Will oil companies get the hell out of oil?

Virent Energy Systems said that it secured $46.4 million from Royal Dutch Shell and more than a dozen other investors to scale up production of transportation fuels from plant sugars. This is among several investments major oil companies have been making beyond oil — hydrogen, biofuels, and natural gas are on the list.

During last month’s Alternative Fuel Vehicle Institute conference, I was able to ask oil and natural gas icon T. Boone Pickens why oil companies are investing in alternative energy such as natural gas and biofuel. He said Exxon Mobil acquired a natural gas company to power energy plants, not vehicles. As for biofuels, he said OPEC completely controls oil companies, and they’re making these investments just to look good. He also downplayed the Gulf oil spill as if it were no big deal, and we’ve only basically had three – this one, Exxon Valdez, and Santa Barbara. I would beg to differ – a lot more than that.

Someone asked me later what I thought about what Pickens said about oil companies investing in something besides oil. I didn’t know what to say – I could see where he’s coming from, but I still think oil companies are also investing because drilling for oil will soon get very expensive (what’s referred to as peak oil) as will the prices at the pumps. That along with government regulations in the industrial world means this industry needs to expand its investment portfolio.

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