Even Jed Clampett knew there was something special about the "black gold" he discovered spewing out of his land while hunting. Oil was the reason that he, Granny and the rest of the lot were able to move up the food chain to a mansion in Beverly Hills. Oil is not only a precious resource, it's also a financial hot commodity for the giant oil companies. That's because we have a love-hate relationship with it. We love how oil allows us to zip around in planes, trains and automobiles. But we aren't too keen on what excessive consumption of fossil fuels -- coal, oil and natural gas -- is doing to planet Earth. Even though oil companies reap the financial benefits of our demand for oil, they claim to be leading efforts in search of alternative sources of energy (solar, wind or biofuels) to help ultimately save the environment and people's wallets.
But it leaves some to wonder, is that really so? A quick look suggests that oil companies are investing funds and do collaborate with others on alternative energy projects. For instance, ExxonMobil formed a joint venture with a company to grow algae that produces biofuel that can be substituted for petroleum. Chevron has made financial investments in biofuel research at universities, and even has a division within the company responsible for finding energy efficiencies in buildings like schools. And Shell announced a joint venture with a Brazilian company to produce 2 billion liters of ethanol per year from sugarcane.
Both oil companies and alternative energy advocates agree that long-term consumption of fossil fuels is harmful to the planet. Fossil fuels are responsible for polluting the air and water and causing toxic wastes and harm both plants and animals. But where oil companies and alternative energy advocates typically part ways is over what to do next. Advocates say given the amount of profits oil corporations bring in, they should spend much more money on alternative energy investments. In 2010, the five largest oil firms spent 1.2 percent of profits on alternative fuels and clean-tech research -- with about 4.7 percent of profits spent on R&D overall -- according to the Center for American Progress.
Oil companies insist that while they are investing in alternative energy, our never-ending appetite for oil causes them to put their R&D expenditures where they are most needed.
On the next page, we'll look at oil companies' responses to alternative energy investing.