Major Oil Companies Investments in Biofuels
Posted on November 7, 2009
The status quo isn’t a problem for big oil companies, who seem to be constantly breaking their own record profits. However, these corporations know that they must also look to the future and sustain their competitive edge.
The competitive landscape of the future is not clear for the oil industry, with financial, political, and environmental considerations coming into play.
The technologies and processes behind various renewable energy sources are improving, and may eventually lead to a renewable product that is cost competitive with oil.
Even if no renewable source is strictly cost competitive, the overall cost to society may be deemed lower because of the carbon pollution associated with oil. This will lead, and is already leading to political pressure and regulations. And it’s not just the price of renewables coming down that oil companies have to worry about, but also the price of oil going up as global energy demand rises.
Oil companies have been aware of these forces for some time now, and have been investing in a range of renewables.
Recently, major oil companies seem to be sharpening their focus and concentrating on commercially viable biofuels. This pragmatic approach may spring from a recessionary mindset, but also speaks to the evolution of biofuels to the point where there are commercially viable alternatives on the near horizon.
The specific competencies and competitive advantages that have made oil companies successful are easily transferable to biofuels.
» Filed Under Biofuel
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