European oil supermajors are slashing costs but sparing their renewable energy business. U.S. giants are cutting across the board and focusing on their core business above all else. Both are preparing for the future, but who's doing it right?

A recent Reuters analysis into European and U.S. supermajors' approach confirms what is becoming increasingly obvious: the Europeans are pushing strongly into renewables while the Americans are sticking with oil and gas.

Of course, the European supermajors are subjected to more pressure to clean up their fossil fuel act than their American peers. European governments are dead set on a green future, and the environmentalist lobby is stronger than it is in the United States, where the federal government is an open and quite vocal supporter of the fossil fuel industry.

But is this all there is?

The big question is whether peak oil will come sooner rather than later and, following this, is it wise to start preparing for a post-oil world sooner rather than later. Shell, BP, Total, Eni, and Equinor appear to belong to the former camp: peak oil will be here earlier than we previously expected, so now is the time to start diversifying into alternative energy sources and revenue streams.

Exxon, Chevron and Conoco, on the other hand, seem to have a different opinion, expressed succinctly by the chief executive of Exxon, Darren Woods, on the conference call for the company's first-quarter financial results.

"I know that there are a lot of different views on what the future holds," Woods said, "but I want to be clear on how we see it: The long-term fundamentals that drive our business have not changed."

Many would disagree. The drive to clean up economies that started in Europe has spread to some of the biggest oil consumers, notably China and India, with both drafting ambitious emissions-cutting plans that would inevitably slash oil demand. But that was before the coronavirus pandemic struck. Now, oil demand has been hurt in both countries, although it is now beginning to recover. Still, ambitious—and costly— emissions-cutting plans might need to wait as the economic recovery takes priority.

This is not the case with Europe, which has already tied its recovery from the pandemic to its green targets. But is Europe enough of a factor in oil demand to use it as a weathervane for what's coming elsewhere? It might not be a bad idea because the clean energy drive is spreading as the costs of renewable energy fall. And now, it's supermajors that will be actively promoting this renewable energy to a greater extent. They are investing in it, after all, even if it is only a small portion compared with what they are spending on their core business.

The green lobby regularly criticizes Big Oil for this, demanding that it spend more on clean energy. And Big Oil will oblige, at least on the European side of the Atlantic. With activist investors making it their lives' mission to wean Big Oil off the business that made it big, and with governments determined that there is only one way forward--and that way does not emit CO2--it's only a matter of time.

Meanwhile, activist investors are not sparing U.S. supermajors either. One of Exxon's larger investors, Legal & General Investment Management, earlier this month said

Chevron is being

"The company has failed to provide shareowners with the needed information to adequately assess their climate-related lobbying objectives," CalPERS said in a filing with the Securities and Exchange Commission.

At the same time, banks are beginning to curb their lending exposure to the oil and gas industry, albeit modestly, and in what you might call a non-risky area, namely Arctic drilling. Few companies are interested in costly, uncertain Arctic oil exploration, so the grand statements

In the context of these developments, it seems that the Europeans have the winning strategy. They are positioning themselves for a lot less carbon-intense future, in which Shell, for example, plans to be the largest global power utility. But does this mean oil will die--and with it, Exxon and Chevron?

"Despite what a lot of activists say, it is entirely legitimate to invest in oil and gas because the world demands it," Shell's CEO Ben Van Beurden said last year. "We have no choice."