Chevron And Its Impact On The Economy

In 1998, the price of crude oil went into a major decline with prices collapsing to below $20 per barrel after reaching highs around $37 during the Iran oil embargo of 1979. (“Chartsbin”) Some companies within the oil industry such as Conoco In some cases were integrated producers that were somewhat protected against an overall collapse in the price of oil. Conoco had operations in different segments of the industry including: drilling, refining, transportation and production. The combination of these segments helped provide Conoco with consistent profits those profits were not as high as DuPont executives had hoped when

Another cause for the decline in oil prices is caused by an increase in consumers purchasing more fuel efficient vehicles, such as hybrid or electric vehicles. In many countries today, especially in North America, there has been an increased demand for fuel efficient vehicles. This is evident in TV commercials which are advertising more and more vehicles that get 40 to 50 miles per gallon, and by the ever increasing commercials for electric vehicles. Consumers are tired of paying outrageous prices for oil and are demanding more for their money. As this demand continues to grow, the demand for oil will decrease.

The energy industry is not any different than most commodity-based industries as it faces long periods of boom and bust. Drilling and other service firms are highly dependent on the price and demand for petroleum. These firms are some of the first to feel the effects of increased or decreased spending. If oil prices rise, it takes time for petroleum companies to size up land, setup rigs, take out the oil, transport it and refine it before the oil company sees any profit. On the other hand, oil services and drilling

Long-term: Low profits cannot be maintained for so much time. In some time in the near future, Opec will have to drive the oil price up in order to regain losses.

The cause is none other than the plummeting oil prices. Just from last June the price of a barrel of oil has dropped 60 percent. The last time prices were this low was in 2004, over 12 years ago (Krauss). Thesis: The drop in oil prices affects the petroleum industry in a negative way.

Exxon and Chevron are no doubt some of the leading incorporated oil companies on the globe. Exxon Corp. is the second largest oil firm after Royal Dutch Shell, it is respected for getting the biggest revenue return in 2008 which no company in the U.S. have ever reported before. According to Wilson (2009) Chevron has managed to show a lot of profitability in the market despite the decease in its oil production. It graded as one of firms which made a billion dollars profit within a week in the period of July to September 2008. Regardless of profitability trends set by the two oil firms in the U.S. market, they have been facing financial decline like the rest of the companies in other industries. The two firms are like two sailing ships which are taking longer time to sink. In the last few years, the production capacity of Chevron and Exxon has decreased and their listings on the stock market have become weak. The continuation of construction and drilling which requires billions of dollars in expense of oil production might make them experience a bigger financial crisis (Wilson, 2009).

In this article on the abc.news.net website, Woodside chief executive Peter Coleman has warned the people that oil prices could remain lower than usual for two to three years, he said that the slide has wrinkled the profits of local companies, forcing many to cut hundreds of people from their job. This is an example of the external influence of a competitive situation and also an internal influence of financial resources because this oil company has to keep up with America’s oil prices to be competitive. In order to achieve this they have had to reduce the number of employers the company carries.

From 2010 until mid-2014, world oil prices was fairly stable and their costs was oscillating at around $110 per barrel. The situation changed rapidly in June 2014 when prices have more than halved. At the moment, Brent crude oil has now fell below $50 a barrel for the first time since May 2009 and US crude is down to below $48 a barrel.

Chevron is a multinational company whose primary business involves the exploration for, extraction of and retail of hydrocarbon products. The company trades on the New York Stock Exchange under the ticker symbol CVX. Its market cap of $226 billion makes it one of the largest companies in the world by that measure. Chevron has sales of $241.9 billion, net income of $26.18 billion and with a beta of 0.80 is a fairly low-risk investment (MSN Moneycentral, 2013).

Of course, as the credit crisis was spreading through the global economy, money began to flee the oil market. By the end of Quarter 4, crude was trading in the $30s.

In mid-2014, the general oil prices started to decline due to the slump in oil prices in global market. Oil prices dropped from over $100 per barrel to lower than $30 in early 2016 due to different factors. Firstly, the new and unconventional energy resources such as shale oil and shale gas discovered in Texas and North Dakota which created a new glut in oil supply. In addition, OPEC members failed to agree on the supply cap which reduced the prices further down.

ExxonMobil is a narrowly diversified company with few lines of related business that operate in global markets. At the core of ExxonMobil’s corporate strategy is related business diversification. The Upstream business segment is the largest one with more than 70 percent of earnings coming from that segment & followed by the downstream business segment at 12 percent. The average capital employed by the upstream business segment is four to six times that of other segments. Clearly, the upstream business is ExxonMobil’s center of gravity

Gasoline prices can be directly related to oil. In 2014, “a barrel of Brent crude cost $110,” but in 2015 it cost only “$60” (“The high cost of falling prices; Deflation.” Economist. 21 Feb. 2015: 69. eLibrary. Web. 22 Mar. 2016.). The barrel of crude oil was hence cut by “45%” and “in America the price of gasoline has fallen by 35%” (“The high cost of falling prices; Deflation.” Economist. 21 Feb. 2015: 69. eLibrary. Web. 22 Mar. 2016.). As you can see here because crude oil is a main component of gasoline, their prices correlate - meaning that when one price shifts downward the other will follow. Crude oil and gasoline are not the only products that have seen a decrease in value in the past few years. All around the United States and in many other areas of the world, the value of products are being slashed.

It has been documented that a change in crude oil prices can lead to an economic depression, which could in turn weaken asset prices. Weaker asset prices will lead to devaluation in a company, which will lead to a

We expect that increased oil exploration overseas will adversely affect the domestic oil industry by lowering the domestic oil price and causing local producers to lower production costs by cutting overhead. We expect these cost cuts to result in an increased number of layoffs and cutbacks in large oil companies. These cutbacks will lower employee morale and decrease the level of job satisfaction and security.