Chevron winning while ExxonMobil slips

The past quarter has offered differing paths for two major international oil companies. ExxonMobil showed what is for them a rare earnings slip. A result made even more surprising by the fact that they were the only international oil producer to show a drop.

Meanwhile, Exxon’s rival Chevron, blew well ahead of even Wall Street’s expectations, posting a double-digit production increase. Shell and Statoil also showed good earnings.

The news is especially good for Chevron, and troubling for its competitors, because the company has been keeping a lid on profits in recent years, funneling a lot of its ready cash into expansion projects in both the Pacific and the Gulf of Mexico. The fact that the company has been able to continue generating solid profit gains in a flat market has a lot of people excited.

Not that one disappointing quarter has ExxonMobil panicking. The company plans to match Chevron step for step in expansion, especially in the Gulf of Mexico. Good news for investors, though the message may not play as well back home, with a nation – and a world – in transition on energy.

Most Americans know and understand the economy still runs on oil. From transportation to electric generation to plastics, Americans love petroleum based products. That said, there’s a generation coming up, that is very aware of oil pollution, and this generation, more than any before it, is actually pushing to see something done to stop pollution from fossil fuels.

While it may be premature to say Big Oil’s days are numbered, their popularity is certainly waning, and it’s not inconceivable that these companies will go the way of the Big Tobacco companies that fell from grace as Generation X came of age.

For Exxon, Chevron or any other oil company to stay competitive going forward, they will have to innovate and accelerate expansion of and investment into alternative energy sources. It will take time, and it might be a slow transition, but there will be a tipping point. Public opinion is shifting that fast. That’s not to say consumption is down all that much. After a brief hybrid blip in the mid to late 2000s, SUVs and bigger trucks are back. While some national political leaders are pushing for alternative transportation initiatives, Americans still love their cars, and that doesn’t appear to be changing anytime soon.

However, what is powering those cars may be changing. Forget increasing emissions and mileage standards, it’s Elon Musk’s Tesla that will really signal the sea change. With the release of the Model 3, Musk has proven a fully-electric vehicle really can be a family car. If the Model 3 is successful, the dominoes may begin falling very quickly, and oil companies will need to be prepared for a major shift in consumer appetite for fossil fuels.

Robert Gillings is an award winning writer, producer, actor architectural designer, philosopher and financial consultant.