According to Newsweek, Big Oil managed to put only 4 percent of total 2008 profits into green energy investment. Now when you note that the top 15 oil and gas companies have a collective market capitalization of $1.9 trillion, the question is, is Big Oil really going green?
While the Obama Administration calls for $150 billion in investments over 10 years to create a clean energy future, the response from Big Oil is far from encouraging. Over the previous 15 years (according to the industry trade organization American Council on Renewable Energy) the top five major oil companies have ponied up about $5 billion to develop renewable energy, only 10% of the total money invested in green energy research and development (primarily by investment firms and venture capital funds).
The clean energy optimists point to BP’s Beyond Petroleum “What’s your carbon footprint?” advertising campaign, which earlier in this decade seemed to establish the company as a serious advocate of alternative energy. But the reality is … not so much. For sure the majors have spent some money on wind and solar (BP, Royal Dutch Shell), algae (Exxon Mobil), ethanol (Marathon Oil, and Sunoco), carbon sequestration (Chevron, and Royal Dutch Shell) pilot projects, but these efforts are really only dabbling around on the periphery of their core business models, the exploration and production of oil and gas. In April this year a New York Times article noted that Big Oil was in many ways going backward in response to the Obama Administration’s call to move from oil dependency to a green economy. In March, Royal Dutch Shell announced a freeze on its wind solar and hydrogen power investments, focusing instead on biofuels. In June BP shut down its alternative energy headquarters in London, accepted the resignation of the head of the green energy division, and announced budgets cuts in the company’s renewable energy programs.
An obvious conclusion: Renewable energy is a sideshow for Big Oil, and will remain so for the foreseeable future.
In September, the powerful Saudi Arabian leader Prince Turki Al-Faisal called the Democrats’ call for energy independence through renewables (and by implication the Republicans’ call for energy independence through a little more US drilling) “a concept that is unrealistic, misguided, and ultimately harmful to energy-producing and -consuming countries alike.” His position is that the US is and will be dependent on oil producing giants like Saudi Arabia (with 25% of the world’s oil) for decades to come. And while talk of “switch-grass” and “Drill, baby drill” leading to rapid US oil independence is all very well, it is an entertaining distraction, a sideshow. When the US economy comes surging back in the next few months and the demand for oil spikes again, it is not biofuels or solar power, or an incremental uptick in drilling in the US that will come to the rescue of beleaguered drivers on US turnpikes, it is Turki Al-Faisal’s oil reservoirs.
So, America, what will it be? The Green Energy dream, the Drill Now scream, or Turki Al-Faisal’s oil dependency scheme.
Big Oil is siding with the Saudis — the main show.
Keep and eye on the Ramadi oil fields in Iraq. If you see start seeing a more active role of US development – you might see a lot less dependence on KSA. Sometimes I have to wonder if it’s the Saudi’s “religious” influence that keeps Iraq so stirred up that its oil potential can’t be effectively developed by the US and its allies. As they say, follow the money.