4 ms·

Why Exxon Mobil won't produce more [oil]

11 points by wumi 19y ago

Linkin Park, "Hands Held High" Like they understand you in the back of the jet When you can't put gas in your tank These fuckers are laughing their way to the bank and cashing the check Asking you to have compassion and have some respect

noonespecial 19y ago
HHhmm lets see. There are x barrels of oil left on earth, Exxon gets most of them. Would it rather sell them at $50/barrel or $100/barrel. Whatever else they say about production, there's always this.
- moog 19y ago
  They'd rather sell for $200/barrel. Their plan to hold volume production flat is a good a reason as any to break up the company for the benefit of consumers. I wouldn't let them near 'green' energy development either as their interests aren't served by viable alternatives to oil.
  - nradov 19y ago
    This is silly. First of all, ExxonMobil doesn't control "most" of the oil reserves; they have only a very small fraction. And if the US federal government forcibly broke the company into several pieces (like Bell Telephone) the resulting smaller companies would still have no greater incentive to increase production.
    - noonespecial 19y ago
      I meant it as a critique of OPEC in general. They will control production to get the most money per barrel because when its gone, its gone. Exxon is the largest publicly traded energy company in the world (from tfa). They do better when prices stay high. While they may not be the biggest player in the whole oil game, they do play a significant role in oil's path to the end consumer. Lets just say they have a lot more to gain form $200/barrel oil than from $50/barrel oil and leave it at that.
      - nradov 19y ago
        Huh? ExxonMobil is not a member of OPEC. What are you proposing they do differently?
vitaminj 19y ago
Disclosure: I work in the oil industry and have worked for ExxonMobil in the past. ExxonMobil may be the world's largest publicly traded oil company, but it is nowhere near the largest oil producer, nor does it have the the largest reserves. These honours go to the state-owned oil companies eg. saudi aramco, PDVSA (venezuela), NIOC (iran), CNPC (china), kuwait petroleum, etc. To give an example, in 2004, saudi aramco had proven oil reserves of 261 billion barrels, iran, iraq had around 130 billion each. Meanwhile exxon had 22 billion. Even the state-owned comapnies in nigeria, qatar and libya have more proven reserves than exxon. My take on this: the rhetoric seems to be about return on capital, and betting on high future oil prices. But I strongly suspect the real reason for ExxonMobil not producing more oil (and the story alluded to this) is that there haven't been any major new fields discovered to grow beyond replacing their existing depleted fields. Also, the large new discoveries have typically been deepwater, which is difficult and expensive with current technology. In my experience with Exxon, they are astute managers when it comes to their investments, but ultimately they are an oil company. Unlike most of the other big oil players (BP, Shell, Chevron, Total), Exxon has openly said that it is in the oil and gas business only and won't diversify to alternative energy sources (eg. BP has started tagging their brand Beyond Petroluem with investments in ethanol and other renewables). So I certainly don't think they are holding off on projects simply to leverage higher prices in future.
- wumi 19y ago
  My friend's dad is Exxon Mobil manager for the Balkans. My dad has worked in oil & natural gas industry for 28 years, including a long standing working relationship with Exxon Mobil. While what you are saying sounds nice ("So I certainly don't think they are holding off on projects simply to leverage higher prices in future.") ... I know for a fact it is certainly not true. Some people wouldn't touch the company with a ten-foot pole, including relatives of country managers.
dhimes 19y ago
What I don't understand is how they always escape investigations into price-gouging. It happened also with the first Iraqi-American war (Bush 41). Sen Al D'Amato (sp?) was supposed to lead an investigation into why the companies have record profits in stressful times. They always claim it's "volume"; their percentage profits are reasonable, but they sell a lot. Last year I don't think that held--I believe (but am not certain) that usage fell because the prices were so high. But that may just be civilian usage--perhaps total usage increased. I'd love to see info on that, because I am skeptical and in this election year we may have a shot at changing things.
- nradov 19y ago
  How do you define price-gouging? Are you suggesting that oil companies should voluntarily sell their products at a price lower than what their customers are willing to pay? What are stressful times? Times are always stressful for someone, somewhere. What are unreasonable profits? Do you think the government should arbitrarily limit total net profit for any particular company? Or perhaps they should limit profit margins or return on capital? And any profit limits that apply to oil companies should also apply to software companies, right? You can find consumption statistics here. http://www.eia.doe.gov/ http://www.eia.doe.gov/
  - dhimes 19y ago
    In certain situations where an anticompetitive monopoly exists, the government does and should regulate. Take, for example, the birth of cable tv in the US. The cable companies were granted monopoly in regions because otherwise it was senseless to commit the funds to build the infrastructure necessary to develop the industry. In this case, the trade-off is; yes, you get a monopoly but we're going to regulate the prices. Same with utilities (water, sewer, electric,...). Many times, however, the regulation is a farce (the regulators and the regulated are all friends). In some cases, the government steps in to see what the shenanigans are. Usually the defending companies argue that their increased margin is needed for "future investment costs," or something. Sometimes the regulators agree, sometimes not. So, yes, in certain cases where a few tightly-knit companies are committed to control essential resources, they are "forced" to sell at "reasonable" prices. Interesting that you bring up software companies. In the 1992 presidential election, the deciding issue to me was the building of the internet. Bush (41) wanted to let the private companies do it all a la cable, sewer, etc. Clinton said, no, it was to be a vital infrastructure to our country and the government should build it (a la our interstate highway system). I voted for Clinton.

