You Do Not Have to Take the Oil Industry’s Word for Anything

For the headline of an article at the New York Times Today — “Why Oil Companies Are Walking Back From Green Energy” — to be meaningful, those companies would have had to walk toward it in the first place.

The piece is premised around the grim realities of an oil industry shrugging in the general direction of an “energy transition” and, with gold doubloons flowing from every orifice, re-embracing their fossil fuel roots. The idea is that when the pandemic struck in 2020, the combination of a dire year and the momentum for climate action led some oil giants to begin a major pivot in their portfolios; but now, as political and market realities have shifted, they have changed their minds. From Rebecca Elliott at the Times:

Demand for the fuels was drying up as the pandemic took hold. Prices plunged. And large Western oil companies were hemorrhaging money, with losses topping $100 billion, according to the energy consulting firm Wood Mackenzie.

Renewable energy, it seemed to many companies and investors at the time, was not just cleaner — it was a better business than oil and gas.

This narrative is at least understandable. Back in 2020 and 2021, these sorts of headlines abounded:

• “North America’s largest pipeline company aims to pivot to natural gas and renewable energy.”
• “How the six major oil companies have invested in renewable energy projects.”
• “Oil and Gas Supermajors Rebrand as Energy Companies: Oil and gas companies around the world are incorporating renewables into their portfolio.”
• “Europe’s Big Oil Companies Are Turning Electric: Under pressure from governments and investors, industry leaders like BP and Shell are accelerating their production of cleaner energy.”

Only, they never really did this — they just liked talking about it for a bit there. Oil company investment in renewables reached $30 billion in 2023, but that’s pocket change; it amounts to only four percent of their overall capital investment, while their fossil investments continue to skyrocket. And it turns out, some companies have outright lied about their expenditures on renewable energy; others spent a while touting fancy ventures like algae-based fuels before just folding the projects outright, presumably happy with the PR return on investment that kept real pressure off their backs for another critical decade.

That’s all it is, really: Big Oil will say whatever needs saying at any given moment in order to continue doing exactly what they have done for a century. In 2020, that meant acknowledging the need for an energy transition, contritely pointing to their pandemic-induced losses, and floating the idea of some major pivot to wind and solar power. In 2024, that means saying, more or less, “fuck you, let’s drill.”

(This is not even that much of an exaggeration. Just a couple of months ago Occidental Petroleum’s CEO said in a public interview that the world should keep burning fossil fuels through “every last molecule” of the stuff we can find. When should we stop? “The day that should happen is the day when we run out of oil and gas.”)

The oil execs even admit this! “Investors were focused on what I would say was the prevailing narrative [emphasis mine] around it’s all moving to wind and solar,” said ExxonMobil CEO Darren Woods, in that very same New York Times article. “I had a lot of pressure to get into the wind and solar business.”

Supposedly Woods and Exxon’s resistance to that pressure at the time — instead focusing on hydrogen and lithium mining — is what has given them a 70 percent stock price bump since the pandemic dip, versus smaller returns for other oil companies. It couldn’t be other company-specific stuff, like, just to take one example, ExxonMobil’s dominant stake in little Guyana’s burgeoning offshore oil industry? And why doesn’t the Times mention other US giants like Chevron that basically followed ExxonMobil’s playbook rather than Shell’s or BP’s — their stock price has risen 30 percent in the same time span, closer to the supposedly renewable-friendly Shell’s 15 percent than Exxon’s leap.

What’s more, the Times ignores the very recent history of the entire industry: 2022 saw record-shattering profits for Big Oil, across the board. Shell set its all-time profit record at $40 billion; BP wasn’t far behind, earning a record $28 billion.

There isn’t, fundamentally, a difference between what these companies are doing, though there are blips in those “narratives” here or there. Shell and BP are now shedding their renewable investments and virtually all the oil majors have backtracked in one way or another on pledges to reduce their own emissions (let alone the downstream emissions from burning their products). Petrostates — most notably Saudi Arabia — are now openly pushing to abandon global climate goals, and the oil companies couldn’t be happier to tag along. They aren’t “walking back” from renewable energy, not in a meaningful sense on the scales of their oil and gas investments and revenue — they’re just feeling a bit more free to say the quiet part loud.