Why Exxon and Chevron are doubling down on fossil fuel energy with big acquisitions
Prices at a Chevron Corp. gas station in Fontana, California, on Thursday, July 8, 2021.
Kyle Grillot | Bloomberg | Getty Images
On Monday, Chevron announced plans to acquire oil and gas company Hess for $53 billion in stock.
Less than two weeks prior, Exxon Mobil announced it is acquiring oil company Pioneer Natural Resources for $59.5 billion in stock.
On Tuesday, the International Energy Agency released its annual world energy outlook report that projects global demand for coal, oil and natural gas will hit an all-time high by 2030, a prediction the IEA’s executive director Fatih Birol had telegraphed in September.
“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if,’ it’s just a matter of ‘how soon’ — and the sooner the better for all of us,” Birol said in a written statement published alongside his agency’s world outlook. “Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”
But based on their acquisitions, Chevron and Exxon are seemingly preparing for a different world than the IEA is portending.
“The large companies — nongovernment companies — do not see an end to oil demand any time in the near future. That’s one of the messages you have to take from this. They are committed to the industry, to production, to reserves and to spending,” Larry J. Goldstein, a former president of the Petroleum Industry Research Foundation and a trustee with the not-for-profit Energy Policy Research Foundation, told CNBC in a phone conversation Monday.
“They’re in this in the long haul. They don’t see oil demand declining anytime in the near term. And they see oil demand in fairly large volumes existing for at least the next 20, 25 years,” Goldstein told CNBC. “There’s a major difference between what the big oil companies believe the future of oil is and the governments around the world.”
So, too, says Ben Cahill, a senior fellow in the energy security and climate change program at the bipartisan, nonprofit policy research organization, Center for Strategic and International Studies.
“There are endless debates about when ‘peak demand’ will occur, but at the moment, global oil consumption is near an all-time high. The largest oil and gas producers in the United States see a long pathway for oil demand,” Cahill told CNBC.
Pioneer Natural Resources crude oil storage tanks near Midland, Texas, on Oct. 11, 2023.
Bloomberg | Bloomberg | Getty Images
Africa, Asia driving demand
Globally, momentum behind and investment in clean energy is increasing. In 2023, there will be $2.8 trillion invested in the global energy markets, according to a prediction from the IEA in May, and $1.7 trillion of that is expected to be in clean technologies, the IEA said.
The remainder, a bit more than $1 trillion, will go into fossil fuels, such as coal, gas and oil, the IEA said.
Continued demand for oil and gas despite growing momentum in clean energy is due to population growth around the globe and in particular, growth of populations “ascending the socioeconomic ladder” in Africa, Asia and to some extent Latin America, according to Shon Hiatt, director of the Business of Energy Transition Initiative at the USC Marshall School of Business.
Oil and gas are relatively cheap and easy to move around, particularly in comparison with building new clean energy infrastructure.
“These companies believe in the long-term viability of the oil and gas industry because hydrocarbons remain the most cost-effective and easily transportable and storable energy source,” Hiatt told CNBC. “Their strategy suggests that in emerging economies marked by population and economic expansion, the adoption of low-carbon energy sources may be prohibitively expensive, while hydrocarbon demand in European and North American markets, although potentially reduced, will remain a significant factor.”
Also, while electric vehicles are growing in popularity, they are just one section of the transportation pie, and many of the other sections of the transportation sector will continue to use fossil fuels, said Marianne Kah, senior research scholar and board member at Columbia University’s Center on Global Energy Policy. Kah was previously the chief economist of ConocoPhillips for 25 years.
“While there is a lot of media attention given to the increasing penetration of electric passenger vehicles, global oil demand is still expected to grow in the petrochemical, aviation and heavy-duty trucking sectors,” Kah told CNBC.
Geopolitical pressures also play a role.
Exxon and Chevron are expanding their holdings as European oil and gas majors are more likely to be subject to strict emissions regulations. The U.S. is unlikely to have the political will to force the same kind of stringent regulations on oil and gas companies here.
