European oil supermajors are slashing costs but sparing their renewable energy business. U.S. giants are cutting across the board and focusing on their core business above all else. Both are preparing for the future, but who's doing it right?
A recent Reuters analysis into European and U.S. supermajors' approach confirms what is becoming increasingly obvious: the Europeans are pushing strongly into renewables while the Americans are sticking with oil and gas.
Of course, the European supermajors are subjected to more pressure to clean up their fossil fuel act than their American peers. European governments are dead set on a green future, and the environmentalist lobby is stronger than it is in the United States, where the federal government is an open and quite vocal supporter of the fossil fuel industry.
But is this all there is?
The big question is whether peak oil will come sooner rather than later and, following this, is it wise to start preparing for a post-oil world sooner rather than later. Shell (NYSE:RDS.A), BP (NYSE:BP), Total (NYSE"TOT), Eni (NYSE:E), and Equinor (NYSE:EQNR) appear to belong to the former camp: peak oil will be here earlier than we previously expected, so now is the time to start diversifying into alternative energy sources and revenue streams.
Exxon (NYSE:XOM), Chevron (NYSE:CVX) and Conoco (NYSE:COP), on the other hand, seem to have a different opinion, expressed succinctly by the chief executive of Exxon, Darren Woods, on the conference call for the company's first-quarter financial results.
"I know that there are a lot of different views on what the future holds," Woods said, "but I want to be clear on how we see it: The long-term fundamentals that drive our business have not changed."
Many would disagree. The drive to clean up economies that started in Europe has spread to some of the biggest oil consumers, notably China and India, with both drafting ambitious emissions-cutting plans that would inevitably slash oil demand. But that was before the coronavirus pandemic struck. Now, oil demand has been hurt in both countries, although it is now beginning to recover. Still, ambitious—and costly— emissions-cutting plans might need to wait as the economic recovery takes priority.
