Why do oil companies call themselves “energy” companies?
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Listener Darshan A. from Portland, Oregon, asks:
How did oil companies come to be rebranded as “energy” companies, when their primary product is almost exclusively oil and fossil fuels?
Chevron has dubbed itself ”the human energy” company in press releases and tweets as part of an advertising campaign that it launched in 2007.
But in the late ‘90s, the superlative it preferred instead was: “one of the world’s largest integrated petroleum companies.”
As awareness about climate change has grown, companies have rebranded themselves in an attempt to show that they’re conscious about the environment.
Reports from the Intergovernmental Panel on Climate Change, a U.N. body that assesses and summarizes scientific papers on climate change, have revealed that global warming is guaranteed to rise around 1.5 degrees Celsius over the next two decades. We have until 2050 to stop adding carbon dioxide to the atmosphere unless we want to risk temperatures rising higher.
Marketplace listener Darshan pointed out that after Russia’s invasion of Ukraine, the catalyst for rising gas prices, journalistic outlets used the word “energy” when referring to oil companies.
This is likely the result of successful branding on the part of corporations, said Martin Dietrich Brauch, a senior legal and economics researcher at the Columbia Center on Sustainable Investment.
The history of the word “energy”
Although the broader public is now more aware about climate change and its consequences, the practice of using “energy” in marketing dates back decades.
Back in the early 20th century, the Texas-based company Humble called itself an oil and refining company.
But in 1961 its tagline changed to “America’s leading energy company,” said Robert Lifset, a history professor at the University of Oklahoma and co-editor of the upcoming book “American Energy Cinema.”
Lifset said that going into the 1970s, some oil companies started rebranding themselves in part due to the oil crisis. Exxon, for example, ran a marketing campaign, on how it was producing “energy for a strong America.”
In 1973, Arab member states of the Organization of the Petroleum Exporting Countries put an embargo on oil exports to the U.S. in response to the country’s support of Israel in the Yom Kippur war. That led to a shortage of oil, sending prices skyrocketing.
Lifset said the American public blamed the Arab member states and oil companies. “They were making enormous amounts of money, while it appeared the rest of the country was suffering,” he said. On top of that, Lifset added, there was a growing environmental awareness of the consequences of our reliance on oil and gas in the 1960s and 1970s.
Lifset said he thinks these companies have tried to move away from the terms oil and gas because “nobody’s against energy” and to stake out dominance in the larger energy industry.
However, some oil corporations did attempt to diversify over fears of oil shortages and rising prices, like Exxon. In 1973, Exxon, founded the Solar Power Corp. but it ended up closing it in 1984.
In the decades since, companies have employed different marketing efforts to distance themselves away from the products they’ve been known for and leaned heavily on the term “energy.”
Brauch pointed out that the IPCC, the panel that releases comprehensive reports on climate change, was formed in 1988, while countries around the world adopted the 1992 United Nations Framework Convention on Climate Change, which was aimed at stabilizing greenhouse gasses.
“This is when international attention started to be drawn to the problem and to the fact that oil companies are at the root,” Brauch said.
British Petroleum renamed itself to “Beyond Petroleum” in 2001, before eventually settling on simply BP, Brauch said. Several years later, Chevron launched its “human energy” campaign.
Chevron and BP did not respond to requests for comment by publication time.
Brauch noted that it’s not just companies that use these terms, but groups like business associations — for example, Oil & Gas UK changed its name to Offshore Energies UK earlier this year.
How fair is this label?
Lifset said that while he thinks the use of the word energy is not completely accurate and is “less than ideal,” he wouldn’t say it is unfair since oil and gas are part of the energy industry. He pointed out that companies in the wind power sector call themselves energy companies instead of wind power companies.
But while energy is a generic word, its use becomes an issue when these companies present themselves as green or climate-friendly energy companies, said Patrick Callery, an assistant professor of management at the University of Vermont.
Some oil companies have made some strides when it comes to investing in renewable energy and developing (or signing onto) solar energy projects. However, Callery said they’re still tied to their legacy businesses because they continue to be profitable.
Brauch said he doesn’t think companies should be using the term generally, and finds it misleading.
He said this is because companies are barely investing in businesses other than oil and gas and they’re lobbying against the energies they claim to be investing in.
A 2020 report from the International Energy Agency found that “investment by oil and gas companies outside their core business areas has been less than 1% of total capital expenditure.”
Brauch said these companies have an enormous historical responsibility in addressing climate change, yet their response has not been in line with that responsibility.
The Columbia Center on Sustainable Investment released a report this year looking at how much oil corporations have contributed to climate change over the span of four decades, from 1980 to 2019. The authors, which include Brauch, found that BP, Chevron, Eni, ExxonMobil Shell and TotalEnergies are responsible for 35% of the carbon footprint of the petroleum products sales sector.
“And not only do they represent this big chunk of emissions from the sector, the carbon footprint doubled in the 40-year period,” Brauch said.
Brauch said the use of the term “energy” has trickled down into our vocabulary in ways we may not even be conscious of. When people use the term, he said he doesn’t think it’s an attempt at deliberately trying to greenwash, which is the act of putting a PR spin on one’s products to make them seem more environmentally friendly than they really are.
“I think it’s more a reflection of being the victim of greenwashing, or targeted rebranding,” Brauch said. And, he added, it operates as a shorthand.
“It’s important for us to name things right, so that we can push those companies to change their corporate behavior, their business models, how they actually produce and what they actually produce,” Brauch said.
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