Posts Tagged ‘Oil Companies’

Oil Investors Better Protected Under New SEC Rules

January 5, 2009

 

oil investors better protected under new SEC rules
As from last week, under new Securities and Exchange Commission (SEC) rules, investors will have much more information on which to base their investment decisions. Business Week  reports that the changes, the first in 25 years, are intended to reflect improvements in the technology used by companies to determine their proven reserves. It also requires that petroleum companies’ assessments of their reserves be independently audited.

For a complete list of the new revisions see the full article here – http://www.businessweek.com/ap/financialnews/D95CJU0O1.htm – but, overall, these changes should provide better protection for the investor in terms of allowing him or her to make informed decisions.

The Tyranny of Oil

December 15, 2008

 

book_tyrannyofoil
Now, as a potential investor, there are two ways to view the book I have just read by Antonia Juhasz called “The Tyranny of Oil: The World’s Most Powerful Industry – and What We Must Do to Stop It. The book, just published by Harper Collins [ISBN 978-0-06-143450-1], and available at your local library it seems, is a damning indictment of an industry that is under-regulated, secretive, controlled by too few people and which wields excessive power and influence over U.S. elected politicians, all to the detriment of the citizens of the United States and anywhere else it finds itself operating, their economies, and the world’s environment. Don’t let their adverts fool you into thinking they are ‘part of the solution’ – they are no friend to alternative energies, as Antonia’s book reveals.

The ‘here-we-are-again’ history outlined in the book is particularly interesting given the excesses of “Big Oil’s” previous incarnation – John D. Rockerfeller’s Standard Oil Company, which had to be broken up in the early nineteen hundreds because of the dark excesses of its monopolistic hold over American democracy. Now, the spawn of that breakup have, with the anti-reglatory ideology of the Reagan and Bush years, once more merged back together to the point where their unbridled greed and power is once again threatening the very democracy of the United States. Juhasz argues that ‘Big Oil’ must be broken up again – and this time permanently. It is a great and sobering read for anyone interested in the oil industry, and there is further information and interviews with the author about the book to be found on the tyrannyofoil.com website.

What does it mean in terms of investment in the industry? Well, if you are a futures trader then I would advise a career change, probably sometime in the next 6 – 12 months. I think for the smaller investor it will actually open up many more opportunities as the industry is split up into different operating entities, such as production, refining, marketing and so on, and when more independents are encouraged to re-enter the industry again. As for those of you thinking more in terms of some Exxon shares, perhaps you might like to read Antonia’s book before making that decision – there are always two ways of looking at these things.

Big Oil Companies May Buy Out Small Producers

November 24, 2008

 

 

USA Crude Oil Production 2005

Crude Oil Production 2005

Now here’s an interesting dilemma. Everybody is all fired up to “drill, baby, drill” so that we don’t have to spend so much money buying the foreign stuff; prices are high so there is lots of incentive to invest in new production; there’s lots of diversity in terms of large and small producers; and the lifting of restrictions of offshore drilling means new territory to be explored. And then the the price falls. . . 

“Altogether, the nation’s roughly 5,000 independent operators account for 68 percent of oil and 82 percent of the natural gas produced in the U.S., according to the Independent Petroleum Association of America”, to quote an article by CNN on Friday (see full report here).  But, the report goes on to highlight, with the price of crude falling to below $50 a barrel, and combined with the difficulties of obtaining credit because of the financial crisis, and suddenly all that drilling doesn’t look quite as attractive as it did a few weeks ago. An interesting potential side effect is that the combination of falling prices and tight credit could lead to many of the smaller operators being swallowed up by the big boys.

We are all aware of the record profits made by the big oil companies in recent months and this means that they have fairly hefty cash reserves on hand. There are also a lot of small producers who have readily exploitable land-based properties but who are struggling to find the finance to work their claims. Now, for the large, cash-rich companies these small land-based properties might become quite an investment bargain when compared to something like the costs of exploring new territories offshore. Even Chesapeake, America’s biggest gas producer has been cited by CNN as a potential BP target. It will at least mean that those territories will be worked whereas under the small producers they may not have been, the article concludes, but much is going to depend on how long those prices stay that low, and how quickly the big boys act in the meantime.

Oil Companies Create Venture Capital Funds for New Technologies

September 15, 2008


A very interesting bit of news appeared toady in the Wall Street Journal. In an article by Russell Gold, called “Just in Case – as big oil companies begin to invest in new technologies, some skeptics wonder what they are up to.” Mmmmm, I think to myself as I stroke my non-existant beard – does this in anyway remind of something?

Check out the video above which is a trailer for the 1996 Documentary “Who Killed the Electric Car?”. Seeing that it was, indeed, made in 1996 it does particularly strike one on viewing how similar the situation then is to the one today – almost exact as a matter of fact.

Gold describes the move towards creating venture capital funds by large oil companies as “a quiet trend”. Does he mean by that that the oil companies don’t want the general public to know too much about it? One can’t help but wonder.

Whereas Exxon apparently can’t see the point in doing this (oh yeah?), one of the major players seems to Chevron, according to Mr. gold’s article:

“Lately, Chevron has increased the share of its venture funds going into renewable energy to 33% from 18%. It has provided seed capital for BrightSource Energy Inc., an Oakland, Calif., company that turns solar energy into steam, and Southwest Wind Power, a Flagstaff, Ariz.-based company that builds small-scale wind turbines that can be placed on top of light poles.

One argument made, based on the relatively modest investments in renewable and alternative energy technologies compared to the oil companies overall size, is that such investing is an attempt at what is called “green-washing” –  “an effort to green up the image of a company that produces a lot of fossil fuels.”

Certainly General Motors, one of the ‘prime suspects’ in ‘Who Killed the Electric Car’, does seem to be moving towards alternatives to the gasoline-powered car, at least if all their advertising for hybrid SUV’s is anything to go by. Ultimately, one has to ask oneself “are they capable of investing in new technologies just to kill them off”. Yes, I think they are – given the kind of invested political climate we have had over the last eight years or so. Somehow though, I think the genie has been let out of the bottle now, and I don’t think the oil companies are going to ever be able to get it back in. Let us hope that such actions are nothing worse than “green-washing”. In the end it is down to vigilance by the individual and by the media. They can only get away with anything untoward if we let them.

You can see Russell gold’s article in full at the following link:
http://online.wsj.com/article/SB122123947896128695.html?mod=googlenews_wsj