And part of the reason is that almost every country and company sees itself in a unique position: as the future last producer of fossil fuels.
And part of the reason is that almost every country and company sees itself in a unique position: as the future last producer of fossil fuels.
Letting ones own company go bankrupt and squeezing the last bit of money out of it is a perfectly legitimate business plan. The money is paid out to the investors, who then can use it to invest into something with a better business model. As far as I know only Ørsted has successfully transformed from an oil company into a renewables company.
We have to choose deposits to leave in the ground though. We can’t have a situation where everybody keeps extracting.
Extraction is not free and most cheap conventional oil suppl has been used up or it is in politically difficult countries. Hence unconventional sources like fracking and oil sands are being used. However they are also more expensive, hence they can not compete. If the cost of production is higher then the oil price, then nobody is going to do it.
Locking up oil supply helps too, as it drives up the oil price and makes adoption of alternatives more likely.
Extraction isn’t free, but it’s cheap enough that we’ll see too much taken out of the ground if we depend purely on existing economics. Something like half the proved reserves of oil and gas have to be left in the ground for 2C
The other big one is politics. Since the US has become an oil export it has started to shut down other oil exporters. First of all Venezuela, which has the biggest oil reserves in the world and is producing nearly nothing right now. Iran is a long time trouble maker and sanctions have been restarted under Trump. Since the invasion of Ukraine Russia is under sanctions as well and Western oil companies shut down cooperation. Saudi Arabia has not gotten much support after its oil refinery has been attacked by Iran a few years ago, so we know the US is not terribly interested in securing those oil reserves.
As I said a lot of the good oil is in politically difficult countries. That is about half of the worlds supply. If something goes wrong the US is basically the only country able to secure those supplies militarily. However that would be expensive and it also benefits from high prices being an oil exporter itself. With EVs there is a workable alternative for a lot of Western oil consumption.