Gasoline prices are posted at a Mobil gas station in Candia, N.H., on April 30. The coronavirus pandemic has renewed a critical debate about just when global oil demand will peak.

Gasoline prices are posted at a Mobil gas station in Candia, N.H., on April 30. The coronavirus pandemic has renewed a critical debate about just when global oil demand will peak. / AP

Oil is facing an existential crisis.

There has never been so much uncertainty about the future of a commodity that keeps the global economic engine running.

And it's not just environmental activists calling for the end of oil: New reports out this week show the battle lines are shaping up within the industry.

On one side of the argument are those who call for a swift transition away from oil and for charting a path to a zero-emissions future within a few decades.

The influential International Energy Agency global advisory group called for urgent and unprecedented action from governments worldwide to aggressively shift away from oil and gas, keeping the most devastating effects of climate change at bay.

"Let's face it: This is a choice," said IEA Executive Director Fatih Birol during a news briefing on Tuesday. "A choice for citizens, investors, companies — but most of all for our governments around the world."

But the powerful oil cartel OPEC is betting the world's appetite for oil will continue to rise.

In a report last week, the organization was skeptical that governments will even manage to meet their current climate commitments, let alone build on them.

OPEC anticipates a future where demand for fossil fuels is sustained by the economic growth of developing countries, even as the world's richest countries try to curb their carbon emissions.

"I think OPEC and others are kind of looking around the world and saying, 'You know, how much is sizzle and how much is steak when it comes to these heroic pledges?' " said Bob McNally, founder and president of Rapidan Energy Group.

All this comes as some of the largest oil companies are slashing jobs and cutting back on oil investments as the coronavirus pandemic leads to a collapse in consumption.

Royal Dutch Shell is cutting 10% of its workforce and BP is slashing 15% of its jobs as both companies prepare for a future that's less reliant on oil.

Schlumberger, the world's largest oil-field services company, is also cutting about 21,000 jobs, citing the pandemic.

But there are stark differences in how companies see the future when energy demand inevitably recovers from the pandemic: Will the future look much like the past, or will it reflect an extraordinary transformation in how the world powers itself?

It's not a hypothetical question. Companies are shaping strategies now based on which future they predict.

Many European giants, like BP and Shell, are banking their future on a world that is shifting aggressively away from oil and gas and are vowing to invest more in renewables to profit off that transition.

Meanwhile Exxon Mobil shares OPEC's worldview and is preparing for a world where oil and gas projects are still good investments despite efforts to cut emissions.

Which prediction is correct will have huge implications — not just for the energy industry, but for the entire planet.

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