The Dow Jones Newswire Headline: Exxon, Chevron and Big Oil ‘greenwash’ climate efforts and plan to pump more, Democrats say in new report.
From the article: “‘Big Oil has little intention to drop atmosphere-warming fuels for more solar, wind, hydrogen and other alternatives despite ‘greenwashing,’ Rep. Ro Khanna and other Democrats charge.”
The Democrat-led U.S. House Oversight Committee issued a report that assets Exxon, Chevron, Shell, BP, and the American Petroleum Industry (API) trade group have all made major investments in windmills and solar farms. However, the report says Big Oil has little intention of any concrete action to transition away from oil and gas despite what they say publicly.
The companies have made billions of dollars of investment in alternative energy sources, but have also increased their investment in oil and gas production capabilities.
According to the report, “Exxon Mobil and Chevron recently disclosed plans to increase investment in oil projects. Both have also expanded investment in alternative energy, including Chevron’s deal, announced in October, for development of clean-burning green hydrogen. But according to internal documents released to NBC News as part of the report, oil companies still forecast sizable returns on their fossil fuel investments. Further, they have come under scrutiny for pushing stock dividends and buybacks over reinvestment. One internal document from Chevron touts up to a $200 billion return over the next 40 years after upscaling oil production off the coast of Australia.”
“Our industry is focused on continuing to produce affordable, reliable energy while tackling the climate challenge, and any allegations to the contrary are false,” said API Senior Vice President Megan Bloomgren. “We are poised to be a leader in the next generation of low carbon technologies, including CCUS [carbon capture utilization and storage] and hydrogen — technologies widely recognized to be critical to meet the world’s emissions reduction targets.”
So what does this mean?
Oil and gas are here to stay and we can expect lower prices at the pump. Also, it might be worthwhile to look at O&G stock given Chevron expects a $200 billion return over the next 40 years ($5 billion a year).
Here’s the reality of things: The US Government created a subsidy and tax breaks for renewable energy investments. Consequently, the industry has been pushed by hedge funds to focus on environmental investments to take advantage of the returns from taxpayer funded subsidies and breaks. So big oil is taking advantage of this by building solar and wind farms. They are also building “carbon capture plants.” These are facilities that vauccum up atmospheric gas and concentrate the gas into a liquid form with the intent of injecting these gasses into the ground.
Why?
Rhodopseudomonas palustris. The False Rose. It’s a bacterium that is responsible for converting subterranean sediments and liquids into carbon, nitrogen, and hydrogen. When these bacterium die in the presence of these elements, they form a protein mass called Kerogen. Kerogen is a solid organic matter in sedimentary rocks and is the most abundant source of organic compounds on earth, exceeding the total organic content of living matter 10,000-fold. What happens when you heat it? It converts to liquid and gaseous hydrocarbons – petroleum and natural gas.
These little things live in everything and are found at depths of 30,000 feet under ground. These massive blobs of dead bacterium are the primary source of the oil fields. It wasn’t dinosaur bones. You’d be surprised that the deepest a dinosaur fossil was ever found was only about 2,500 feet. So the term “fossil fuel” was a Rockefeller-derived marketing term to give the aura that oil is a non-renewable resource and was a fixed quantity. It’s not. This marketing gimmick drove up the value of oil and enabled the US to switch from the Gold Standard to the Oil Standard – the Petrodollar. That’s the real faith and credit of the US government.
The False Rose bacterium is an infinitely renewable resource, and with the volume of the colonies being more than 10,000x of all living matter on Earth, one can hardly believe Big Oil can come even close to tapping out the resource. Compared to the size of The False Rose colonies and their growth capabilities, Big Oil may as well just be another small disadvantaged business. The bacterium also has some pretty amazing capabilities. They can produce electricity, they don’t have to breathe, they don’t need light – they don’t really need anything. They can work in the most inhospitable environments, but love to work in your garden. They are also the bacteria that make up your garden earthworm’s gut bacteria. So when you put earthworms into your garden to help take care of the soil, you might be helping Exxon. Ha!
