The recent shift in priorities at BP away from alternative fuel sources and back to carbon-based energy is confirmed in the article in the url below:
“… having led the charge, BP is now leading the retreat. When the world does move beyond fossil fuels, neither BP nor any other big oil company is likely to be in the vanguard. … Alternative energy provides less than 1 per cent of BP's revenues and none of its profits. Capital spending will be about $20bn this year, of which at most 5 per cent will go into renewable energy.”
The article makes for depressing reading as BP’s CEO, Tony Hayward (who replaced John Browne in 2007), appears to be sacrificing long term prospects for short term financial strength:
“As one former BP executive puts it, … while the rest of the world is trying to move forward, Mr Hayward is "turning the clock back".”
As a result of its pullback, BP is losing the influence it once had in this section of the market:
“Over the next three years, BP is likely to invest about $2.5bn in renewables. In the same period Eon, the German electricity and gas group with about half BP's market capitalisation, expects to invest more than twice as much in wind and solar power.”
The article argues that the uncertainty inherent in renewable energy and the immediate pressures on BP for financial results have led to this shift in policy. There is no escaping the medium- to long term trend, however, as well as the CEO’s responsibility to position his or her company effectively for the transition when it occurs:
“A hundred years ago, the world's fuel was primarily coal. Today it is oil. In the future, it will be renewable energy. By 2050, perhaps 50 per cent of our energy will be non-carbon-based.”
An interesting sidebar in the article traces the problem back to the firm’s July, 2000 re-branding (Issues: Brands, p153), which, it argues, raised expectations too high and left no-one satisfied:
“Launched in July 2000, the slogan - with a new logo and a lavish advertising budget - sent BP's brand awareness soaring in the US and helped it craft an image as the world's best-run oil company. Critics argued that it also sent a message to the majority of the company's workforce that theirs was an outdated part of the business. It also set BP up for attacks from green campaigners, who could never be persuaded that the company had done enough to live up to its promise.”
Take care
David
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther/
Back to petroleum
Crooks, ED
2485 words
8 July 2009
Financial Times
Asia Ed1
07
http://www.ft.com/cms/s/0/b8626bf4-6b20-11de-861d-00144feabdc0.html
or
http://royaldutchshellplc.com/2009/07/08/back-to-petroleum/
