2025 Oil, gas trends: Rules of engagement have gone digital, sustainability efforts ramp up across the industry
The rules of engagement are changing in the energy industry with a growing focus on renewables, partnerships, and digital integration.
“Energy transition” is a term that’s become ingrained in the energy-business and political vernacular. But the data show a “energy diversification” to be a much better fit. That’s because what’s happening in energy is much less a transition than it is a diversification, and that reality is already reshaping the strategic decision-making and operations of energy companies worldwide.
True, the economics of electricity generation is indeed shifting new generating capacity toward renewable sources, which the International Energy Agency (IEA) expects to climb to 35% of global generation capacity this year – roughly equal to that of coal-fired generation.
And EVs appear to be here to stay, with more than half of China’s new cars being electric, as just one example. Even in the United States, EV sales are holding up despite political headwinds, with 7.5% of new vehicles sold in here in the first quarter of this year being EVs – a 10% year-over-year increase. Last year overall, 9.2% of new vehicles sold in the U.S. were electric.
Fossil energy use continues to grow
But then, consider the flipside of that U.S. EV number: More than 90% of new cars and trucks sold in the United States last year burned hydrocarbons. That means nine in 10 new vehicles are adding to or replenishing a 290-million-strong U.S. vehicle fleet of which just 1.4% is battery electric.
Further, global coal demand actually increased 1.4% last year. Global natural gas demand rose 2.7%. And while oil’s share of total global energy demand fell below 30% for the first time in 2024, oil consumption still grew by 0.8%, with chemical feedstocks and aviation accounting for about half of that demand growth.
Feedstocks include the roughly 15% of oil production that goes to plastics, chemicals, pharmaceutics, cosmetics, synthetic rubber and more. Natural gas also is both fuel and feedstock.
Consider that natural gas-based nitrogen fertilizers are critical inputs to high-yield agriculture that feeds about 3.8 billion people, and that global agriculture production must expand by roughly half by midcentury to feed the roughly 10 billion people expected to inhabit the planet by then (we’re at 8.2 billion now).
Add to all that the EIA’s estimate that primary energy demand will be 16% to 57% higher in 2050 than it is now, and that natural gas and oil consumption will also rise along the way.
“Transition” implies leaving something behind. That’s definitely not happening in energy.
Hear more about the top trends reshaping the oil, gas, and energy industry in the Future of ERP podcast.
Energy diversification means more complexity
Globally speaking, this is not an energy transition. This is an energy diversification, one that should be approached with efficiency, profitability, and environmental stewardship front and center.
Energy diversification will, for many energy firms, involve business diversification: Carbon capture and storage, lithium development, hydrogen production and distribution, and EV charging and associated retail all present opportunities.
But energy diversification will also bring added complexity and competitive pressures across the board. There are big gains to be had, including:
- Business transformation by embracing cloud technologies, not least of which include fast-evolving agentic AI tools. The energy industry’s use of cloud services is forecast to grow nearly 20% a year through 2033, in fact.
- End-to-end visibility of the commodity supply chain to predict swings in prices and adapt quickly to them.
- Efficient addition and incorporation of new business lines and revenue streams – for example, to take advantage of growth in a biofuel market expected to expand by about 30% in the next five years.
- Holistic enterprise asset management that, combining internet-of-things and mobile technologies with predictive maintenance and other analytics, can reduce maintenance costs 20% to 30% and cut downtime 20% to 50%.
The green revolution: Turning aging oil refineries into renewable fuel producers
The business case to turn oil refineries into renewable energy producers grows stronger as the world moves to more sustainable, less carbon-intensive energy sources.
Tech solutions to manage energy diversification
The energy industry’s enormous size confers the advantage of having a wealth of technology solutions available throughout the value chain, from exploration and production, the commodity supply chain and primary distribution, secondary distribution and fuel retailing, on through to asset management and operations.
Examples include:
- Real-time supply chain and demand planning
- Human-capital and field-service management solutions to optimize workforce scheduling and deployment
- Supply chain management solutions to support materials sourcing, equipment, and services
- Sustainability metrics tracking for regulatory compliance
- Analytics for performance optimization and executive decision support
And throughout, AI increasingly plays a role.
I don’t anticipate the term “energy transition” to be put to bed anytime soon. Vocabulary can be sticky, and there are specific cases where it does still apply. But energy diversification truly is a better descriptor for what’s happening as we work to power the planet’s growing energy needs while minimizing carbon emissions and other environmental impacts.
Energy diversification will continue to introduce added complexity and the prospect of higher costs for those producing, distributing, and retailing it. Fortunately, there are technology solutions to help manage its many interconnected facets, efficiently and profitably.