Big Oil Bets Against America’s Energy Future, Congressional Research Service Report Finds

JR:  America’s future depends on rapidly accelerating the transition to clean energy.  That’s the only way to avert the chaos of peak oil and catastrophic climate change.

CAP’s Valeri Vasquez has the story of how Big Oil continues to bet against America’s future.

We’ve seen this movie before:   A global crisis rocks international energy markets, driving up the cost of petroleum. Spiking prices help Big Oil rake in huge profits, reinvesting handsomely in their own stock to spur share values and enrich senior executives. And they shamelessly defend billions of dollars in annual government subsidies even as the money rolls in.

But that’s not the least of it: the largest of these companies, ExxonMobil, pays a lower effective tax rate than the average American.  Meanwhile, families across the country are forced to pay exorbitant amounts of hard-earned cash at the pump because they’ve got few transportation options—gasoline runs the car that they rely on to get to work and ferry their kids to school.

Now, at the request of Senator Harry Reid (D-NV), a report by the nonpartisan Congressional Research Service (CRS) has confirmed just how little the nation’s five primary oil companies care to invest in the future of American energy security.

During these difficult economic times, oil giants are doing very little to drive the innovation that stands to free us from the financial turmoil in the world petroleum markets. A 2009 CAP analysis determined that while most of the top oil companies claim publicly to invest in renewable energy and energy efficiency research and development, these “greenwashing” campaigns are “little more than empty rhetoric.” All told, they devoted a mere 4 percent of their collective 2008 earnings to green R&D.

Despite the consistently massive financial gains that allow these companies to buy back their own stock—more than 50 percent  this year by ExxonMobil and ConocoPhillips—the CRS Research and Development by Large Energy Production Companies report shows that the amount invested in clean energy R&D is miniscule. CRS researchers found that:

Total R&D expenditure of the five [largest oil] firms in 2010 was $3.6 billion. Financial documents do not include what portion of this [was] spent on green R&D… expenditures remained flat in 2010 but revenue and income rose with oil price

Considering that CRS calculates profits for these companies in the neighborhood of $77 billion for 2010, the comparative percentage of this investment is small. In putting together the report, the Senate Finance Committee asked how much the Big Five each spent in 2010 exclusively on “clean, non-petroleum-based alternative transportation fuels.” The chart at the top of the page puts the companies’ self-reported investments in perspective.

Shell, which netted $20 billion in profits during 2010, did not provide a response.

Exxon Mobil, Chevron, ConocoPhillips, BP, and Shell have benefited enormously from lack of choices The crisis/price spike/extreme earnings cycle is one that’s repeated itself yet again in 2011, as the Center for American Progress (CAP) has documented at quarterly intervals.

And even as domestic drilling surges to a nearly twenty-year high, our limited national petroleum supply will never be enough to satisfy our demand.

This year, first and second quarter Big Oil profits stand at a grand total of $67.4 billion, more than doubling the half-year earnings of both 2009 and 2010. According to the CRS report, each of the top five companies has big plans for ramping up clean energy R&D:

ExxonMobil is partnering with Synthetic Genomics in developing algae biofuels. The research and development program could total $600 million over the life of the project if Congressional Research Service milestones are attained. Shell is part of a joint venture to produce ethanol from sugar cane in Brazil, and is developing technology to process ethanol from straw with Iogen Energy, of Canada. Chevron is a global partner with Cleantech Open in encouraging clean technologies [and] has partnering agreements in solar energy, biofuels, and geothermal energy around the world.

BP announced in 2010 that it plans to invest $8 billion in alternative energy through 2015. ConocoPhillips is developing lithium batteries to improve energy efficiency in transportation and stationary uses. The ConocoPhillips Energy Prize is a joint program with The Pennsylvania State University offering a prize of $300,000 for ideas in alternative energy, energy efficiency, and combating climate change.

The CRS report admits “these investments are not all for R&D” but optimistically notes that “they demonstrate the interest that oil majors have in alternative technologies.”

