A January 22, 2025, Wall Street Journal article “Oil Majors Flirt With Electricity “by Jinjoo Lee reminded me of how poor I was at forecasting the future. The article related that a number of major oil companies, Exxon-Mobil and Chevron were mentioned, were looking to invest in electricity generation to power the rising demand for data centers.  The experience major oil companies had with building and operating gas-fired power plant to supply their own operations was cited as a qualification for their entry into the market for powering data centers on site.

The major oil companies have diversified into one aspect of the electricity industry in the past with most having made investments in renewable energy production such as solar or wind power. None remain today heavily involved in those businesses as they quickly discovered that core competencies in exploring, developing and producing oil and natural gas deposits were of no advantage in siting solar and wind facilities.  Okay, that’s a personal opinion.

However, thirty years ago with the introduction of competition in electricity and natural gas in retail sales I was convinced that the major oil companies would be the long-term survivors and winners in retail energy markets. My logic was as follows. In the 1980s and 90s millions of Americans held credit cards for purchases of gasoline from America’s oil majors.  The oil major’s brand names, logos and reputations were national, stellar and familiar. If, as a family, you were already spending 3% of your income, today about $180 a month, with an oil major for gasoline why wouldn’t you choose to buy your electricity or natural gas supply from the same entity. The oil company was an entity which already had issued you a credit card and was sending you a monthly bill, but that it seems in retrospect was not enough.

So, it did not happen the way I had forecast. I suppose it didn’t happen for the same reason that oil major left the renewable energy production space. The new business line didn’t align with the oil major’s core competencies. While the retail credit and billing competencies existed, knowledge of the rest of the value chain did not. The core competencies of acquiring electricity and natural gas at wholesale were complicated by state and federal regulation and the markets were local by state and not regional or national

A national market for electricity and natural gas marketing at retail never came to fruition. A limited number of states (13) have allowed retail competition in electricity and more (32) have allowed some form of retail competition in natural gas. Each state had and have today their own rules for retail sales.

Competition was also handicapped with some states allowing the incumbent electric utilities to provide competitive services as “providers of last resort” sometimes with rates below market. In other cases, public utility affiliates were allowed to compete and their “brand names” related to the historic electricity provider proved to be an advantage.

No, the oil majors did not make it into the fragmented competitive electricity and natural gas markets. It’s a pity as I would have liked to have been right in my prediction. Perhaps I’ll turn to astrology which is today very popular, or the system most popular with Babylonians, Etruscans, Greeks and Roman emperors: haruspicy. [i]