Jessica Lynn
9.15.20
A few years back when I first arrived in California on the Chevron Hydrogen plant I was stunned. Immediately, I felt insignificant compared to the giant industrial “city” Chevron had acquired and laboriously was trying to polish into a fully functional, cleaner fuel source. Riddled with a dark backstory of bankruptcy (original owner), bad permitting, and massive fire, the plant was a sore sight (site). Many of us came from various construction/mechanical contractors nationally and internationally, to rebuild the massive hydrogen modernization project.
(Train 1 on the left Train 2 on the right)
As I reflect on my time working on Chevron, many questions I had then, resonate now. I was always curious why any company would spend a Billion dollars to invest on an old, dead plant. Reading through our required materials and my own personal curiosity, lead me to something I hadn’t thought of before. The automotive industry: a main driver to refocus and re-invest into renewable energy. Big oil has continued to lose a stronghold in the market, the barrel prices dropping below $40. Car companies continue to develop new ways to supply to an expanding market (Millennials and Gen Z.) who want a cleaner, more eco-friendly option. Factors such as new technology (digital age) increase remote accessibility, leading to less need for people to travel. Ride sharing options such as Uber and Lyft provide easy access to cars without having to own a vehicle “a 10 percent share for electric vehicles in the U.S. alone would easily remove more than 1 millions barrels from crude oil demand.” (Ghouri & Vries, 2016). This is prevalent as urban areas become more robust, and concerns over air pollution and road congestion increase.
Automotive companies are responding to this demand “aggressively expand in this area between now and 2020. This includes the German manufacturers BMW, Mercedes and the Volkswagen Group, Ford, General Motors, Volvo and Honda.” (Ghouri & Vries, 2016). Fact: there is less wear and tear on an electric vehicle due to minimal moving parts. This means fewer shop visits from customers for repairs ($$) but a higher sales volume, as more people trade-in or buy new electric vehicles. Individuals are looking at sustainable car options as a long-term investment. Fewer moving parts and less maintenance is a major plus to consumers. It’s not about just buying a car, but how to best spend money and the return on investment.
The strategic planning and external/internal factors businesses are considering, will continue to illuminate what once was a successful business model, creating an opportunity to re-assess and implement a better narrative to stay relevant. My personal experience and understanding come to the same conclusion; I still do not believe Chevron made the best use of time and money completing the Modernization Project. However, it remains an investment to the “greener” market, a fallback to oil.
Resources
Chevron Policy, G. (2018, December 31). Refinery Modernization. Retrieved September 12, 2020, from https://richmond.chevron.com/our-businesses/refinery-modernization
Crude Oil Prices Today. (1970, January 01). Retrieved September 12, 2020, from https://oilprice.com/
Ghouri, D., & Vries, A. (2016, March 09). The Second Automotive Revolution: Implications for the Oil Industry. Retrieved September 12, 2020, from https://energyfuse.org/the-second-automotive-revolution-implications-for-the-oil-industry/
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