August 28, 2020 Read More →

Big Oil falling into same trap as Big Coal

Houston Chronicle:

Nine years ago, Exxon Mobil was the most valuable corporation in the world.

Last week, Dow Jones removed the stock from its industrial index that is supposed to represent the U.S. economy. Exxon’s market capitalization has dropped from $400 billion in 2011 to just $175 billion today, and the oil business is no longer as important to the U.S. economy.

Oil executives talk a lot about how their industry will bounce back after the coronavirus pandemic passes, but the truth is their business is in long-term, secular decline. No matter who wins November’s elections, we need to find new businesses to replace the oil and gas industry in Texas to avoid economic decay. 

In early summer, Shell wrote off $16.8 billion in assets, BP slashed the values of its assets by $11.7 billion, Total cut them by $8.1 billion and Chevron said it was worth $4.8 billion less than at the beginning of the year.

Those four companies, plus Exxon, still managed to pay dividends to shareholders, but only by borrowing money or selling assets. The five supermajors paid out $16.9 billion more in dividends than they generated from their core business operations, according to the Institute for Energy Economics and Financial Analysis, a nonpartisan think tank. 

[Chris Tomlinson]

More: Oil companies following in coal’s footsteps

Posted in: IEEFA In the News

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