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Why Exxon won't produce more oil (2 posts)

  1. Arabesque
    Member

    Why Exxon won't produce more oil By BusinessWeek

    But how is it that crude can still trade above $100 a barrel, three times what it sold for at the start of the decade, despite a very wobbly economy?

    If you want to understand that, it helps to listen in to ExxonMobil's (XOM, news, msgs) presentation to analysts in New York City in early March. Halfway through the three-hour meeting, Exxon management flashed a chart that showed the company's worldwide oil production staying flat through 2012.

    Ponder that for a minute. Exxon is the largest publicly traded company in the energy business. In fact, it's the most profitable company in the history of capitalism, earning a record $40.6 billion last year on sales of $404 billion. Yet even with crude oil prices near all-time highs, Exxon isn't planning on producing any more oil four years from now than it did last year.

    That means the company's oil output won't even keep pace with its own projections of worldwide oil demand growth of 1.3% a year. http://articles.moneycentral.msn.com/Investing/Ext...

    Is ExxonMobil's future running dry? By Jim Jubak

    Are we witnessing the death of ExxonMobil (XOM, news, msgs)?

    Strange question to ask with oil above $120 a barrel and ExxonMobil reporting $11 billion in first-quarter profits?

    Not if you understand that ExxonMobil's management has bet the company. If that bet is wrong, over the next 15 years or so, investors will get to watch the gradual disappearance of ExxonMobil.

    In one scenario, the company disappears as a public company, going private by 2018 after buying up all its public stock. In another, the company simply liquidates as it distributes its cash to shareholders until there's nothing left.

    Far-fetched? Not at all. The warning signs were pasted all over the company's May 1 earnings report.

    Yes, revenue for the quarter was up 34%, to $117 billion, from the first quarter of 2007. And, yes, net income climbed 17%, to $10.9 billion.

    But production of oil and natural gas was down almost 6%.

    [...] What's going on here? If any oil company in the world should be able to find more oil and natural gas, it's ExxonMobil, with its immense reserves of both engineering skills and cash resources. http://articles.moneycentral.msn.com/Investing/Jub...

    Posted 16 years ago #
  2. truthmod
    Administrator

    Smooth flowing economies (where people still drive to work, buy iPods, and fly to the Bahamas) would seem to be in the interest of the "elites" who reap the profits from all this consumption. Ever rising fuel prices will destabilize the basis for their comfort. I wonder at what price these energy companies stop making "record profits" because demand simply drops off so dramatically or the economic system begins to disintegrate.

    While some people suspect that skyrocketing prices are due to speculation and possibly the collusion of oil producers to limit supply, there is a lot of data that points to physical limits on supply.

    It looks like the endgame of cut and run capitalism. One thing you can be sure of, is that if Exxon expects a catastrophic peak in oil production, they will not let on that they do and they will try to keep the game going as long as possible in order to reap maximum profits.

    Posted 16 years ago #

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