Oil major BP's recent decision to exit trade groups American Fuel Petrochemical Manufacturers, Western Energy Alliance, and Western States Petroleum Association demonstrates how oil companies are responding to a growing public desire to increase sustainability. BP, along with Spain's Repsol, has pledged to be carbon neutral by 2050. Shell is aiming to halve its carbon emissions by the same year. This trend will place pressure on refining companies to adapt the energy transition as more stringent fuel specifications will force refineries to become more complex or face closure. Additionally, demand for fuels such as diesel and gasoline will be threatened by increased EV uptake, biofuel use, etc. In fact, ClearView Energy Partners's Managing Director Jacques Rousseau believes that many refineries will likely be forced to close due to low profitability. Oil and Gas Senior Director Andrew Logan at Ceres Investor Network believes that despite projections for increased energy demand, oil demand may slow, which will force companies to reconsider how to invest capital. Logan believes that long-term investments, such as offshore projects and oilsands, will be less favorable compared to shorter-lived assets. For example, shale drilling will provide more flexibility to response to changing demand compared to other projects, such as Arctic drilling.
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