Blockchain can massively shake up the whole energy sector, in particular oil and gas, of course for the better. Efficiency, prices, and safety are just some of the things that blockchain can improve for the better.
We all know that oil and gas harm the environment, but it’s in our everyday life. Many essential things like transportation and electricity, and so many other things we take for granted would not be possible.
With prices increasing due to the situation in the world, there is a need to bring more efficiency to this industry. And blockchain would be a great start, implementing blockchain in the energy industry can have a lot of great benefits that we are going to go over in this article.
Remember this is just the start of blockchain technology and it could have a much more impact over the upcoming years, and that’s not just in this area of business but almost all sectors and industries.
1. Government Regulation
For oil and gas companies it’s really important to stay in compliance with all laws and regular requirements. They have all kinds of taxes, and political, safety, and environmental laws to keep them regulated. All this results in higher costs and the delivery of said goods to be slower.
Blockchain technology can fix almost all of these problems. With blockchain implemented in this industry, it can automatically check for a lot of things and store them. It will need to be implemented by both the government and companies to be useful. This can result in a faster determination of whether the company is compliant or not.
All that can help reduce the current problems like inspections, lost or inaccurate paperwork, and various other problems that may happen. Also, a lot of companies in this sector use many sensors in their transport process, and many of them have problems with sharing data of their sensors with government officials.
That’s because data may be manipulated by someone or lost during the process of transferring it from one storage or network to the other, this is also a problem that blockchain technology can eliminate.
Blockchain technology can also automatically check all of the employees and contracts to ensure everything is running as smoothly as it can.
2. Environmental Impact
Oil companies need to comply with governments and climate initiatives to stay in business. We covered how the blockchain can help with government regulations, and now it’s time to talk about the environmental impact of oil and gas companies and how blockchain can help.
Oil and gas companies already need to purchase carbon credits, which does not help directly in saving the environment but it helps fund the projects. Projects like implementing more solar power and planting more trees which can help in the long run.
Some companies even charge more for so-called green barrels of oil, which is, let’s put it into one word, controversial.
Blockchain brings a part of the solution, they can create cryptocurrency on the blockchain and tokenize carbon credits. Which in itself does not solve the problem of the environment but it certainly does help.
3. Crypto Trading
Cryptocurrencies that are “tokenized” (backed up by natural resources such as oil) could see a high rise in price.
The cryptocurrency that is pegged to oil, can be a replacement for traditional oil futures trading, also it can do a better job of connecting suppliers, distributors, and the people who are buying it.
All that without traditional different brokerages and exchanges who all have their fees and slow the whole process down. This can have a great impact on efficiency and maybe even reduce the cost of the oil to all the links in the supply chain.
Although there are currently few cryptocurrencies that are pegged to the oil (which are usually government backed tokens), they haven’t produced much value, however you can start trading these tokens now if you want to take advantage of oil trading with cryptocurrencies. But as it currently stands, it’s safe to say that this is likely to happen in the future, but not as of this moment.
4. CyberSecurity
Almost all of the cybersecurity breaches that happen are the result of human error, either because of carelessness or because of passwords that aren’t even remotely close to what they should be.
There are already many issues and difficulties with data sharing and data manipulation, the last thing these companies need is a cyberattack that is going to allow someone to delete data and maybe even hold it for ransom. These companies need to have strong security because these inconveniences can sometimes be worth millions if not billions of dollars.
This is where blockchain would be the right answer, it can replace passwords with almost unbreakable private keys. That should solve the whole problem of unwanted visitors to your data. Also, this can further extend to the previously mentioned sensors and the company can even have whole encrypted messaging applications.
5. Speed And Efficiency
Trading and buying processes are both done on commodity exchanges, with the whole process of delivering these goods from the manufacturer through the supplier and to the end buyer being one lengthy process filled with paperwork. This paperwork can sometimes get lost, and even if it’s not lost it slows down the whole process a lot.
Blockchain technology is the solution here, there is no more manual data entry and processes like moving data from one network to the other. It’s all there and it’s all secure, this can boost efficiency in so many ways and the speed these goods are needed to be moved from one place to the other will be much higher.
Blockchain technology can also help with fraudulent land dealings which are a big problem in some developing areas.
Closing Thoughts
Almost every industry can see the advantages of blockchain use, although this is all in the explanatory stage it can have a positive effect across all industries.
Oil and gas can see significant results almost immediately after implementing blockchain technology. It will improve efficiency, lower the cost, and speed up the whole process of transportation all while complying with all of the government regulations and laws.
