BP: Back to Petroleum and Beyond Puff-Power
British Petroleum is still one of the world’s biggest oil companies. But as early as the late 1990s they didn’t want you think of them that way. CEO, John Browne, argued: “the transition to alternatives could be accelerated by changing industry practices today.” While other oil companies eschewed climate change alarmism, BP embraced it.
In 2006, Mother Jones magazine reported: “BP vowed to cut its own CO2 emissions and invest heavily in solar, wind, and other alternative technologies.”
BP jumped into renewables and the company’s moniker underwent an evolution from British Petroleum to BP, then to Beyond Petroleum. The “re-branding” was designed to “capture public affection” by positioning “themselves as environmentally friendly enterprises.”
Between 2000 and 2005, BP invested $500 million into solar power and $30 million on wind and has invested more than $4 billion in alternative energy in the US since 2005. BP thought it was “prudent to start diversifying now as a kind of insurance policy.”
At the time, the switch seemed to be sound strategy. ExxonMobil didn’t agree.
Comments from a 2008 blog post on ExxonMobil’s position as “obstructive over climate change” included the following: “Given that oil isn’t going to last a whole heck of a lot longer, would not a good business strategy be to start investing in renewable energy?”
ExxonMobil took a different course. In 2005, then-CEO Lee Raymond, said: “What all these people are thinking about doing, we did 20 years ago—and spent $1 billion, in dollars of that day, to find out that none of these were economic.”
Raymond had “an unabashed skepticism about the potential of alternative energy sources like wind and solar.” He saw “Spending shareholders’ money to diversify into businesses that aren’t yet profitable—and that aim to solve a problem his scientists believe may not be significant”—as “a sloppy way to run a company.”
According to Mother Jones, in 2006, Wall Street “worried that even a small increase in investment in non-oil alternatives would distract BP’s focus from its core business—oil.” Commentators and analysts began mocking BP as being “Beyond Profits.”
Yet, critics of Exxon’s approach, in 2008, feared “that the company’s reluctance to explore alternative energy will prove to be bad business judgment in the long run.”
It is obvious now, nearly a decade later, which was the sound strategy. Global warming is not the manmade crisis it was sold to be in the mid-2000s, and we know that oil is “going to last a whole heck of a lot longer.” Today, innovation and imagination are producing record quantities of domestically produced oil and gas. Robert Bryce, author of Power Hungry, reports: “we won’t hit peak oil until we hit peak imagination.” And, Exxon’s Raymond made the right choice to get out of renewable energy.
On April 3, BP announced that it was selling its US wind assets—estimated to be worth $1.5-3.1 billion. The announcement stated that BP has decided sell the US wind energy business “as a part of our continuing effort to … re-position the company for sustainable growth” and that it would “unlock more value for shareholders.” BP ended its venture in solar energy in 2011. Finally, BP learned that renewable energy was “uneconomic.”
Addressing wind energy’s future, Amy Grace, a New York-based analyst at New Energy Finance, said: “There’s limited visibility beyond 2014 about what the assets will be worth as a tax credit supporting turbines is set to expire at the end of this year.”
In a recent Wall Street Journal op-ed, Patrick Jenevein, CEO of Tang Energy Group—whose website lists developing wind farms as one of its projects, agrees: “Without subsidies, the wind industry would be forced to take a hard fresh look at its product. Fewer wind farms would be built, eliminating the market-distorting glut. And if there is truly a need for wind energy, entrepreneurs who improve the business’s fundamentals will find a way to compete.”
Additionally, having now actually lived with the presence of industrial wind turbines, people no longer want them “imposed on their communities.” On April 4, a meeting was held in Falmouth, MA. City leaders unanimously stood by the selectmen’s prior vote to remove the town’s wind turbines. Residents say: “they’re suffering headaches, dizziness and sleep deprivation and often seek to escape the property where they’ve lived for more than 20 years.”
Across the pond, more than 100 Conservative Members of Parliament urged Prime Minister, David Cameron, to block further expansion of onshore wind. Environment Secretary, Owen Paterson, called England’s onshore wind farms a “blight” and Energy Minister John Hayes said: “We can no longer have wind turbines imposed on communities. … It seems extraordinary to have allowed them to be peppered around the country without due regard for the interests of the local community and their best wishes.”
As result of diminishing public support, the revelation of extreme green-energy crony-corruption, tightening budgets, and a slow economic recovery, government support for renewable energy is under fire. The Daily Caller reports: “States across the country are aiming to scale back or eliminate laws that require certain amounts of power be purchased from renewable energy sources, including wind.”
Yes, the winds, they are a-changing—and BP decided to get out while the getting is good.
Robert Bradley, CEO and founder of the Institute for Energy Research, said: “BP put form over substance and took their eye off the ball” and called “Beyond Petroleum” “a failed corporate strategy. … BP went after an environmental fad, basked in the glow of the Left environmental movement, and now may have destroyed itself in the process.”
Even the “Left environmental movement” is no fan. Mother Jones cites an “industry observer” addressing a post-Valdez-disaster ExxonMobil: “It ‘is a company that does everything in a gold-plated manner. It’s purely a commercial decision: You never put in anything that might fail’—not for ethical reasons, but because as BP has discovered, failure is expensive.”
Now that BP is “back to petroleum,” perhaps now its moniker should be “Beyond Puff-power.”
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