“One might speculate that Exxon and Chevron are anticipating the European oil majors divesting their global reserves over the next decade due to European policy changes,” Hiatt told CNBC.
“They are also betting domestic politics will not allow the U.S. to take significant new climate policies directed specifically to restrain or limit or ban the level of U.S. oil and gas domestic production,” Amy Myers Jaffe, a research professor at New York University and director of the Energy, Climate Justice and Sustainability Lab at NYU’s School of Professional Studies, told CNBC.
Goldstein expects the ever-expanding U.S. national debt will eventually put all kinds of government subsidies on the chopping block, which he says will also benefit companies such as Exxon and Chevron.
“All subsidies will be under enormous pressure,” Goldstein said, the intensity of that pressure dependent on which party is in the White House at any given time. “By the way, that means the large financial oil companies will be able to weather that environment better than the smaller companies.”
Also, sanctions of state-controlled oil and gas companies in countries like those in Russia, Venezuela and Iran are providing Exxon and Chevron a geopolitical opening, Jaffe said.
“They likely hope that any geopolitically driven market shortfalls to come can be filled by their own production, even if demand for oil overall is reduced through decarbonization policies around the world,” Jaffe told CNBC. “If you imagine oil like the game of musical chairs, Exxon Mobil and Chevron are betting that other countries will fall out of the game regardless of the number of chairs and that there will be enough chairs left for the American firms to sit down, each time the music stops.”
An oil pumpjack pulls oil from the Permian Basin oil field in Odessa, Texas, on March 14, 2022.
Joe Raedle | Getty Images News | Getty Images
Oil that can be tapped quickly is a priority
Known oil reserves are increasingly valuable as European and American governments look to limit the exploration for new oil and gas reserves, according to Hiatt.
“Notably, both Pioneer and Hess possess attractive, well-established oil and gas reserves that offer the potential for significant expansion and diversification for Exxon and Chevron,” Hiatt told CNBC.
Oil and gas reserves that can be brought to market relatively quickly “are the ideal candidates for production when there is uncertainty about the pace of the energy transition,” Kah told CNBC, which explains Exxon’s acquisition of Pioneer, which gave Exxon more access to “tight oil,” or oil found in shale rock, in the Permian basin.
Shale is a kind of porous rock that can hold natural gas and oil. It’s accessed with hydraulic fracking, which involves shooting water mixed with sand into the ground to release the fossil fuel reserves held therein. Hydrocarbon reserves found in shale can be brought to market between six months and a year, where exploring for new reserves in offshore deep water can take five to seven years to tap, Jaffe told CNBC.
“Chevron and Exxon Mobil are looking to reduce their costs and lower execution risk through increasing the share of short cycle U.S. shale reserves in their portfolio,” Jaffe said. Having reserves that are easier to bring to market gives oil and gas companies increased ability to be responsive to swings in the price of oil and gas. “That flexibility is attractive in today’s volatile price climate,” Jaffe told CNBC.
Chevron’s purchase of Hess also gives Chevron access in Guyana, a country in South America, which Jaffe also says is desirable because it is “a low cost, close to home prolific production region.”
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The Greek cities of Athens and Thessaloniki are popular tourist spots, and those tourists are about to breathe a little bit easier – literally! – thanks to nearly 90 new electric garbage trucks from Mitsubishi Fuso.
The Daimler-owned Mitsubishi Fuso brand has been making big moves since export of its newest electric eCanter medium duty truck kicked off earlier this year. First expanding to Hong Kong, and now taking orders in the EU.
“Thanks to its compact dimensions and high chassis load capacity, the electric Next Generation eCanter is ideal for waste disposal companies that drive on narrow roads,” says Florian Schulz, Head of Sales, Marketing and Customer Services. “In addition, the vehicle is locally emission-free and quiet, so that garbage can be emptied early in the morning in densely populated areas. This makes it particularly suitable for municipal applications.”
One of the most important goals the cities’ governments had was to quiet down the garbage collection process. To that end, Greek body manufacturer KAOUSSIS has put a lot of development work into the upfit body to quiet the hydraulic and compaction actions. The company is calling its refuse body “the first of its kind,” creating a market advantage for the electric eCanter while meeting all EU technical regulations for operating waste disposal vehicles with standing personnel.
