World’s Largest Oil Companies: Deep Trouble as Profits Vaporize While Debts Skyrocket
The comments above & below is an edited and abridged synopsis of an article by SR Rocco
The world’s largest oil companies are in serious trouble as their balance sheets deteriorate from higher costs, falling profits and skyrocketing debt. The days of profitable global oil companies are over. What remains is a shadow of the industry that will be forced to continue cannibalizing itself to produce the last bit of valuable oil.
This opinion runs counter to many mainstream energy analysts, but their belief that business as usual will continue for decades is unfounded. They do not understand the ramifications of the falling EROI (Energy Return On Investment), and its effect on the global economy.
For example, Chevron made profits in 1997 when oil was $19 a barrel. However, the company suffered a loss in 2016 when the price was $44. It’s worse when comparing the company’s profit to total revenues. Chevron enjoyed a $3.2 billion net income profit on revenues of $42 billion in 1997 versus a $497 million loss on total sales of $114 billion in 2016. Even though Chevron’s revenues nearly tripled in 20 years, its profit was decimated by the falling EROI.
Unfortunately energy analysts, who don’t realize the destruction taking place in the US and global oil industry caused by the falling EROI, continue to mislead a public that is unprepared for what lies ahead. The article provides a more realistic view, with data from 7 of the world’s largest oil companies.
In closing, the author writes, “… the peak and decline of global oil production will destroy the value of most stocks, bonds and real estate. If you have placed most of your bets in one of these assets, you have my sympathies.”