Big Oil's Sinking Fortunes

Big Oil is under attack. Environmentalists point to the fact that the oil in the ground, if extracted and burned, would push Earth's temperatures well above the 2°C limit the IPCC says is safe. Even if this oil were allowed to be extracted, the cost of that extraction is rising, while oil prices remain flat. The EIA (a government unit) says in This Week in Petroleum : Although oil prices remained relatively flat in 2012 and 2013, rising costs contributed to a decline in cash flow from operations. Nonetheless, cash spent on investing activities, which tends to lag changes in cash flow, increased slightly in 2013 as companies increased debt to maintain investment, taking advantage of interest rates that have been low since 2009. Companies have increased debt every year since 2006, with long-term debt increasing 9% and 11% in 2012 and 2013, respectively. At the rate things are going, Big Oil isn't going to be able to afford to keep Congress members on their bribe payout list much longer.

Posted in: Wall Street Trading