Part of this is there is an economic World War going on, and there are many elements to it regarding what is actually happening. The U.S. is now the world's biggest producer of oil. This changes everything on multiple levels. For now, the price of oil and gas will stay low. But, at some point in the future (because drillers are stopping plans to create new drilling sites a lot world wide because of the low price of oil) eventually the glut is going to turn into a dirth of oil (not enough). At that point the world will have a worse problem than now of not enough oil. But, it won't be easily solved unless the new oil is all Shale oil because oil wells take a lot of time and planning before oil actually comes out of a well anywhere. And the longer this present oil glut continues the more oil businesses are going to be harmed in catastrophic ways worldwide.
However, the other side of this is this is really hurting countries like Russia, Iran and all oil countries on earth. So, it is hard to understand what is going to happen when the oil glut turns into a lack of oil for the world and prices go up to 10 to 20 dollars a gallon of gas or diesel around the globe. Also, almost everyone who donates to ISIS gets their money directly or indirectly from oil. So, the less oil is per barrel the less money ISIS gets to function on too. So, even Iran and Russia are happy about this.
It is all about supply and demand (the price) when there is a lot of supply like now the price will be low. But, eventually that will not be the case and likely many countries might really suffer, especially the poorest 50% when the price of oil spikes once again.
So, likely we will witness during these spikes major drops in the standards of living of people around the globe because this is what higher oil prices will tend to do with this level of ever growing populations around the globe.
So, if you are in a poor country converting to solar or wind power might be life saving in the near to far future regarding the well being of your family and friends. Because eventually almost no one might be able to afford gasoline or diesel here on earth because periodic dynamics of the world oil market brought on mainly by Syria, Iraq, Iran, Russia, Saudi Arabia and most Sunni Run nations on earth. But also the U.S. being the biggest oil producer now on earth has a part in this along with shale oil and higher prices a few years ago. But, this is all going to slowly change to not enough oil because of present dynamics ongoing. And unfortunately, the next time we get to high priced oil it might be so high no one could afford to buy it(which would be much worse than now for the average person here on earth).
Exxon, Chevron Bracing for Dark Times Ahead as Oil Slump Lingers
Exxon
Mobil Corp. and Chevron Corp., the biggest U.S. energy producers,
hunkered down for a prolonged stretch of weak prices after posting their
worst quarterly performances in several years. Exxon reported its
lowest profit since 2009 as crude prices fell twice as fast as the
world’s largest crude…
Bloomberg
CVX $88.48 -4.89%Exxon, Chevron Brace for Darker Times as Earnings Slump
Updated on
Exxon Mobil Corp. and Chevron Corp., the biggest U.S. energy producers,
hunkered down for a prolonged stretch of weak prices after posting
their worst quarterly performances in several years.
Exxon reported its lowest profit since 2009 as crude prices fell twice as fast as the world’s largest crude producer by market value could slash expenses. Chevron recorded its lowest profit in more than 12 years after the market rout forced $2.6 billion in asset writedowns and related charges. The companies’ shares fell to multi-year lows.
Stung by the worst market collapse since the financial crisis of 2008, oil explorers from The Hague to Calgary to Houston are firing staff, scaling back drilling, canceling rig contracts and reducing share buybacks to conserve cash. Chevron said the slump convinced it to lower its long-term outlook for crude prices.
“This is the beginning, not the end, of the writedown process,” Paul Sankey, an energy analyst at Wolfe Research LLC, said on Bloomberg TV. “The biggest concern is that we’ll see weaker demand over the second half of the year.”
Oil entered its second bear market since mid-2014 this month as a flood of output from North American shale regions, the Persian Gulf and deepwater fields overwhelmed consumption by refiners and chemical producers.
“Oil prices will be under downward pressure until there is evidence the glut is shrinking,” analysts at IHS Energy said in a note to clients. “This will not happen quickly unless prices fall even further from recent levels,” discouraging new drilling.
Exxon shares fell 4.6 percent to $79.21 in New York, the lowest closing price since June 2012. Chevron dropped 4.9 percent to $88.48, the lowest close since December 2010. The companies were the day’s worst performers in the Dow Jones Industrial Average index.
Exxon cut share repurchases for the current quarter in half to $500 million after net income fell to $4.19 billion, or $1 a share, from $8.78 billion, or $2.05, a year earlier, the Irving, Texas-based company said in a statement. The per-share result was 11 cents lower than the average estimate of 20 analysts in a Bloomberg survey.
Exxon reduced spending on major projects like floating crude platforms and gas-export terminals by 20 percent to $6.746 billion during the quarter, according to the statement. International crude prices fell 42 percent from the previous year to average $63.50 a barrel.
Chevron’s profit dropped to $571 million, or 30 cents a share, from $5.67 billion, or $2.98, a year earlier, the San Ramon, California-based company said in a statement. The per-share result was well below the $1.16 average estimate.
Chevron’s biggest business unit -- oil and gas production - - posted a loss as the second-largest U.S. energy company recorded a $1.96 billion writedown on assets and another $670 million charge for taxes and projects suspended because they no longer make economic sense.
