Monday, February 10, 2014

Oil price: up is bad for the economy, down is bad for oil production, which is bad for the economy

Oil Profits Slump as Higher Spending Fails to Lift Output - Bloomberg: "The problem for the oil majors is two-fold: costs are rising and oil prices aren’t, while the complexity of developing the most recent oil and gas discoveries is preventing drillers from reaching production targets. Brent crude prices, the benchmark for more than half the world’s oil, slipped 0.3 percent last year, the first time that prices failed to gain since the global financial crisis in 2008. Prices may slip below $90 a barrel by 2020, future contracts show.

The biggest producers haven’t kept up with gains in oil prices for the past few years. While Brent crude prices have more than doubled to $105 a barrel since the start of 2009, the top five oil and gas companies have gained just 13 percent since then, compared with an 81 percent increase in the Dow Jones Industrial Average."