While Big Oil is investing some money into alternative energy, for the most part they see the extraction and refining of oil as the core business for a long time to come. From what I have seen, the phrase "We aren't running out of oil" is not just a line to appease concerned parties. It is the sincere belief of those making the claim. Right or wrong, it is this belief that is driving current investment decisions.

Even BP, who has generated a lot of publicity from their alternative energy investments, is still investing far more into the core oil business. BP's CEO John Browne admitted as much recently on CNN's We Were Warned:

John Browne: We are investing $15 billion in the oil and gas business because it is up and running.

Frank Sesno: So alternatives are still a drop in the bucket.

John Browne: At the moment, of course they are.

When Big Oil decides that there is money to be made from alternative energy, they will start moving in that direction. Concerns about Global Warming will be unlikely to accelerate this move, unless it clearly and directly affects profits. There is no guarantee that oil companies won't miscalculate and make their move too late. But the investment decisions will be based on enhancing shareholder return, and right now the general belief is that the best way to achieve this is by investments geared toward bringing more fossil fuels to market.

I am not making judgments about the wisdom of this course of action. I am just stating the way it is. To stimulate a serious move away from fossil fuels, the market is going to have to drive prices up much higher, or the government is going to have to intervene. Government intervention can take several different forms. One, they can subsidize alternative energy technologies that they believe have the best opportunity to compete against fossil fuels. I don't particularly favor this option, because I don't believe the government will necessarily fund the best long term options.

The second way government can intervene is to substantially raise taxes on fossil fuels, while leaving the (renewable) alternatives untaxed and unsubsidized. This would allow the alternatives to compete against one another on a level playing field. I also believe that government should intervene in a BIG way to encourage conservation and prepare us for what's to come, but that is a subject worthy of its own essay.