The hydraulic system employs proportional, electro-hydraulically operated directional valves that operate at a maximum pressure of 180 bar. KAOUSSIS says it’s specially designed for EVs, and is compatible with garbage bins between 80 and 390 liter (aka: really big) capacities. The lift also features a dynamic weighing system that records the weight of the waste with an accuracy of up to ±0.5 kg (about a pound).
“We have had a very close cooperation with KAOUSSIS for over 30 years,” says Antonios Evangeloulis, Director of Sales & Marketing of the Greek importer & general agent for Daimler truck products and services Star Automotive Hellas. “All the necessary tools, safety measures, technicians, training and certifications are in place and we are able to offer excellent after-sales support for these vehicles. Overall, it was an exciting project that we were able to realize together.”
Forty of the new electric refuse trucks are expected to be deployed by the end of November, with the balance expected to be delivered over the course of 2025.
Electrek’s Take
Electrifying the commercial truck fleet is a key part of decarbonizing city truck fleets – not just here in the US, but around the world. I called the eCanter, “a great product for moving stuff around densely packed city streets,” and garbage is definitely “stuff.”
Here’s hoping we see more “right size” electric solutions like this one in small towns and tight urban environments stateside somewhat sooner than later.
SOURCE | IMAGES: Daimler Trucks, via Charged EVs.
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![Italian DC fast charger maker Alpitronic enters the US market [video]](https://i0.wp.com/electrek.co/wp-content/uploads/sites/3/2024/09/Seite-1-KeyVisual_alpitronic_2hypercharger-scaled-1.jpg?resize=1200,628&quality=82&strip=all&ssl=1)
Electrek‘s Seth Weintraub went to Alpitronic America’s new HQ to speak with CEO Mike Doucleff about its plans to roll out its ultra-fast chargers across the US.
Bolzano, Italy-based Alpitronic was founded in 2009, and it specializes in the development and production of DC fast chargers. The global company’s best-known product line is the Hypercharger, an ultra-fast EV charging station that can deliver charging power from 50 kW to 400 kW, depending on the model.
Alpitronic Americas recently announced an agreement with Mercedes-Benz High-Power Charging to become the first DC fast-charging network to deploy Hypercharger 400 units at scale in the US.
Alpitronics Americas’ new headquarters’ 68,000-square-foot office and industrial space in Charlotte, North Carolina, includes a diagnostics laboratory and repair center, a spare parts warehouse, a training center, and space for as many as 300 employees.
The Bolzano, Italy-based company’s Hyperchargers achieve, on average, an efficiency rate greater than 97.5%, and that its repair and service network can service chargers anywhere in the US.
Alpitronic cofounder and CEO Philipp Senoner said, “As a natural part of Alpitronic’s growth, we are anxious to expand our industry-leading Hypercharger network from Europe, where we are market-share leader, to North America. We are pleased with the talent we are finding in North Carolina and look forward to setting a new standard for the EV charging network in the US.”
Alpitronic chargers support all EV brands. Pre-production units have been tested publicly in Rock Hill, SC, and Portland, OR. The first US-built, public chargers are expected to be installed and available in October.
Seth and Mike Doucleff discuss what Aliptronic’s main driver was to come to the US, what attracted them to Charlotte, and what the company thinks the future of DC fast chargers is in the US, among other things. Their conversation begins at 00:41 on the Electrek podcast below:
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![Volvo CE rolls out some new hotness at Volvo Days 2024 [part 1]](https://i0.wp.com/electrek.co/wp-content/uploads/sites/3/2024/09/IMG_3231.jpg?resize=1200,628&quality=82&strip=all&ssl=1)
This week, Volvo Group held its once-every-three-years “Volvo Days” event in Shippensburg, PA for the first time since the pandemic, showing off tons (literally!) of new equipment, new trucks, and new concepts – including a couple of “world’s first” debuts.
