BP's New Ad Campaign

I have been watching BP's ad campaign for a few months now. You've probably seen them- interviews with people on the street about what oil companies "should" be doing.

The various staged responses involve big oil firms needing to go green, and find new energy sources to power our world more cleanly.

Then the requisite solemn voice-over announces that BP is already doing all sorts of lovely green things for its customers and the world.

There's just one problem. Oil companies historically have gotten into trouble, and wasted money, when they try to be something besides an oil company.

For example, in the 1980s, Exxon tried to break into the information equipment business. Living near their operations in NJ, I had colleagues who had worked there, and witnessed the rise and fall of the division. It stemmed from the mistaken belief, in the late 1970s, that Exxon's oil business would diminish in a few decades. The Exxon Enterprises unit was created to house a large assortment of various non-oil businesses whose mission was to grow sufficiently to take up the eventual slack of a declining crude oil-driven business.

It didn't work out that way. Instead, Exxon Enterprises' units had their collective heads handed to them in their respective product/market niches. And it never had the full support of the dominant oil executives, either. If memory serves, a future CEO, Lee Raymond, shut the group down to stem the waste of hundreds of millions of expense dollars.

It seems that utility-like firms have a tendency to wander astray when their sector's outlook is bleak, typically racking up huge losses.

Anybody else recall a little thing called "Penn Central?" When the old railroad tried to become a "transportation" company, and eventually would up in Chapter 11?

So I view these BP commercials with great amusement. I think BP is still suffering from the culture with which outgoing chairman Brown suffused it. It's trying to stray from being a good, well-run oil company, and, instead, apologize for what it is, and try to change into something else.

On the other hand, Rex Tillerson, ExxonMobil's new CEO, was unabashed today on CNBC about being a growing, well-run, profitable oil company. No apologies from him.

Oil companies should seek, find, recover, refine, and distribute oil. That's where their core strengths are. When they try to do radically different things, their shareholders suffer.

Is this really such a difficult concept to grasp?