Oil Giants Gassed out on Renewable Energy

Could the future of renewable energy be reliant on the efforts of big oil companies? They would certainly like you to think so.

Jul 14, 2014 at 10:29AM

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out this recent article:

Could the future of renewable energy be reliant on the efforts of big oil companies? They would certainly like you to think so.

In the first decade of the 21st century, it seemed like the likes of BP (NYSE:BP) and ExxonMobil (NYSE:XOM) had realized that the winds of change were blowing as they begun massive investment programs in renewable source of energy. Renewable Energy World reports that from 2000 to 2010, American oil and gas companies contributed 20% of all US investment in renewables, amounting to around $9 billion. The Deepwater Horizon disaster in 2010 shattered BP's public image, but it came in the middle of the British company's 10-year commitment to invest $8 billion in renewables from 2005-2015. It achieved this two years ahead of schedule in 2013.

Given the scope of this environmental disaster, one would expect BP to double down on this strategy. Not so, according to BP Alternative Energy CEO Phil New, who says that 'BP hasn't made a public commitment on future spending for alternative energy. The financial commitment we made in 2005 has allowed us to cast a wide net in search of businesses that could be financially self-sustaining, and a good fit for BP.'  He then adds  that BP has built up a profitable wind business in the US and is working to maximize its financial and operating performance. Clearly, BP's range of wind farms did not initially fit the bill since they tried to sell them off for just over $3 billion in early 2013 before reversing course and deciding to keep them in August of that year. Loren Steffy, author of Drowning in Oil, does state that BP's now infamous 'Beyond Petroleum campaign, was always more about marketing than commitment, and that the aborted wind farm sale was intended to help pay off legal costs related to Deepwater Horizon.

Shell's performance has not been particularly inspiring, either. In November 2013, outgoing Shell CEO Peter Voser said that "it would be stupid from the oil and gas industry to say that renewables will not play a major role in the energy system of the next few decades. Today´s investment levels into wind and into solar have very rapid growth.  This is quite a startling turnaround from the same Peter Voser who, upon becoming Shell CEO in 2009, ordered the company to abandon all investments in wind, solar and hydropower for not being economical.

Of the big five oil companies, Chevron perhaps had the best track record of investing in alternative forms of energy. Although its investments were second to BP's during the latter's decade-long commitment, Chevron blazed ahead in the private development of geothermal energy.  Its Salak and Darajat fields in Indonesia, as well as Tiwi and Mak-Ban fields in the Philippines, have a capacity of 1.34GW. However, much like its peers, Chevron is moving away from renewables. In January, employees of Chevron's renewable energy group were wined and dined in celebration for having doubled their projected profits in 2013, reaching $27 million. But as compared to Chevron's total profits of $21.4 billion, this was seen as risible. Employees were told the giant was pulling investment from the division and encouraged to update their resumes.

The argument is well-established. Oil companies have invested in renewable energy sources in waves, based on international agreements, or technology breakthroughs, or PR pressure. Their efforts have spawned lovely advertising campaigns such as 'Beyond Petroleum' or Chevron's 'We Agree.' Big Oil must turn a profit, say its lobbyists. Given joint first quarter of 2014 profits of $23 billion for ExxonMobil, BP, Chevron, Shell and Total combined, and with cash reserves of $68 billion between them, this hardly seems worth pointing out. It is fine for oil companies to leave renewable energy R&D to specialized firms, although their involvement would certainly speed things along. But investing in misleading global advertising campaigns is just raising false hopes.

OPEC is absolutely terrified of this game-changer
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour (That's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

 

Written by Chris Dalby at Oilprice.com.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers