A version of this story appears in the October 2017 edition of Oil and Gas Investor. Subscribe to the magazine here.

There are times when you need conviction and other times when it’s prudent to pause and review your underlying assumptions. And then there are those people who get under your skin because they’re doubt-free and relentless in pushing their views: the proverbial “not always right, but never in doubt.”

John Hofmeister

It is some of the latter group who propound “hypothetical inevitables,” according to John Hofmeister, former president of Shell Oil Co. and current CEO of Citizens for Affordable Energy. The proponents of these supposedly “inevitable” outcomes are predominantly composed of “Silicon Valley elites,” who believe “they have locked up the destiny of the world,” he said at EnerCom Inc.’s The Oil & Gas Conference in Denver.

They think they “have your number,” commented Hofmeister. They think “Silicon Valley is replacing all the traditional technologies that oil and gas has used,” he said. “And do not underestimate the speed at which it will occur—that’s another one of the hypothetical inevitables.”

Their slogans: “Who needs oil and gas? Keep it in the ground. Divest it, if you hold shares. Don’t enable new infrastructure. Make it as expensive as possible.”

Hofmeister posed the question: “Do the hypothetical inevitables take priority over the evolution of the energy status quo?”

On a global scale, he threw out estimates of how disparate access to energy continues to be.

“Roughly 2 billion people on this earth have more energy than they know what to do with,” he said. “But 3 billion people don’t have enough to do what the other 2 billion do. And 2 billion people don’t have any access to energy at all.”

This hardly suggests a shrinking market, noted Hofmeister.

“Is demand going to disappear, when 3 billion don’t have enough [energy] and are envious of the two that do, and 2 billion people are making patty cakes out of dung to have dinner before the sun goes down, because they don’t have light? We have a long way to go.”

Meanwhile, regarding the U.S., he said, “Think about the impact on society of what we do. For transportation, we have a near-monopoly. And what would we do in this world without petrochemicals? Think of how petrochemicals affect so many other industries, such as medicine.”

Other areas cited by Hofmeister included: agriculture; freight and logistics; consumer products, from clothes to building products for homes; and travel and entertainment.

“We’ve also turned mobility into a way of life,” he added. “Because of the mobility that we enjoy, we have truly redefined distance—whether that’s by air transport, marine transport or personal vehicle transport—which also redefines time. We have added time to society’s well-being.”

Given all that, “where would Silicon Valley be without the electrons we produce?”

One of the “megatrends” identified by Silicon Valley elites is the growing use of electric vehicles, said Hofmeister. He cited data from three studies forecasting a total vehicle market of about 4 billion vehicles by 2050, including 2 billion electric vehicles. With roughly 1 billion internal combustion energy (ICE) vehicles, that leaves growth for another 1 billion ICE vehicles.

“Does that tell you that the internal combustion energy is roadkill?” Hofmeister asked. “No, it says demand for mobility is going to drive power source. And thank goodness for electric vehicle batteries, because where in the world would we find enough oil and gas for the internal combustion engines.”

But there are issues complicating long-term outlooks, according to Hofmeister.

“Will the battery supply chain have the capacity to displace hundreds of millions of ICE vehicles in a reasonable timeframe?” he asked. “What’s the environmental impact of mining the rare earth materials that go into those batteries? And what are the decommissioning plans for all those batteries?”

Hofmeister also questioned who would pay for retiring the remaining value in oil and gas reservoirs, refineries and coal fields. And who’s “going to pay for the cost of replacing all of that with wind turbines, solar panels and hydropower, the first two being enormously efficient relative to hydrocarbon energy.”

Are all these steps to “displace and replace” the fossil fuel industry inevitable?

“There should never be a shortage of new technology,” said Hofmeister. And likewise, “there should never be a shortage of hypotheticals. But there should be a rooting in reality of such hypotheticals so the word ‘inevitable’ stays out of the vocabulary.”

“Meanwhile, I encourage you to make a bet on the evolution of the existing industry.”

Chris Sheehan can be reached at csheehan@hartenergy.com.