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Investing in Green Energy Through Big Oil Companies

Commodities / Oil Companies Jul 03, 2012 - 03:35 AM GMT

By: InvestmentContrarian


Sasha Cekerevac writes: There is a growing movement to invest in green energy. The thinking behind this movement is that oil stocks are bad and green energy is good. That type of black-and-white thinking is silly, and it doesn’t appreciate that in life, everything is a shade of gray.

While many think that oil stocks are evil organizations generating as much corporate profits as possible along the way, I think there’s a big gap between reality and perception. Oil stocks are no different than any other business; their goal is to try to generate corporate profits for the shareholders.

If you’re a capitalist, you should be applauding the fact that oil stocks, like all businesses in the world, are trying to create generate corporate profits. I would say that oil stocks are simply doing on a larger scale what every business attempts to do: maximizing corporate profits. Without corporate profits, you have no company, hence, no jobs. We’ve seen what happens when a society is not run for profit through the collapse of every communist nation in the world, such as the former U.S.S.R. China has only succeeded because it’s now embraced the notion that to thrive in the world, businesses must generate corporate profits.

But the shocker for many is that some of the leaders in green energy development have been oil stocks, such as BP p.l.c. (NYSE/BP). Oil stocks have spent billions of dollars on green energy initiatives. BP, for one, has invested over $7.0 billion since 2005. While some might think this is just a PR stunt, I disagree. The truth is that oil stocks like BP see the potential for large corporate profits over the next century. While corporate profits through oil production have been significant, even firms like BP know there’s a limit to how much they can extract. It’s just common sense to use the corporate profits from oil to develop new green energy sources.

Since 2005, the BP Alternative Energy division has grown from just a couple of employees to 5,000 currently. The hunt for corporate profits involves biofuel, wind or solar energy, and any other possible avenue to generate green energy. All of life is based on incentives, and the drive to increase corporate profits is the purest of all. Without this drive, we would be nowhere near as technologically advanced as we are today.

Oil stocks should not be reprimanded for their hunt for corporate profits. This is the goal of everyone in business, from a large organization to a small business owner. Without corporate profits, you have no business and no economy. Everything we have in this world, from cars, to skyscrapers, to air conditioning, has come from one source: the drive to generate corporate profits. Don’t applaud an ice cream maker and then denigrate oil stocks just because you don’t like the product. The market is the truth.


Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

Copyright © 2012 Investment Contrarians- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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