Investments in bio-fuel are being seen. Exxon Mobil spent recently $600 million on project to substitute oil with algae. However, it is a fact that this figure does not represent glimpse of what is spent on crude oil. So are petroleum companies really committed to find alternatives for the black gold?
Exxon Mobil is together with a California inventor trying to make algae a wise substitute for petroleum. In July 2009, Exxon Mobil joined a venture with Craig Venter’s Synthetic Genomics to produce bio-fuels. This $600 million investment is one of the biggest, shifts toward green energy by fuel companies.
Oil Companies are joining the field of alternative energy. They are securing their future, as a mixture of energy sources will be required. Generally, all the oil companies have invested in renewable energy such as solar, hydrogen, geothermal, bio-fuel, and wind energy. The oil companies must increasingly act as energy companies instead of their badly connoted oil industry.
The Exxon’s venture provides funding to Synthetic Genomics in two portions of 50 percent each. The strategic alliance will focus on growing algae, which can be used to replace petroleum. If ever the bio-fuel research becomes a hit, billions of dollars will be spent to popularize it.
” Emil Jacobs, Exxon’s vice president of research and development said in a press release last year that “This is not going to be easy, and there are no guarantees of success, but we’re combining Exxon Mobil’s technical and financial strength with a leader in biosciences and genomics to take on this challenge, and we’re very excited about it”
Chevron, another oil company, is already a leader in generating geothermal energy. It is also investing in research related to bio-fuels. The company is focusing on diversifying across various renewable energy sources.
British Petroleum (BP) has been extensively involved in alternative sources of energy, investing in wind, solar as well as bio-fuels. They are extensively digging into the market of alternative energy as it is a market for the future, according to spokesman Tom Mueller.
Yet, the investment made by the oil companies is trivial compared to the possible spending that they could engage in. These companies remain mainly focused on fossil fuel as they constantly invest much more in the quest for oil.
According to Steve Kretzman of Oil Change International, a Washington, D.C.-based nonprofit advocacy organization the estimated spending for 2008 on renewable energy was as follows:
1. Exxon spent $10 million
2. Conoco Phillips spent $165 million
3. Shell spent $500 million
4. Chevron spent $1.25 billion
5. BP spent $1.5 billion.
In 2008, the profit generated by the oil companies was extensive. These figures represent only a minor fraction. It is certain that the public want oil companies to become more generic energy based yet business reasons seem to fasten them to their core business which is oil. It is Wall Street, which determines their potential based on oil analyst, predicting oil reservoirs available on earth.
Yet, perception on investment in alternative energy depends on what it is compared too. It might be small compared to oil investment but if it is judged against refining industry, chemical industry or something else the investment in R & D by Exxon Mobil is extensive.
Source: Portfolio
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