Energy Sector 2011 Expectations


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Chris Gidez explains how the economy and other trends will affect the energy industry in 2011

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Energy Sector 2011 Expectations

  2. 2. ENERGY SECTOR | 201 EXPECTATIONS 1Chris GidezSenior Vice Presidentchris.gidez@hillandknowlton.com201 NOW TRENDING 1: CORPORATE IMPLICATIONSIn the US, the three most significant forces that will shape From a communications and reputation standpoint, energythe energy sector in the coming year are the economy, the new companies will need to focus on two priorities in 201 demon- 1:political order in Washington, DC, and the fallout following the BP strating their value to quality of life, the economy and the environ-oil spill. There is a direct correlation between the economy (US ment; and convincing consumers, voters and policymakers theyand global) and energy demand. While the US economy may deserve their trust. This will be particularly true for oil and gasremain stagnant, growth in Asia—particularly China—translates companies, but will also apply to the rest of the sector.into greater energy demand and a related rise in oil prices. Shouldthe economy continue to stagnate, energy demand will remain Meanwhile, for all companies in the extractive industries (oil, gasflat as well. But if the economy begins to accelerate, we should and coal), safety will become a strategic message.see a growth in demand for all forms of energy—oil, gas,electricity, etc.—and an associated rise in their cost. While still important, the debate over climate change will take a back seat to the more acute debates over deepwater exploration,Despite public enthusiasm around renewables and biofuels, these oil sands development, the recovery of shale gas throughsubsectors should be challenged in the coming year as the hydraulic fracturing, and the siting and safety of pipelines.resurgent Republican Party in Washington will show less enthusi-asm for the tax incentives and subsidies that have historically Developers of renewable energy projects (notably wind andsupported the development of these emerging technologies. solar), will also be challenged by the NIMBY (Not In My Backyard) syndrome, as communities may push back on the siting ofAnd finally, the BP spill, and to a lesser degree the pipeline projects, as well as on their cost.incidents involving Enbridge and PG&E, will lead to greaterpolitical and regulatory scrutiny—even with a divided Congress. Chris Gidez, senior vice president in H&K’s corporate group, previously ran corporate public relations at Texaco and Chevron.