at the empty sky in utter despair – after a decade from now.

That means the OPEC still has time to come up with a grand solution – or be a part of it – for  a world where the protection of the environment and sensible use of petroleum products co-exist.

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