Exxon Chairman and Chief Executive Officer Rex Tillerson was among the first to shrink spending as the crude rout began more than a year ago. After cutting the budget by 9.3 percent in 2014, this year’s reduction may exceed the original 12 percent target, Jeff Woodbury, vice president of investor relations, said during a conference call with analysts.
Tillerson, an Exxon lifer whose 10th year as CEO began in January, has been pessimistic about the prospects for an imminent oil-market rebound. On April 21, he told a Houston energy conference that the supply glut and low prices will persist “for the next couple of years” at least.
Those remarks proved prophetic: international crude prices that rose 45 percent between Jan. 13 and May 6 have since tumbled 22 percent, inaugurating the second oil bear market in 14 months.
“Chevron was a disaster; Exxon was a disappointment,” Fadel Gheit, an analyst at Oppenheimer & Co. In New York who rates the shares of both the equivalent of a hold and owns each. “A rising tide lifts all ships, but when the tide goes down, all ships go down.”
end quote from:
Exxon reported its lowest profit since 2009 as crude prices fell twice as fast as the world’s largest crude producer by market value could slash expenses. Chevron recorded its lowest profit in more than 12 years after the market rout forced $2.6 billion in asset writedowns and related charges. The companies’ shares fell to multi-year lows.
Stung by the worst market collapse since the financial crisis of 2008, oil explorers from The Hague to Calgary to Houston are firing staff, scaling back drilling, canceling rig contracts and reducing share buybacks to conserve cash. Chevron said the slump convinced it to lower its long-term outlook for crude prices.
“This is the beginning, not the end, of the writedown process,” Paul Sankey, an energy analyst at Wolfe Research LLC, said on Bloomberg TV. “The biggest concern is that we’ll see weaker demand over the second half of the year.”
Oil entered its second bear market since mid-2014 this month as a flood of output from North American shale regions, the Persian Gulf and deepwater fields overwhelmed consumption by refiners and chemical producers.
Avalanche of Crude
Exxon and Chevron contributed to the avalanche of supply by increasing second-quarter crude output by 12 percent and 1.7 percent, respectively. Exxon expanded oil production in every region where it operates except Australia/Oceania. All of Chevron’s growth occurred in the U.S.“Oil prices will be under downward pressure until there is evidence the glut is shrinking,” analysts at IHS Energy said in a note to clients. “This will not happen quickly unless prices fall even further from recent levels,” discouraging new drilling.
Exxon shares fell 4.6 percent to $79.21 in New York, the lowest closing price since June 2012. Chevron dropped 4.9 percent to $88.48, the lowest close since December 2010. The companies were the day’s worst performers in the Dow Jones Industrial Average index.
Exxon cut share repurchases for the current quarter in half to $500 million after net income fell to $4.19 billion, or $1 a share, from $8.78 billion, or $2.05, a year earlier, the Irving, Texas-based company said in a statement. The per-share result was 11 cents lower than the average estimate of 20 analysts in a Bloomberg survey.
Spending Cuts
Refinery profits fattened by lower crude costs were more than offset by weaker results in the company’s primary business, oil and natural gas production, Exxon said. The company’s U.S. wells lost $47 million.Exxon reduced spending on major projects like floating crude platforms and gas-export terminals by 20 percent to $6.746 billion during the quarter, according to the statement. International crude prices fell 42 percent from the previous year to average $63.50 a barrel.
Chevron’s profit dropped to $571 million, or 30 cents a share, from $5.67 billion, or $2.98, a year earlier, the San Ramon, California-based company said in a statement. The per-share result was well below the $1.16 average estimate.
Chevron’s biggest business unit -- oil and gas production - - posted a loss as the second-largest U.S. energy company recorded a $1.96 billion writedown on assets and another $670 million charge for taxes and projects suspended because they no longer make economic sense.
Pessimistic Outlook
“The writedowns will get worse into the end of the year as companies complete their end-of-the-year SEC filings,” Sankey said. “The market still looks very oversupplied with oil and we’re in peak demand season.”Exxon Chairman and Chief Executive Officer Rex Tillerson was among the first to shrink spending as the crude rout began more than a year ago. After cutting the budget by 9.3 percent in 2014, this year’s reduction may exceed the original 12 percent target, Jeff Woodbury, vice president of investor relations, said during a conference call with analysts.
Tillerson, an Exxon lifer whose 10th year as CEO began in January, has been pessimistic about the prospects for an imminent oil-market rebound. On April 21, he told a Houston energy conference that the supply glut and low prices will persist “for the next couple of years” at least.
Those remarks proved prophetic: international crude prices that rose 45 percent between Jan. 13 and May 6 have since tumbled 22 percent, inaugurating the second oil bear market in 14 months.
“Chevron was a disaster; Exxon was a disappointment,” Fadel Gheit, an analyst at Oppenheimer & Co. In New York who rates the shares of both the equivalent of a hold and owns each. “A rising tide lifts all ships, but when the tide goes down, all ships go down.”
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