US oil majors are mounting on drilling activities and deepening their gap with their European counterparts betting big on renewable energy. Unlike Shell, BP, or TotalEnergies, Exxon and Chevron are doubling on oil efforts.
According to a Reuters report, US fund managers from companies with around $7 trillion in oil assets said they prefer oil companies to keep on the business. The US oil majors’ strategy is to keep oil businesses with fast returns and give shareholders dividends so that investors can make their green energy bets.
About the matter, Adams Funds head Mark Stoeckle said. “At the end of the day, you don’t invest in a company because they promise nice things.” Also, Michael Liss, senior portfolio manager of the American Century Value Fund, said he invests more in US oil majors. This is because American companies spend less capital on renewable energy when demand for oil remains strong.
However, US producers say they do have concerns over climate change. Consequently, they are investing more in producing oil sustainably. Mostly through carbon capture and the development of cleaner fuels.
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US oil majors will continue to bet on their business; energy transition not happening overnight
Moreover, Chevron CEO Michael Wirth recently said, US companies prefer to generate profits for shareholders “and let them plant trees.” He also remarked. “There are some who believe we should do what the European companies are doing. But I would say that’s not the majority of the shareholders that I hear from.”
Furthermore, Exxon Senior Vice President Neil A. Chapman said at a conference this month that Europe’s energy crisis, with natural gas and electricity prices soaring, partially reflects underinvestment in fossil fuels.
In contrast, a Dutch court in May ordered Royal Dutch Shell to cut its carbon emissions by 45% by 2030, a decision that would hasten its exit from fossil fuels. While Shell and BP have divested from US shale assets as part of their energy shift. Also, TotalEnergies has pledged 20% of its capital spending on electricity and renewables.
Finally, Shawn Reynolds, a VanEck fund manager, said high oil prices offer support to the US majors’ strategy. “There is this slow awakening that an energy transition isn’t going to happen overnight,” he said.