What is Volvo Days? That might require a bit of background …
The heavy equipment world operates on something of a three-year cycle. ConExpo, the industry’s biggest trade show, happens every three years. That sets the tone, with companies showing off all their hottest concepts and forward-thinking new projects. That’s year 1. Year 2 is typically when shows like Volvo Days typically take place, with manufacturers rolling out the production versions of the concepts they showed at ConExpo and inviting a mix of dealers, end-users, and journalists in to try out some of what got showed at ConExpo. Year 3 is more insular, with the manufacturers bringing in salespeople to get them trained on new products and prepare them for how to talk about what the company is planning to show at next year’s ConExpo.
ConExpo was last year, so this year we get Volvo Days – for the first time since 2018, in fact, since the 2021 event was canceled due to COVID. That makes this the first Volvo Days in six years … and expectations were high.
The kickoff
Volvo kicked off the week’s events with a drone display highlighting the company’s construction equipment history – appropriate, given that the event was held at Volvo CE’s Pennsylvania engineering and production campus. The drone show was followed by a genuinely impressive, highly choreographed equipment ballet that featured new electric equipment shown for the first time in North America, as well as the new-for-2025 Volvo VNL and Mack MD Electric trucks doing some heavy lifting and hauling.
The show lasted well over thirty minutes, and it was impossible for me to keep track of everything that was happening, but you can get a sense of it in the video (above).
Compact electric equipment
Volvo had its new, in-production L20/120 Electric wheel loader and ECR25 Electric excavator front and center in its reception center, along with information highlighting their competitive advantages in the compact equipment space.
The best thing about Volvo Days, however, isn’t that they have interesting vehicles on display – it’s the fact that nearly every one of those interesting vehicles is available to experience first hand … including the 30-ton EC230 Electric excavator.
All the electric excavators (even the mini) were incredibly smooth and quiet, with noticeably fewer vibrations than their diesel counterparts … which we also got to play with.
That said, I’m not a “real” equipment operator, which means my seat of the pants impressions are probably worth less than those of the people who use these things every day. That’s why I was glad to have Mike Switzer, my co-host on The Heavy Equipment Podcast, along for the ride.
“It’s really impressive, and the articulation on the Steelwrist is incredible,” Mike told me, after hopping out of the demo EC230. “I’ve seen it before, obviously, but I’ve never had a chance to use it. I think every municipality needs to take a look at that.”
Electric compaction
Over on the compaction side, Volvo had its DD25 Electric vibrating drum compactor on display – where the all-electric tandem roller was joined by two all-new siblings being shown off for the first time ever: a pre-production DD15 Electric “mini” compactor prototype seemingly designed for sidewalks and driveways, and the TC13 Electric trench compactor.
The TC13 Electric is designed as a walk-behind unit that uses its heavy batteries to provide the compaction mass – but those heavy batteries won’t get depleted in the hour or so of operation that most trench compactors see on a busy day. To keep the little TC13 useful throughout the day, Volvo gave it a pair of 110 and 220V outlets.
Specs weren’t released, but Volvo’s compaction brand manager claimed those outlets were more than capable of keeping the rest of the job site’s battery-operated tools running all day long, and even packed enough juice (in a pinch) to power a portable office, table saw, or drill press.
“Did you see his face when I asked if it could run an arc welder?” asked Mike, smiling. “He said, ‘It’s not something we’d advise,’ but you could tell he liked that question.”
Yeah, he did!
Electrek’s Take
Somewhere around the twenty minute mark of the “equipment ballet” show, something broke inside my brain. I think it was the sparks flying off the bucket when the L20 Electric scooped up a few thousand pounds of gravel and sand at full speed, scraping its bucket along the ground. Maybe it was the hydrogen-powered articulated loader, or the open bar.
Regardless, one thing that was made very clear at Volvo Days ’24 is that, while other companies are still developing the initial entries into the electric commercial vehicle space, Volvo has not just a full line of products – but an expanding line of products, with the company entering new spaces specifically because of the unique advantages electric offers.
As Volvo’s North American President, Scott Young, explains, the future is electric, and Volvo’s vision for the future has the company firmly in the leadership position … but more on that in part 2.
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