From debating moral dilemmas to confronting their harmful impacts, oil never ceases to become irrelevant in modern discussion. But, with the onset of electric vehicles and other more sustainable, energy-efficient initiatives rising, one must wonder if crude oil is nearing its peak in utility.

Recent reports concerning the financial performance of industry leaders do not paint the same picture being shown by political leaders in our nation, who have scrutinized the resource and input policies to slowly cut out its use. Oil industry leaders such as Exxon-Mobil ($XOM) and Chevron ($CVX) have posted profits only second to tech giants like Apple ($AAPL) and Microsoft ($MSFT), according to earlier reports this month from the Wall Street Journal. Many large oil producers have proven that they can continue to be major players in the energy industry.

The primary concern regarding these powerhouses revolves around a growing negative sentiment against the use of oil. Major political figures, including President Joe Biden, are clearly in favor of seeking alternative sources of energy.  

Laws have been introduced to deduct tax liability from those who choose to purchase an electric vehicle. As a result, recent efforts have included both Exxon Mobile and Chevron showering their shareholders with record dividend distributions.  

Despite poor sentiments, these companies remain confident in their ability to corner the market. They have made massive investments in low-carbon tech and algae biofuels to diversify their risks and products.  

Aram Balagyozyan, associate professor of economics at the University of Scranton’s Kania School of Management, provided his professional insight regarding the state of the oil markets.  

Society will not “remain heavily reliant on fossil fuels for much longer,” Balagyozyan said. Many existing oil and energy companies “have significantly stepped up their investments in renewable energy.”

A growing negative sentiment toward the use of oil has led many to question why the price of oil remains relatively high. In attempts to artificially inflate the price of the barrel, aggressive input from international regulators, including OPEC+, has resulted in production cuts, which have failed to soften the blow that the industry has experienced.  

In 2024, production of crude oil barrels is expected to drop to 170,000 barrels per day, a far cry from the million-a-day increase experienced in 2023, according to a Reuters article published earlier this month. Market analysts now project prices to fall between the $80-$85 range—down 29% from $120 per barrel at the end of 2022—padded only by cuts in American oil production.

As production levels inevitably rise, there is a growing curiosity about whether oil is genuinely becoming outdated as a fuel, or if the enthusiasm for alternative energy sources is not justified. For the moment, major investments in green technologies alone have not been significant enough to be massively disruptive, Balagyozyan said.

In general, the outlook for the oil industry is uncertain. With recent political sentiment encouraging the prevalence of alternative fuel sources, questions regarding the use of oil—a centerfold commodity for decades—remain.

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