What’s Up with ConocoPhillips?

by Richard T. Stuebi

On the clean-tech front, ConocoPhillips (NYSE: COP) seems to be striving to take the lead among U.S. oil companies. In just the last two few weeks, COP has made two announcements of significance.

ConocoPhillips is not yet in the league of Wal-Mart (NYSE: WMT) and General Electric (NYSE: GE) as major players that are driving environmental improvement on a mass-scale through the aggressive pursuit of capitalism across their core businesses.

But at least COP has gotten off the dime: they aren’t denying the existence of climate change as a real issue, and are recognizing that they need to start shifting their perspective if they want to continue to be a relevant energy company in the future.

Its peers among U.S. oil majors, ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX), have also begun making strides on the green-front.

The contrast between the three of them and the major U.S. automakers — General Motors (NYSE: GM) and Ford (NYSE: F) — is stark. The auto companies are stuck with tenuous competitive positions due in large part to their strategies for focusing on high profit gas guzzlers (e.g., SUVs and performance cars), and as a result they are fighting Federal pressures to tighten auto fuel efficiency standards. In general, they don’t want to hear about climate change.

The historical solidarity between the companies involved in oil supply and in oil demand seems to be breaking down.

Presumably, it’s at least partly because the oil companies are in better shape than the auto companies: with huge profits, the oil majors have more degrees of freedom to think more proactively. However, I think it’s also because the oil companies are increasingly coming to the view that reduced oil demand is unavoidable in the future — not just for environmental reasons, but simply because supplies will be challenging to obtain. COP, XOM and CVX are probably beginning to plan what they will look like as companies in a post-oil world, and that plan is consistent anyway with carbon limitations.

Interestingly, most of the independent U.S. oil producers and refiners — many of which are enormous companies in their own right — are laggards on the environmental front, alongside the U.S. automakers. What will it take for the U.S. oil independents to begin to see the light? Do they not see a future for them beyond oil?

Richard Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

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