11 points by wumi 19y ago

noonespecial 19y ago

HHhmm lets see. There are x barrels of oil left on earth, Exxon gets most of them. Would it rather sell them at $50/barrel or $100/barrel. Whatever else they say about production, there's always this.

moog 19y ago
They'd rather sell for $200/barrel. Their plan to hold volume production flat is a good a reason as any to break up the company for the benefit of consumers. I wouldn't let them near 'green' energy development either as their interests aren't served by viable alternatives to oil.
- nradov 19y ago
  This is silly. First of all, ExxonMobil doesn't control "most" of the oil reserves; they have only a very small fraction. And if the US federal government forcibly broke the company into several pieces (like Bell Telephone) the resulting smaller companies would still have no greater incentive to increase production.
  - noonespecial 19y ago
    I meant it as a critique of OPEC in general. They will control production to get the most money per barrel because when its gone, its gone. Exxon is the largest publicly traded energy company in the world (from tfa). They do better when prices stay high. While they may not be the biggest player in the whole oil game, they do play a significant role in oil's path to the end consumer. Lets just say they have a lot more to gain form $200/barrel oil than from $50/barrel oil and leave it at that.
    - nradov 19y ago
      Huh? ExxonMobil is not a member of OPEC. What are you proposing they do differently?

vitaminj 19y ago

Disclosure: I work in the oil industry and have worked for ExxonMobil in the past. ExxonMobil may be the world's largest publicly traded oil company, but it is nowhere near the largest oil producer, nor does it have the the largest reserves. These honours go to the state-owned oil companies eg. saudi aramco, PDVSA (venezuela), NIOC (iran), CNPC (china), kuwait petroleum, etc. To give an example, in 2004, saudi aramco had proven oil reserves of 261 billion barrels, iran, iraq had around 130 billion each. Meanwhile exxon had 22 billion. Even the state-owned comapnies in nigeria, qatar and libya have more proven reserves than exxon. My take on this: the rhetoric seems to be about return on capital, and betting on high future oil prices. But I strongly suspect the real reason for ExxonMobil not producing more oil (and the story alluded to this) is that there haven't been any major new fields discovered to grow beyond replacing their existing depleted fields. Also, the large new discoveries have typically been deepwater, which is difficult and expensive with current technology. In my experience with Exxon, they are astute managers when it comes to their investments, but ultimately they are an oil company. Unlike most of the other big oil players (BP, Shell, Chevron, Total), Exxon has openly said that it is in the oil and gas business only and won't diversify to alternative energy sources (eg. BP has started tagging their brand Beyond Petroluem with investments in ethanol and other renewables). So I certainly don't think they are holding off on projects simply to leverage higher prices in future.

wumi 19y ago
My friend's dad is Exxon Mobil manager for the Balkans. My dad has worked in oil & natural gas industry for 28 years, including a long standing working relationship with Exxon Mobil. While what you are saying sounds nice ("So I certainly don't think they are holding off on projects simply to leverage higher prices in future.") ... I know for a fact it is certainly not true. Some people wouldn't touch the company with a ten-foot pole, including relatives of country managers.

dhimes 19y ago

What I don't understand is how they always escape investigations into price-gouging. It happened also with the first Iraqi-American war (Bush 41). Sen Al D'Amato (sp?) was supposed to lead an investigation into why the companies have record profits in stressful times. They always claim it's "volume"; their percentage profits are reasonable, but they sell a lot. Last year I don't think that held--I believe (but am not certain) that usage fell because the prices were so high. But that may just be civilian usage--perhaps total usage increased. I'd love to see info on that, because I am skeptical and in this election year we may have a shot at changing things.

nradov 19y ago
How do you define price-gouging? Are you suggesting that oil companies should voluntarily sell their products at a price lower than what their customers are willing to pay? What are stressful times? Times are always stressful for someone, somewhere. What are unreasonable profits? Do you think the government should arbitrarily limit total net profit for any particular company? Or perhaps they should limit profit margins or return on capital? And any profit limits that apply to oil companies should also apply to software companies, right? You can find consumption statistics here. http://www.eia.doe.gov/ http://www.eia.doe.gov/
- dhimes 19y ago
  In certain situations where an anticompetitive monopoly exists, the government does and should regulate. Take, for example, the birth of cable tv in the US. The cable companies were granted monopoly in regions because otherwise it was senseless to commit the funds to build the infrastructure necessary to develop the industry. In this case, the trade-off is; yes, you get a monopoly but we're going to regulate the prices. Same with utilities (water, sewer, electric,...). Many times, however, the regulation is a farce (the regulators and the regulated are all friends). In some cases, the government steps in to see what the shenanigans are. Usually the defending companies argue that their increased margin is needed for "future investment costs," or something. Sometimes the regulators agree, sometimes not. So, yes, in certain cases where a few tightly-knit companies are committed to control essential resources, they are "forced" to sell at "reasonable" prices. Interesting that you bring up software companies. In the 1992 presidential election, the deciding issue to me was the building of the internet. Bush (41) wanted to let the private companies do it all a la cable, sewer, etc. Clinton said, no, it was to be a vital infrastructure to our country and the government should build it (a la our interstate highway system). I voted for Clinton.