Big Oil Ceases To Invest in Renewables—Zzzzzzzz

Anyone driving to the grocery store can see that COVID-19 has dramatically reduced demand for gasoline and diesel.  That, coupled with low oil prices, has caused the fossil fuel companies to cut their investment in renewables and other carbon mitigation strategies.

But is that a big deal?  Is anyone really expecting the oil companies to be a major driving force behind the migration to solar, wind, and nuclear?

Not consultancy Wood Mackenzie.  They say this won’t likely slow the overall investment in renewables – fossil fuel players really weren’t putting much money into it anyway.

“In a US$60 per barrel oil price environment, most companies were generating strong cash flow and could afford to think about carbon mitigation strategies,” said Valentina Kretzschmar, vice-president, corporate analysis, at Wood Mackenzie.

“But now … all discretionary spending will be under review – that includes additional budget allocated for carbon mitigation. And companies that haven’t yet engaged in carbon reduction strategies are likely to put the issue on the back burner.”

Oil companies are still telling their bankers that their business model is simple: Suck the last molecule of hydrocarbons out of the ground and burn it.  Only a naive fool expects them to do anything else, they are permitted.