Big oil vs alternatives? Doesn't make sense to me

Interesting article on CNET today about "Big Energy's alternative challenges." One of the observations here is that Exxon/Mobil sees no need to be investing in alternative energies; they see their future remaining in oil/gas.

"Know thyself" is of course critical to success, and Exxon is expressing self awareness about their core competencies (oil & gas), so I don't actually fault them this.

But where I do fault them is that I think they have a decision to make, and I don't think that they realize that they are failing to make that decision. Specifically, are they an energy company or an oil and gas company?

They seem to be divided on this; they position themselves as an energy company, but they stay in oil & gas. This is a recipe for long-term failure, I think; they should pick one or the other. If they are an energy company, then the goal is continuity and diversity of supply, and alternatives are not at all competitive; to an energy company, there is nothing inherently special about oil and gas - they happen pencil out as the most economical sources of energy today, but if that changes tomorrow, that's fine. They can still source their own oil and gas if it makes sense to do so. But notice that intrinsic in the qualifier "if it makes sense to do so" is the presumption that they do not have to be in the oil/gas business.

BP and Chevron have decided that they are energy companies - almost entirely hydrocarbon based today to be sure, but they are both positioning themselves to pounce upon any competitive technology that furthers their goals as energy companies; they're not ideological about it being oil.

If Exxon doesn't want to be an energy company, then they can certainly claim competence as an oil and gas company. But this implies a different set of priorities. An oil/gas company is all about supplying energy companies with oil and gas, and securing supplies and refining capacity is paramount. In this model, it does indeed make sense to forego investments in alternative energy sources, because those alternatives are in fact competitive with core business. The name of the game in oil/gas is efficiency and maintaining oil's economic edge over other sources of energy. And your goal is to sell as much product to as many people as possible, so one might legitimately ask why an oil/gas company would maintain its own retail network.

Either model can work just fine; I'm not trying to tell Exxon which is the right model for them. The problem as I see it is simply that Exxon is half pregnant, and half-pregnancies rarely result in happy outcomes. Energy companies need diversity of supply, but oil/gas companies want to be exclusive suppliers. These goals are inherently in conflict. Exxon ultimately needs to decide which it is.