"Oil, energy, the environment. It is the story of our time."
Those are the words that begin the now-famous Chevron (NYSE: CVX) commercial alerting the public that an oil company can be a part of the solution.
I'll get to the semantics of why that doesn't work in a moment. For now, let's deal with the opening quote.
Oil, energy and the environment are indeed the stories of our time. Just on my way to the office this morning I listened to:
- An NPR Climate Connections story about urban sprawl and the associated rise in fuel and energy consumption,
- A radio blurb about rising energy costs, and
- A story about the local utility (BGE, a unit of Constellation Energy) being forced to give its customers a rebate per a settlement reached with the state of Maryland.
With the issues so prevalent, there are certainly numerous ways to profit. Let's delve into a few, using the Chevron commercial as a catalyst.
Oil and Energy
Although many think so, oil and energy are not synonymous. This is a point I recently argued in a piece about cleantech's correlation to oil prices.
You see, as ubiquitous as oil is, its primary uses are for transportation fuels, chemicals and plastics. Of course, those uses are extremely important and--at least for now--they're things we've become critically dependent on.
Yet narrowly defining oil as energy only causes convolution. Imagining--as the commercial suggests--an oil company as part of the solution does more to foster confusion than to provide any real insight.
By definition, a company that is touting its activities in solar and geothermal isn't an oil company at all. It's an energy company.
The Chevron Spin Factory
Basically, what Chevron is telling us is that the oil era is coming to an end, though Peak Oil and climate change are never mentioned. The company is not saying it's pursuing clean energy because it's the right thing to do. They're doing so just to stay relevant in a rapidly evolving energy economy.
The question then becomes: will Chevron (and other "oil companies") be able to evolve fast enough? Or will they be leap-frogged by other, pure renewable energy companies?
Well, as many will tell you, it's hard to say. But the sheer notion that an oil company has to drop millions to tout its clean credentials tells us that they know the world is headed down the cleantech road.
And while they drag their feet in getting there, trying to squeeze out every last barrel of profit (and they'll be successful, at least in the short term), the energy market will eventually pass them by.
Obviously, spending only $2.5 billion on clean energy research while spending $15 billion to buy back their own shares, is the tell-tale sign this oil company won't be part of the solution.
Perhaps comedically, they've spread their (natural?) resources too thinly. One company can't reign supreme in each of the numerous facets of the energy industry. You know the old saying: jack of all trades, master of none.
So don't buy the hype of Chevron the Energy Company when, even while trying to brand themselves as such, they still call themselves an oil company.
There will, however, be a profitable merger of energy technologies for some time going forward.
Sure, there's still money to be made in oil. But what my colleague Jeff Siegel refers to as a new generation of wealth will only be available to those investing in green chip stocks.
You can read about those opportunities three days a week simply by signing up for the FREE Green Chip Review.
The Environment
More and more, effects on the environment are being calculated in to the cost of energy.
In fact, just a few months ago three of the largest investment banks (Citigroup, Morgan Stanley, and JP Morgan Chase) announced the formation of "Carbon Principles"--a set of guidelines the banks will follow when lending money to carbon-intensive projects such as coal-fired power plants.
Of course, we'll still be burning coal to produce electricity for the next several decades. Just as we'll still be using oil for limited applications.
What will change is how we use them. We'll be using more efficient engines. We'll blend gasoline with biofuels. We'll be capturing the noxious gases from the flues. All while significantly increasing the amount of energy we get from renewable resources.
You see, it's not just about energy. It's about efficiency as well. It's not possible to simply wean ourselves off fossil fuels overnight. There will be a series of transitional technologies that help usher in the switch.
And it's possible to take those to the bank as well. Just last week, legendary oilman T. Boone Pickens was on CNBC touting the benefits of his natural gas company, Clean Energy Fuels (NASDAQ: CLNE).
While still a nonrenewable fuel, natural gas is cheaper, burns cleaner and can be domestically sourced. So using it as a transportation fuel helps limit the adverse effects on the environment while reducing dependence on foreign oil.
T. Boone, of course, is a master of making money in the oil sector. But even he knows that isn't the path forward.
He has the same investment philosophy as the Alternative Energy Speculator: let's make money on cleantech investments and the stop-gap technologies being used to limit our fossil fuel use and make it cleaner.
If he really thought oil companies were the way forward, he'd still be pushing that front instead of founding natural gas fuel companies, water companies and, most recently, announcing intentions to build the world's largest wind farm.
You too can profit like Pickens. To learn how, check out this lucrative way to profit via natural gas-fueled vehicles with the Alternative Energy Speculator.
Until next time,
Nick
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