Long Story Long
Oil and gas are here to stay, carbon capture is good, but it also has its profitability purposes. The carbon capture technology is basically free food for the False Rose bacterium. We pump the captured carbon back underground in the same lines used for fracking, and in a period of about 15 years you get more oil – a completely refreshed oil field. With this knowledge, I’m putting my money on Valero, Exxon, and Chevron. This is not financial advice – just knowledge. Do your own research, but perhaps this is a good starting point.
What about the economy?
The Democrat report appears aimed at giving “Big Oil” a black eye, but trains and trucks need diesel. We need diesel. The increased fuel costs have been the primary driver of inflation just like every other inflationary period in the Modern Era. Recall back in 2007 the price of oil skyrocketed because of the 110th Congress’ “Energy Indepedence and Security Act of 2007” which eliminated subsidies to oil and gas to force a reduction of consumption by 20% by 2017. That didn’t work out. Not only was this target never achieve, this caused a spike in inflation because of the increased fuel costs. Then the Fed had to increase interest rates to cool inflation. This had the negative effect of increasing the interest rates on Adjustable Rate Mortgages (ARMs) of which there were plenty in use. Between 2007 and 2008, people stopped paying their ARM mortgages and defaults skyrocketed. Banks started laying masses of workers off and tightening credit to make sure they had enough cash to cover their bets (spoiler: they didn’t have enough). As the bank layoffs and bankruptcies accelerated and credit tightened, the manufacturing industry was hit hard – particularly the automotive industry. People quit buying houses and cars. They quit making their loan payments on both. The stock market collapsed, the banks collapse, and the Fed bailed them out. Oil consumption dropped, interest rates dropped, inflation cooled, we entered a recession, families were torn apart, tons of people committed suicide, and we were stuck in a period of stagflation for the next 10 years as the Great Recession (2008-2009) decimated the economy. Side note: The 110th Congress was the first time Nancy Pelosi had full leadership as Speaker of the House and rammed the Energy Act of 2007 through with Democrat leadership in the Senate supporting her. George W. Bush signed it into law.
All of this has happened before and will happen again. – Battlestar Galactica
In 2020 a pandemic was marketed to the world. In March of that year, the US went into lockdown to prevent the spread of a virus. Throughout 2020, Congress fought each other and eventually passed legislation creating trillions of dollars in national debt. In 2021, more fighting ensued and more trillions were added to the national debt. The creation of money at such a scale caused global inflation to take hold. In 2022, to get a handle on inflation, the Federal Reserve began agressively raising market interest rates from 0% to 4% today. We can expect another 0.75% rate hike in the next month. Over this two-year period, the price of oil had collapsed to a never-before-seen negative number. Then as restrictions were lifted and we came out of a recession, oil skyrocketed with an floodgate of pent-up demand for all the things one could buy. Consumers were flush with stimulus cash, private equity was making truckloads of profit on their inflated stock prices, and companies were increasing the consumption of cheap corporate debt. More bailouts occurred except this time it was more than 9 times larger than the bank and auto bailout. Kind of seems like the whole debate back then was just a pittance.
With ESG requirements, the cancellation of federal oil leases, and pipline cancellations, oil has enjoyed a persistent, elevated price per barrel. Rising interest rates, high oil prices, financial companies heading into bankruptcy *points finger at crypto* where have we seen all this before? Oh yeah – it’s 2007 all over again. This time the magnitude of public and corporate debt that is putting the nation at risk is magnitudes more than the Great Recession could ever dream about.
The good news about Big Oil’s commitment to their primary product turned into bad news, but fear not. For our little bacterium are here to stay and will always be accessible so long as Big Oil can be wise about their debts and operations. If they can continue pumping, then we will all remain in our jobs. To that, we should wish their taxes be reduced, leases be provided, projects approved, and drill, baby, drill. It seems the markets and public perceptions are already turning against alternative energy. Even rural communities are putting up NIMBY defenses (Not in my backyard) against alternative investments. We want our oil. We need our oil. Our oil will sustain our economy. Luckily Exxon, Valero, and all our friends in the industry know this and are prepared. Our only ask is they take care of the land and their consumers.