Exxon (XOM): Fuel From Algae

One piece of news no one ever expected to hear is that Exxon (XOM) will put $600 million into a project that seeks to convert algae into liquid fuel for transportation. The huge oil company says that any commercial success of the project is five to ten years off, but Exxon has to be concerned that, at some point in the next several decades, the amount of fossil fuel in the ground and under the oceans will begin to drop.

According toThe New York Times, the biofuel investment will be done in partnership with Synthetic Genomics, a leader in the field of research and production of renewable energy. The paper says that “according to Exxon, algae could yield more than 2,000 gallons of fuel per acre of production each year.” That compares to only 250 gallons from corn.

The press and advocates of green energy are going to greet the Exxon move with substantial skepticism. The company could be hedging a bet on its own future by leading the way in converting plant-based raw material into liquid to power cars and other machines with internal combustion engines. On the other hand, it may be using the announcement as a public relations ploy to get alternative energy advocates off of its back. The $600 million investment is a lot of money for most corporations, but it is not for Exxon.

One positive result that will come from Exxon’s actions is that research and production of biofuels will be advanced, whether the oil company ever plans to use it or not.

Douglas A. McIntyre