Posted by Nancy Howell on April 03, 2008 at 08:17:06 from (144.162.48.81):
Found this article on www.msn.com. The following are excerpts from the article.
WHY EXXONMOBIL WON"T PRODUCE MORE OIL The energy giant is being managed to achieve an acceptable investment return for shareholders, not for the benefit of consumers. Less supply of crude oil means higher prices -- and record profits.
In ExxonMobil"s (XOM, news, msgs) presentation to analysts in New York City in early March. flashed a chart that showed the company"s worldwide oil production staying flat through 2012.
Ponder that for a minute. Exxon is the largest publicly traded company in the energy business. In fact, it"s the most profitable company in the history of capitalism, earning a record $40.6 billion last year on sales of $404 billion. Yet even with crude oil prices near all-time highs, Exxon isn"t planning on producing any more oil four years from now than it did last year. That means the company"s oil output won"t even keep pace with its own projections of worldwide oil demand growth of 1.3% a year.
It really goes back to what is an acceptable investment return for us," Tillerson said. In other words, producing more barrels just to ease prices for consumers is not part of the company"s calculations.
Last year, ExxonMobil led the industry with a return on capital of 32%.
Big oil companies can continually miss their targets or even target no growth and still shine on Wall Street due to the peculiar nature of commodity businesses. Less supply of a commodity means higher prices. Higher oil prices mean more profits for the oil companies.
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Today's Featured Article - Listening to Your Tractor - by Curtis Von Fange. Years ago there was a TV show about a talking car. Unless you are from another planet, physically or otherwise, I don’t think our internal combustion buddies will talk and tell us their problems. But, on the other hand, there is a secret language that our mechanical companions readily do speak. It is an interesting form of communication that involves all the senses of the listener. In this series we are going to investigate and learn the basic rudimentary skills of understanding this lingo.
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