Big Oil is being forced to rethink its future

Beyond the black stuff

Big Oil is being forced to rethink its future

Feb 4th 2010 | From The Economist online

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ON THE face of it the world's big and publicly quoted oil companies should be celebrating some pleasing results this week. Royal Dutch Shell unveiled its results on Thursday February 4th, reporting that it had made $9.8 billion in 2009. Two days earlier BP boasted profits of $14 billion for the same year. Yet these billions are a disappointment compared with the bonanza of previous years (Shell, for example, raked in $31.4 billion in 2008 alone) when soaring oil prices pulled profits ever higher.
In the long term, however, the firms' success depends on sustaining reserves. The big western oil companies are trying to expand through acquisitions and investment, but the opportunities do so are becoming scarcer. The firms are spending where they can. Exxon Mobil, the biggest listed oil company, says that exploration and capital spending hit $27.1 billion in 2009, 4% higher than in 2008. The company expects to spend $25 billion to $30 billion annually to the same end over the next five years. BP intends to spend some $20 billion this year on investment in new projects and drilling, roughly the same level as last year.
 
For full Article, please visit http://www.economist.com/businessfinance/displaystory.cfm?story_id=15473681

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net short positions represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn

Traders make $8bn bet against euro

By Peter Garnham, Victor Mallet and David Oakley in London
Published: February 8 2010 11:48 | Last updated: February 8 2010 19:03

Traders and hedge funds have bet nearly $8bn (€5.9bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis.
Figures from the Chicago Mercantile Exchange, which are often used as a proxy of hedge fund activity, showed investors had increased their positions against the euro to record levels in the week to February 2.

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The Economist reviews 2009

The Economist reviews 2009
The Economist looks back at crucial events of the year. It began with a whirlwind of activity after the inauguration of Barack Obama as the 44th U.S. president. It ended with a Copenhagen conference on climate change. Obama was there, too. The Economist

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India's tax simplification could be good news for business

India's tax simplification could be good news for business
Business could be the big winner if India goes ahead with tax reform based on a uniform goods and services tax. From the outside, India looks to be a huge market with more than a billion consumers, but it is actually a collection of 28 states, all with power to set their own tax rate. The governing Congress Party promised to "create a seamless national common market for our farmers, artisans and entrepreneurs," possibly through a national GST. The Economist

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Exxon Mobil is bullish on Natural Gas

Exxon Mobil bets $31 billion on natural gas
XTO Energy deal seen as bold response to shifts in environmental regulations

With prices low, and the possibility of carbon emission caps looming, analysts expected it would be just a matter of time before one of the major energy companies took a plunge into the natural gas market. Now they expect others to follow suit.

“I think this is the first domino to fall,” said Curtis Trimble, a Houston-based analyst for Natixis Bleichroeder. “In future weeks, months or quarters we can expect to see other deals as well.”

That means American independent oil and gas producers such as Chesapeake Energy, Devon Energy and The Woodlands-based Anadarko, may get a look from other energy companies seeking an entrée into the gas market.

Full article here

This week, the left-leaning Economic Policy Institute floated the idea of a national transaction tax that would raise $100 billion to $150 billion a year. The tax, at a rate of 0.1% to 0.25% of the value of the trade, would be levied on all financial transactions such as stock trades, but not on consumer transactions such as with credit cards.

Full Article at

Tax On Financial Transactions

Companies are borrowing but not spending

• Companies are borrowing but not spending
  Many companies worldwide are issuing bonds to raise capital, but they are not spending that money. Most of the $2.3 trillion raised with corporate bonds this year is going toward repairing finances, or the companies are hoarding the cash, according to Dealogic. This is bad news for the economy, which needs investment to support recovery. A large part of the cash is going into mergers and acquisitions, but that does not help the economy much, analysts said. The Wall Street Journal/Real Time Economics blog (13 Oct.)