Monday, January 31, 2011

Oil Prices, Egypt - what's going on really?

As part of my investment strategy I try and keep up on things that are happening around the world. We have to face facts - this is a global economy and what happens around the world effects us.

I'm sharing this article with you because it really made me think. Its no surprise that oil prices are rising and in turn the oil companies profits. Now I'm not down on big biz or big oil per se and I'm sure not a fan of the NY Times but one line in this article struck me "reported earnings of $1.15 billion (after a loss a year ago), driven by higher refining margins. Hmmmm. Higher margins - that doesn't feel good when I'm paying $3.45 per gallon. And it also doesn't fit quite right when "they" tell me there are no inflation worries. What are you seeing - is your stuff more expensive?

Hope you find this article interesting.......


Earnings from the company’s upstream business, which includes oil and gas production, rose to $7.48 billion in the quarter from $5.78 billion in the period a year ago.

The company’s downstream operations, or its refining and marketing business, reported earnings of $1.15 billion after a loss a year ago, driven by higher refining margins.

Chevron, the No. 2 American oil company, reported on Friday that fourth quarter earnings were 72 percent higher than the preceding year. The third-largest, ConocoPhillips, reported that its quarterly profit climbed 46 percent. Growing demand for crude around the world, particularly in China and other developing countries, pushed oil futures traded in New York for the fourth quarter 12 percent higher than the year before, to just over $85 a barrel.

The earnings reports have been overshadowed by developments in Egypt, which have caused a sharp upturn in oil prices in recent days to around $90 a barrel.

Egypt is not a major oil producer, but 1.8 million barrels a day pass through the Suez Canal every day and the Sumed pipeline carries another 1.1 million barrels a day from the Persian Gulf to the Mediterranean. Neither have been disrupted so far.

Several Western oil companies operate in Egypt, including BP and Apache, contributing to the country’s production of nearly 700,000 barrels a day. The most vulnerable is Apache Corporation, a middle-sized Houston-based oil and gas producer that relies on Egypt for a hefty proportion of its oil production. But so far the unrest has not impacted exploration and production since the oil fields are far away from major population centers.

original article

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