Oil Companies Skimping on Green Energy
Though advertising in the industry encourages alternative energy, BP's, Chevron's, and Exxon's capital expenditures tell a different story.
BP (BP) has been running ads in the past about a "Low Carbon Diet." In 2009, the company invested $1.2 billion in "other" and alternative energy. With $20.6 billion total in capital expenditures, that equals 5.8%. Not bad! Of course that's assuming that a good portion of that "other" number really is for alternative fuels.
Chevron (CVX) has run an ad saying, "It's time oil companies get behind the development of renewable energy." We'll just see about that. In an explanation of the company's $22 billion in expenditures, $17.1 billion is upstream (exploring for energy), $4.4 billion is downstream (refining), $302 million is in chemicals, and $405 million is in "other". Evidentially, the annual report is not going to show what was spent on green tech and alternative energy.
In a forecast of what capital expenditures will be in 2011, the company plans to spend $26 billion. Of that amount, $500 million is listed as "other". Even if that $500 million were entirely to go to alternative, it's still a paltry sum of money compared to traditional oil exploration. I'm going to have to say that Chevron is not too serious about alternative.
The last company I'll look at is the grand daddy of them all -- Exxon (XOM). Exxon doesn't really claim that it's into alternative energy. As a matter of fact, it came right out and admitted that it's all about oil. Looking at a bar chart of capex in 2009, the "other" is such a small sliver when compared to oil and gas exploring and refining that it's not even worth seeing what they spent on alternative energy.
Exxon did invest a small amount in Synthetic Genomics. Synthetic's CEO, J. Craig Venter, was featured on 60 Minutes.
If an investor is looking to make money in alternatives, the major oil producers have the cash flows but won't invest in green. They want oil and natural gas. That is what the majors see as the future. Until that changes, investors need to look in alternative places for alternative energy.
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter