Perception is reality, according to the maxim, and if the perception of today’s youth regarding the energy they consume becomes reality, then the oil and gas industry is a dying breed. Teenagers and young adults en masse prefer a better option than our familiar hydrocarbons, even if today’s reality doesn’t yet match their expectations.

That sentiment is quantified in EY’s Consumer Perceptions Poll, conducted in late January and released in mid-May. The poll took the opinions of some 1,000 U.S. consumers and 200 energy executives across a swath of questions focused on energy. One trend became notably evident to the EY analysts when it came to oil and gas: Positive perceptions wane with age.

When asked to fall on the side of whether the oil and gas industry is “good” for society or “bad,” 63% more of the senior “silent” generation (age 71-plus) voted good over bad, while 38% more baby boomers (ages 52-70) chose the good option, with a 21% edge by Gen Xers (36-51) and a mere 3% by millennials (19-35).

The lurking danger lies within Gen Z. This group of 16- to 18-year-olds fell under the bar with a -14% weighted to the negative ratio.

And it’s this generation that will ultimately determine the future of oil and gas as energy sources.

“A strong negative perception does exist in the younger generation,” said John Hartung, EY U.S. oil and gas strategy principal, “and it could impact the industry’s license to operate and its ability to attract talent. And, it could impact the types of fuels consumers demand if they have affordable choices.”

A social “license to operate” is a concept the industry has probably taken for granted for too many decades prior. Public pushback has manifested by slowing drilling via selective use of the Endangered Species Act, and in more recent years the cry against fracking and protests of pipelines. These barriers to production will seem minor nuisances if Gen Z grows up disgruntled.

“This generation has a different perspective of the industry than the older generations, and they could become more vocally opposed to some of the developments that will need to occur to build out the vast energy resources we are finding here in North America,” Hartung said. “There is a risk down the road; there will be more resistance.”

Second, Hartung foresees a problem with attracting young talent. “[Energy] may not be the first place they focus on in terms of getting a job if they have a negative view.”

Besides a pervading wrinkling of the nose toward the industry, the younger generation also doesn’t perceive oil and gas as technologically inviting. “They are attracted to working somewhere that is technologically innovative, so there is a disconnect in their perception as to what the industry actually offers.”

Third, 71% of teens polled have an expectation that renewable energy sources will be their primary energy supply in the future, at the expense of oil and gas, which they view as polluting. More than half do not believe oil or gas to be “important resources” by the time they are their grandparents’ age.

These youths “would prefer renewables with less oil and gas in the energy mix. They certainly hope it will happen and will do what they can to support it. Their perception is that any renewables are a good thing.”

But here is where Hartung emphasizes that perception is not—yet—reality. As much as the young gens like the idea of renewable energy sources, the economic reality is that these sources cannot effectively compete in the marketplace. Not today; maybe not for decades.

“They can resist traditional sources, but at some point they’re going to have to make an economic decision. Reality will set in, and that younger group will potentially decide based on economics and affordability.”

But that affinity for technology combined with youthful willpower could very well lead to breakthroughs in cost-effective renewables. That perceived reality, however, requires a leap of faith and, by Hartung’s measure, won’t take place for at least 10 to 20 years—optimistically.

But it’s risky to ignore the perception, as the perception that oil and gas is “bad” for society is largely rooted in misinformation. Is there any hope the oil and gas industry can reach these young minds that these resources that have made our lifestyles possible hold a place in their energy future?

“There’s a lot of room for improvement in how the industry communicates,” Hartung said. “This generation is distrustful of energy companies, so you need to find a trusted vehicle to get the facts into the market.”

EY’s report is titled with a question, “How can oil and gas fuel tomorrow as well as today?” and its subtitled answer is “change public perception.”

The time is now, because the shock wave of youth entering college today is an approaching asteroid that would like to make the fuel of dinosaurs extinct once and for all.

Comments