Energy Markets: Lack of Unity Leads to Turmoil

Intro

The oil crisis served as a loud prelude to the coronavirus crisis: anticipating the epidemic and the potential onset of an economic shock, OPEC countries and the U.S. entered into a battle for shrinking market shares. The resulting price war led to a demand shock, causing commodity prices to briefly turn negative. Over the past 15 years, oil company stocks have shown moderate growth compared to the S&P 500. Producers focused on increasing oil production and storage, which restrained the growth of demand for raw materials and dividends, which increased by only 2% between 2005 and 2019.

Branding in a Competitive Market

Today, the industry is entering an era of fierce competition that will require significant innovation efforts, yet fossil fuels will remain a multi-trillion-dollar industry for a long time. Many companies are being forced to rebrand as they compete for the best partners and talent.

The pandemic and the drop in oil prices have impacted investments in renewable energy, which are expected to decrease by 10% in 2020. At the same time, the destructive impact of the oil shock has drawn global attention to the challenges of the energy transition. Amid declining incentives for the shift to green energy and a slowdown in industrial production, government support for renewable energy within economic recovery measures is becoming a key factor.

Branding and M&A: Consolidation

The 2020 crisis will lead to the elimination of medium-sized players, leaving only large natural monopolies and small innovative companies with significant influence. Major industrialists will seek to capitalize on the new circumstances to become beneficiaries of the energy transition. This will inevitably trigger a wave of mergers and acquisitions, much like the 2008 global financial crisis consolidated the financial sector into a few major banks. The creation of new players in the energy sector will reshape the business landscape and give voice to their brand missions.

At Electric Brand Consultants, we have extensive experience in creating brands in the industrial, manufacturing, and other sectors. You can order rebranding by contacting our specialists