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Oil Companies Skimping on Green Energy

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Though advertising in the industry encourages alternative energy, BP's, Chevron's, and Exxon's capital expenditures tell a different story.

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On the back cover of every major American magazine is a picture of a gigantic oil producer saying we must get into green technology. But are they really dumping as much money into green energy as they claim? Let's take a look at what their capital expenditures (capex) were in the latest annual report of 2009.

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.


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Position in BP.

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