Exxon: Your Best Weapon Against Price Uncertainty

The price movement of oil and gas is heavily monitored as it affects almost all aspects of our lives. It goes without saying that the U.S. economy is greatly affected by oil and gas price changes. When prices go up, consumers’ energy and petroleum bills go up, limiting their ability to buy other goods and services. For the industry, an oil and gas price hike means more expenses in logistics and power usage. These extra costs are then passed onto consumers that makes merchandise more expensive, which again causes consumers to buy less goods and services. When there are large oil and gas reserves, the economy receives some stimulation, because prices for petroleum and natural gas drop.

At the beginning of the year, West Texas Intermediate Crude prices were above $140 per barrel, creating speculation that there might be a replay of the 2008 oil crisis. On June 21, 2012, amid the uncertainties in the global economy, West Texas Intermediate Crude fell to $78.20 per barrel, the first settlement below $80 since October 2011. Its London counterpart, Brent Crude, also settled below $90 for the first time since December 2010, at $89.56 per barrel.

In this article, I will focus on Exxon Mobil (XOM), the largest oil and gas company and largest natural gas producer in North America. It has 46 refineries in 26 countries and a production capacity of 6.3 million barrels per day. It is the largest oil refiner in the world, followed by Royal Dutch Shell (RDS.A), with a production capacity of 3.2 million barrels per day.To continue reading, click here.