But that “interest” isn’t turning into the massive investments we need. President Obama understood this when on September 12 he presented the financing plan for his newly unveiled American Jobs Act. The proposal cuts $41 billion in unnecessary annual oil and gas subsidies, and puts those funds towards a much anticipated job creation package that includes energy efficiency measures.

A secure, affordable national energy policy requires funding for more R&D and deployment of clean energy. Such investments would put the Big Five in a position to profit themselves as they help “rebuild the economy the American way” by getting an edge on the competition in these emerging technologies. Right now, these companies are falling far short of what we need.

— Valeri Vasquez is a special assistant to the energy team at the Center for American Progress

6 Responses to Big Oil Bets Against America’s Energy Future, Congressional Research Service Report Finds

  1. Anarchy Wolf says:

    Why would they care about the US? These companies are transnationals. They care about nothing but money. That’s it. They have no allegiance to any place or people. All they want is personal wealth, and to hell (quite often literally) with anyone or anything that stands in their way. They should be smashed, for the good of all living things on the planet.

  2. A J says:

    It is hard to say whether these companies are always interested in the technologies themselves, or more in the green image projected. Perhaps a nice complement to ads taking credit for making “clean burning”/smog reduction fuels, that are required by law. They may also be sticking their toe in the water, but they’ll only jump in when there’s little alternative (i.e. the economics of oil extraction start becoming unfavorable regardless of risks taken and technologies applied).

  3. Sasparilla says:

    Good points in the article but rather unrealistic. If the author is expecting the oil industry to do anything but ensure that they get the most money for their oil (including anything illegal they can get away with) and make the most money (while deflecting criticism via greenwashing), he hasn’t been paying attention to the history of the oil industry.

    Expecting the oil companies to invest in the security of America’s energy future is naive – to make the most money they need to ensure the United States does exactly what’s not in the national interest of the United States (stay as dependent on oil for as long as possible, which we’ve been doing) – because the price of oil will get the most expensive (highest profits for oil companies!) as the world oil resources diminish and run out (that this would strangle the economy in the process is not part of the thinking) – i.e. for profits, its critical to keep the Junkie addicted to the end.

    Corporations often behave like psychopaths, only doing things for their own perceived (often short term) ends, often in direct conflict with the best interests of the country or its population (this is how you get the financial crash). The oil industry, in particular, lives this roadmap.

    While a secure, affordable national energy policy sounds great, really great – that was only a possibility for the last 3 decades, which never occurred even a couple of years ago with Dems in control of all 3 branches and a veto proof majority in the Senate, now that is not even possible. Things have gotten much, much worse at the Federal level, corruption of both parties and the GOP in particular.

    The things the author are positing need to come from a government guiding private enterprise in where the government wants to take the nation, but that is not how the US government works – its private enterprise guiding government to where they want to go with their money (that’s how you get our energy policy, or the revoking of the Glass-Steagal act or the law that said the Derivatives market was to be completely unregulated (that guy was going to be McCain’s chief economic advisor) or a Democratic President who campaigned on climate change action approving the first tar sands pipeline (Keystone 1) just months into office with the price of oil on the floor and tremendous support for action on climate change all around.

    It seems obvious the US federal government has become completely corrupted by money at this point, until that is resolved we will continue to talk about sensible energy policies and real action on climate change in the abstract as the most entrenched and powerful industries lead the country to where they want to go.

  4. Heck the oil majors have recently started betting against their OWN long-term future.

    Just look at the pattern of huge stock buybacks (rather than investing to get more oil) coupled with ever declining annual production. They have the funds to increase production but they are choosing not to. More short term profits to be had via a biz model that decreases production.

  5. BBHY says:

    I would not be surprised if the oil companies spend more money on advertising their green R&D than they do on the actual green R&D.

  6. Doug Hockinson says:

    And Big Oil is in cahoots with the auto manufacturers, which is why GM doesn’t make a 2011 model that gets better mileage than my 2000 Saturn.