Big Oil Still Big


The AP had this story yesterday:

Exxon Mobil Corp. said Thursday it plans to increase spending on capital and exploration projects by 11 percent in 2009 and could invest as much as $150 billion over the next five years, even as many smaller rivals scale back operations.

Rex Tillerson, chairman and chief executive of the world’s largest publicly traded oil company, said capital spending this year is expected to reach $29 billion, up from the $26.1 billion it spent in 2008. [. . . ]

A deepening global recession and falling energy demand have forced many oil and gas producers to slash spending.

Not so for Irving, Texas-based Exxon Mobil, which last month reported a profit of $45.2 billion for 2008, breaking its own record for a U.S. company. The company said it was sitting on $31 billion in cash at the end of 2008. [. . . ]

Exxon, like others across the industry, benefited from the historic run up in crude prices during the first half of 2008. But all that changed in the second half of the year, as prices plunged from their high near $150 a barrel in July. Reflecting the 60 percent price drop in the fourth quarter alone, Exxon’s fourth-quarter earnings fell 33 percent from a year earlier. [. . . ]

Last month, Exxon Mobil, which produces about 3 percent of the world’s oil, said it added 1.5 billion barrels of oil equivalent to its proved reserves in 2008, extending a positive trend of replacing more barrels than it produced. The added reserves totaled 103 percent of its 2008 output.

Reserve replacements represent the ratio of reserves found over production for a given period. Analysts typically say a company’s reserves replacement should average more than 100 percent over a three- to five-year period to indicate growth.

You know, one could almost imagine a scenario in which an industry is over-regulated and over-taxed, and the effect would be to solidify the position of the biggest players in that industry, causing their “many smaller rivals [to] scale back operations.” I’m not saying Exxon would do such a thing. (I mean, all the global-warming climate-change deniers are in Exxon’s pocket, right? Though, uh, Planet Gore seems to have been left out of the big cash giveaway.) But, hypothetically, you could see how it might be in the interest of some big players to go to Washington and lobby for increased regulation on their own industry. A weird thought, I know, but — like the planet — I have a fever.


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