- BP increases oil and gas investment by 20% to $10 billion annually while slashing clean energy spending.
- Wall Street rewards fossil fuel focus, with Exxon and Chevron outperforming BP and Shell since 2019.
- Energy transition stalls as European oil majors scale back renewables due to inflation, technical setbacks, and shareholder pressure.
BP’s Strategic Reversal
BP’s latest strategy shift marks a sharp departure from its 2020 ambition to transform into an “integrated energy company.” CEO Murray Auchincloss announced plans to boost oil and gas production while cutting investments in renewables, biofuels, and batteries. This move follows years of financial underperformance, stock declines, and mounting pressure from activist investors like Elliott Management.
Wall Street’s Verdict on Green Energy
The financial markets have favored oil giants that maintained a strong fossil fuel presence. Since 2019, Exxon Mobil’s stock has risen by 102% and Chevron’s by 55%, while BP has stagnated. “Investors want to see their capital deployed in a disciplined manner,” said Ben Cook, portfolio manager at Hennessy Funds. “If you have to cut dividends for renewables, your valuation takes a hit.”
The Risks of Doubling Down on Oil
Despite BP and Shell pulling back on clean energy, the long-term future of oil remains uncertain. Gasoline consumption in the U.S. and China is plateauing, and global crude supplies are abundant. Meanwhile, renewables are set to nearly triple by 2030, according to the International Energy Agency.
TotalEnergies has taken a different approach, balancing oil and gas growth with strategic renewable investments. “I need the cash in charge if I want to finance diversification,” said CEO Patrick Pouyanne.
The Bigger Picture
While Big Oil pivots back to fossil fuels, the energy transition continues. “The fundamental business model for renewables is challenged today,” said Andy Brown, deputy board chair at Orsted. However, Columbia University’s Robert Johnston warns, “C-suites need to look at the next 20 years.”
For now, BP and its peers may be walking back on climate commitments, but the pressure for a long-term energy transition is far from over.
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