For the ExxonMobil Corporation:
The ExxonMobil Corporation reported today that it earned $10.49 billion in the third quarter, the second largest quarterly profit ever posted by a publicly traded American company. The largest on record was also reported by ExxonMobil — $10.71 billion in the fourth quarter of 2005.
High oil and natural-gas prices and strong demand for energy made the quarter a robust one for the company and for much of the industry. But the search for new supplies is growing more costly as the international oil giants push into ever remoter or more politically unstable territory, leading Royal Dutch/Shell to report a sharp fall in net income today.
ExxonMobil's results in the quarter were 26 percent better than in the same period in 2005, and translated into earnings of $1.77 a share, well above the consensus Wall Street forecast of $1.59 a share.
"High oil and natural-gas prices...made the quarter a robust one for the company." The problem with this sentence is that the energy industry has some power over the prices. It's an oligopoly, meaning that the supply side consists of only a few large firms, and an oligopoly doesn't just react to prices but affects them directly.
Did you spot how the good story was wrapped with a few complaints, too? The way I always tell of my good news (such as a new story getting published) by complaining about my tempero-mandular joint disorder or whatever. That way my friends don't get overly envious. Here the equivalent complaint is about having to go to more and more marginal and dangerous areas in search for more oil resources.
But the high prices of oil make that profitable, you know, even a price that has fallen down from $80 to $60:
Oil companies -- at least private oil companies in the US and Europe -- do face a big future problem. It isn't oil at $60. It is that they aren't likely to be able to replace their existing oil fields -- oil fields that generally were developed with the expectation that oil's long-term price was well below $60 -- with comparably cheap fields.
Oil fields that were meant to turn a profit if oil averaged $20 will need to be replaced by oil fields that will only turn a profit is oil is well above $20. Hey, that's life. No country with oil should be selling their oil forward at that low a price right now.
There is going to be a crisis about energy fairly soon (assuming that you don't think the Iraq war is about oil, really). China and India want to drive SUVs, too, and there isn't enough oil for all those potential new suburbanites as well as the old suburbanites in the West, especially with the peak oil problem.
I don't see much being done about any of this. What I see is more short-term thinking of the "drink and be merry for tomorrow we shall die" type.