“Too Far, Too Fast”: BP’s Green Energy Retreat and What It Means for Oil

Last week, I flicked through a recent report released by the energy giant BP and its long-term energy outlook.

As you might know, BP has been on the renewables bandwagon for several years… Promoting the idea of going green.

That’s a tad unusual given that its principal business is in oil and gas extraction!

For years, BP has openly celebrated its pivot away from oil and gas and heavy investment towards renewables.

For that reason, some view BP as the golden child among oil and gas producers… A model for other energy giants to follow as they pivot towards greener forms of energy.

Yet, others have seen BP’s decision to shift green as self-destructive and catastrophic to its status as a profit-making enterprise.

Either way, this oil giant is undertaking a dramatic U-turn in 2025.

Recently admitting that it went:

“Too Far, Too Fast”

Money talks in the game of making profits and trying to achieve share price gains.

And that’s why BP’s shareholders recently demanded answers from management, questioning the company’s long-term strategy to invest in green renewables.

BP’s profits had underperformed relative to less green-focused oil and gas peers. And that’s why management recently buckled, acknowledging its miscalculations.

Murray Auchincloss, BP’s chief executive, said the energy giant had gone “too far, too fast” in the transition away from fossil fuels, and that its faith in green energy was “misplaced”.

And with that, BP cut its renewable energy investments in a big way this year.

While also refocusing on increasing oil and gas production to drive up profits and appease shareholders!

Under its U-Turn strategy, BP announced that it would increase its investments in oil and gas by approximately 20% to $10 billion per year, while reducing previously planned funding for renewables by more than $5 billion.

Has BP turned bullish on oil?

The company’s latest report draws on the idea that oil and gas demand will not collapse anytime soon… A revision of its earlier predictions.

In fact, according to the company, by 2035, the world is expected to consume between 85 and 100 million barrels per day (Mb/d) of oil, accounting for approximately 30% of global energy — a share only slightly lower than its current level.

But one additional tailwind is the persistent use of oil as a feedstock in the petrochemicals sector.

That includes all the associated by-products from oil and gas processing, think fertilisers, synthetic fibres and plastics.

Components that underpin our modern economy, almost as much as the oil and gas energy market itself.

And while oil and gas (as an energy source) can be replaced through renewables… The byproducts that come from oil and gas production are far less easy to replace.

It’s why some argue that this is the most resilient part of future oil and gas demand.

And one of the world’s most successful investors tends to agree…

The Warren Buffett Trade

Last week, I detailed Warren Buffett’s plans to acquire part of a US oil and gas company called Occidental Petroleum [NYSE: OXY].

Which part, specifically?

Occidental’s petrochemical arm!

This is why you need to watch market insiders and follow their lead.

Oil’s role as a feedstock for the petrochemical industry could keep O&G demand far stronger than most anticipate.

Whether you like it or not, an expanding global economy (especially in Asia) will drive more demand for plastics, fertilisers and other synthetic products.

That’s because options for substitution are limited.

And BP agrees…

It projects that the growing demand for oil and gas as a feedstock for the petrochemical market will offset any declines associated with EV uptake.

It all boils down to this: the oil and gas market is going to be with us for some time yet.

For now, oil and gas stocks are being priced for annihilation… Businesses that seemingly have no future market.

But add in supply fragmentation, the risk of secular inflation and geopolitical upheaval… All bullish tailwinds for oil…

The potential for a major sentiment reversal in the oil and gas market is about as good as you could get as an investor!

If you’d like to explore this opportunity more and check out some of the investment ideas I’m looking at, you can watch my latest presentation here.

Until next time.