The oil and gas industry is facing its “last cycle,” according to consultancy Ernst & Young.

What does that mean? It’s a “time when energy abundance, driven by technology, creates a permanent oversupply that not only keeps prices low but also allows consumers to make new choices about their energy usage.”

In this new world, consumer perceptions are critical, writes E&Y in a new report. While most Americans still see fossil fuels playing an important role for decades to come, only about one in three trust the fossil industry — and the younger the generation, the higher the distrust of the industry.

Those are some of the top-level findings laid out in the report, the first in a series to explore U.S. consumer attitudes toward the oil and gas industries. It’s based on polling of consumers of all ages, as well as oil and gas executives, starting in early 2017. And like its subject, the findings are filled with seeming contradictions.

About four-fifths of adults and three out of four teenagers say the fossil industry is important to the national economy, for example. But only 37 percent of adults and 33 percent of teens “trust the industry to do the right thing.”

And not surprisingly, few people want oil and gas industries to set up shop in their neighborhoods or communities.

“Energy’s perception rating is respectable but precarious. Its value to consumers is based largely on necessity, a weak attribute for long-term appreciation and support,” the report noted. And “overall, consumers believe the industry is good for society, though they still see it as a problem causer, not a problem solver.”

About 40 percent of consumers ranked their perception of the oil and gas industries as positive versus negative, which is about the same ratings received by the health care industry, and better than those for investment bankers or pharmaceutical companies. Public perception is better than most oil and gas executives believe, the report noted.

Still, the industry and the public disconnect in other areas.

For example, consumers have a much more positive view of natural gas than of oil, nuclear power or coal, the report found — a likely result of the industry’s “success leaning heavily on technology to reframe perception, especially with the advent of the North American shale revolution.”

But only 8 percent of respondents “think of natural gas first when they think of the energy industry,” the report noted, compared to 18 percent who first think of oil, and 40 percent who think of power plants.

So what form of energy do Americans see most favorably? The answer — by a long shot — is renewables. Nearly 80 percent of respondents in all generations said they have a positive perception of renewable energy.

There are important distinctions between adults and teens in their respective views of the energy industry’s future role, although these are also fraught with contradictions. For example, the energy industry gets a higher net positivity rating among millennials and “Generation Z” respondents than among baby boomers, indicating that age isn’t the best predictor of attitudes on the subject.

But teens are also far more likely to believe that oil and gas won’t play an important role 100 years from now compared to adults. And when it comes to the oil and gas industry’s societal value, positive perceptions drop from 63 percent for the “silent generation” and 38 percent for baby boomers to a mere 3 percent for millennials, and a negative 14 percent for Generation Z.

The silent competitor in all of this is renewable energy. For example, when asked whether oil and gas should be the main source of energy in their lives, most consumers and executives alike chose the middle option — that is, only “until cleaner energy can replace them.”

Nearly one in three consumers said oil and gas shouldn’t be the primary energy resource in their lives at all.

Ernst & Young sums up its cross-generational findings in a chart that combines demographics and energy resources, showing that most teens identify solar and wind energy as “their generation’s” energy, with oil and gas relegated to their parents’ generation, and coal to their grandparents’.

 

Underlying this analysis of public perception is Ernst & Young’s thesis of the “last cycle” for the oil and gas industries.

“There is a compelling argument to be made that this might just be the oil industry’s last cycle, due to abundant supply and an overall — and seemingly permanent — slowing of global demand,” wrote E&Y.

This, in turn, will “force energy companies to develop new corporate cultures, customer-facing philosophies and everyday business practices that are aligned with the public’s desire for a more environmentally conscious, more consumer-oriented industry,” the report notes.

The energy industry’s messaging — and investments — will need to adapt to these stark generational differences.

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