Wednesday, May 28, 2008

What's Your Opinion? Should Exxon (XOM) Go Green?

Posted by TraderMark at 11:50 AM TweetThis
I will keep my opinion to myself, until seeing the results but there is a lot of fuss lately about the fact Exxon should be going "green".

So I am putting a poll on the website (all you email readers, please come over and visit) which basically asks, should a company be forced out of its core competency to invest in green energy? Try to take away any bias you might have from paying $4 for gas... I am asking from a purely scientific approach - Exxon (XOM) is a oil and gas company. Should public pressure be brought to bear to make them go green or should they just be trying to make profits at their core business (and yes I realize they are not doing a good job of devoting enough money to new oil and gas projects, and instead just feeding their cash flow back to shareholders in terms of share buybacks and dividends)

Read more here

Posted by TraderMark at 11:50 AM Comments (4) | Edit This Post | Create A New Post

4 comments:

shaxmatist said...

Exxon's job is to make money for shareholders.

In terms of dollar return on the dollar invested, it makes much more sense for Exxon to buy up other oil and gas producers. Appreciating assets and cashflow from day one.

BP went "green" (noticed their new logo? woa, thats soooo green!) and plowed millions into R&D for alternatives, neglecting their core business, which ended up in a huge spill of oil from their alaskan pipeline that rusted away without money spent on maintenance.

Needless to say, I will not be investing in either XOM or BP.

May 28, 2008 12:22 PM  
James said...

I've been thinking that they should for years... but I understand why they do not.

With their $$$ power, they could accelerate the green 'revolution' and thus in the longer term cannibalize their own revenue from oil.

That reasoning was ok when oil was at $20 because at that price, there is no (economical) alternative to oil. But with oil at above $100, which is recent, the so called green alternatives become economically attractive and can become substitutes for oil. We are not their yet, but we will be in a few years.

Given this new situation, I think that Exxon has to choice to (a) do nothing and remain an pure oil company or (b) become an 'energy' company and get a share of these emerging markets.

It is just a matter of choosing between being a cash-cow company or investing those dollars to earn even more.

One thing I have clear is that the world doesn't need Exxon. These green companies will flourish with or without Exxon as a competitor.

May 28, 2008 12:34 PM  
Link McGinnis said...

There weren't enough options for me in the poll (but I went with "make money").

Exxon's devotion should be first to it's shareholders. I don't think they should be forced to "go green" but there are reasons for them to do so:

1. If Exxon can increase profits in other energy areas they may want to explore that. All business models eventually change either by choice or by necessity.

2. They could spend millions in research and simply write it off as PR expense - perception could mean a lot to Exxon (remember the Valdez?) In the meantime, they may find that they can make profit their.

But, to the point of the poll- never forced.

May 28, 2008 12:40 PM  
road said...

Forcing a company to do something that is not aligned with the current management's philosophies, especially when it's a large and profitable company for the shareholders, is ridiculous. If they weren't serving the best interests of the shareholders, I'd understand.

I personally think that this is a case of what I call "you-got-money" syndrome. It's like when someone wins the lottery, there are all these people who appear out of the woodwork trying to tell you what to do with you new found riches. Most of them are full of it.

The Rockefeller's are just bitter that they don't have more than 0.1% of XOM, it's just that simple, and I'm willing to bet that some PR guy told them that it would work well for them to pretend to support and promote "green" ideas. Jeez.

Like Link said, there may be reasons for XOM to invest in green, but nothing should be forced. It's pretty evident that the management team is not a bunch of loons, they see what Shell, BP and Conoco are doing, perhaps they don't believe it's the right direction for them. Either way, just because someone else is doing it, doesn't mean they should. Be innovative and original. (Did you hear that MS?)

May 28, 2008 1:42 PM  

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