After decades of enjoying its status as a supermajor in the oil and gas industry, changing winds have finally caught up with British Petroleum, better known as BP. In just over the past year, a series of setbacks and statements have signaled a new direction for the firm, the most significant of which includes BP’s pivot toward renewable sources as its core line of business.
Like most heavyweights in the sector, BP’s bottom-line has incurred significant losses during the COVID-19 pandemic, the worst of which coincided with seismic fluctuations in oil prices after internal disputes arose within the OPEC+ bloc. Such conditions were followed by a rare dividend cut—BP’s first in 10 years—and then a grim and controversial assessment that the world has already reached “peak oil”, a prospect that many experts believed wouldn’t emerge until the middle or end of the current decade.
While such a forecast may be designed to justify BP’s change in strategy to shareholders, other members of Big Oil, most notably Royal Dutch Shell, have mirrored BP’s moves by slashing dividends and reorienting their attention toward the clean energy space. Nevertheless, these moves have yet to earn much appreciation from investors. Instead, the resilient rally in US capital markets points to a burgeoning interest in renewables, a moment that some have described as the passing of a “psychological Rubicon” that relegates fossil fuel investments to an inferior status.