SAN ANTONIO ─ The energy industry faces a major challenge from an environmental movement determined to sharply reduce—if not end—the use of hydrocarbon fuels, according to author and researcher Amy Myers-Jaffe.

“You don’t think like the millennials on energy,” she said in her keynote address to the 94th annual Gas Processors Association convention on April 13. “The most powerful part of the movement is consumer activism” that seeks total use of renewable energy and consumer products—“a circular economy” in which waste and pollution are minimized—even at the cost of economic advancement.

“This is going to become a big feature” in future years, she cautioned the audience of more than 2,400 midstream business leaders.

The circular economy emphasizes biological sustainability, an approach opposite to a traditional linear economy in which resources are found, put to use in an economic system and then disposed. An author and contributor to various news organizations, Myers-Jaffe is now executive director for energy and sustainability at the University of California-Davis. Previously, she was with Rice University’s James A. Baker III Institute for Public Policy.

In a wide-ranging address, she compared current world events to predictions she made in a keynote speech at GPA’s annual meeting in 2005. “I got out my old computer to look up what I said,” she added with a laugh.

Some of her points proved to be correct, for example noting at that time that upstream independents were outspending the majors and super majors on exploration and production.

“At the time, a lot of people said that doesn’t matter because the independents didn’t have a large role in the industry,” said. However, the independents led the breakthrough in development of the unconventional shale plays in North America—something that has fundamentally changed the world energy business.

Another point she made 10 years ago was the historic but growing conflict between the Sunni and Shia sects of Islam in the Middle East. The conflict currently plays out in proxy wars in Yemen, Syria, Iraq and elsewhere between Sunni Saudi Arabia and Shiite Iran.

But the researcher admitted to missing some points a decade ago, such as projecting continuing increases in energy prices into the foreseeable future. The 2008-2009 recession and the current commodity price downturn proved that view to be incorrect.

Instead, “there is a pattern of [energy] industry cycles that go back to the 1800s,” she said. “We’re seeing it again today, connected to the current global cycle.”

There are four causes of these cycles: War, drilling and completion technology breakthroughs, demand destruction due to greater efficiency and price wars caused by producers trying to control the oil market. All four are in play currently, Myers-Jaffe noted, adding humorously that “we’re caught between Iraq and a hard place… The result is we’re working out of a rather large supply bubble now.”

She noted the continuing move of financial markets and equity providers into the oil and gas business appears to be countercyclical but isn’t. Rather, it’s simple rebalancing of portfolios “that is misread as bullish, they’re just recalibrating.” But private equity providers seem to be “still optimistic and are putting money into the shales,” which probably currently are proving to be more profitable than many projected, despite the current price environment.

Myers-Jaffe said North America’s unconventional shales are not the high-cost plays many say they are. Rather, the energy businesses in Australia, Brazil and Russia have higher costs and will suffer the most because of low commodity prices.

“Already we’re seeing Venezuela and Russia under pressure. It’s clear the U.S. is not going to lose the most,” she added.

The U.S. can emerge as a major energy exporter, she said. “Already, we’re exporting 3 ½ million barrels per day of petroleum products. The politics is going to change so that we will become globally competitive” in other energy products, including NGLs, LNG and crude oil.

But she cautioned not to discount the nation’s environmental movement and its goal of a circular economy without hydrocarbon fuels. She noted the defeat of the Keystone XL Pipeline was a must-win for an environmental movement that felt betrayed when President Obama—who environmentalists supported heavily in the 2008 election—instead turned his attention to health care. Killing Keystone XL was necessary to prove the movement still has significant political clout.

“Pipeline issues are just a litmus to a broader, no-oil agenda,” Myers-Jaffe added.

The environmental lobby does have some selling points. She noted a recent study by UC-Davis researchers on her personal car, a gasoline-electric hybrid, determined 99% of her personal driving could be handled by the car’s batter power alone without using its gasoline-powered engine.

She told the GPA audience to watch for new environmentalist tactics, such as using local politics for environmentalist goals. “You’re going to see continued focus [locally] on pipelines because it has been successful.”

Another strategy, just emerging, focuses on divestment in energy stocks by pension plans and investment funds because “they want to remove capital from the equation,” she noted.

“No oil will be next… and if we don’t change the economy all we will have is shortages,” she added.

Keep that no-hydrocarbon, circular-economy goal in mind, she cautioned. Some 5% of the world’s oil and gas production goes to plastics. That may grow as the U.S. increasingly moves into ethylene cracking “while other markets are trying to eliminate plastics… this is going to become a big feature. It will affect the demand side” she said.

Will some sort of circular economy occur as the environmental lobby flexes its political muscles? The remains to be seen, Myers-Jaffe said, adding “Maybe I can come back [to the GPA conference] in 10 years with more data on a circular economy.”