Written by Miranda Marquit
Is it time for Big Oil to come up with another product?
It's no secret that even though some Big Oil companies do invest in alternative fuel (CVX in algae and BP in jatropha), they really aren't that interested in investing in alternative energy (Exxon -- XOM -- is notorious for this). Indeed, according to Reuters, more than $200 billion of the profits made by Big Oil companies go into exploration. But, as Reuters reports, all the spending Big Oil is doing hasn't yielded significant new findings:
"Profits have increased sharply in the past five years, greatly increasing the amount of cash that companies have available for investments," the EIA said in a new report. "However, to date, the big increase in spending has not resulted in significant increases in reserves." Does this mean that oil reserves really are dwindling? What will happen to profits (and share prices) in the future if Big Oil can't find a way for its investments to yield better results? Maybe it really is time for Big Oil to start diversifying further into renewable energy. After all, as Big Oil is discovering, fossil fuels eventually disappear, offering diminishing returns on investment. The great thing about renewable energy is that it is, well, renewable.
Disclosure: I do not own any Big Oil stock right now, although I did invest in BP for a while.