ExxonMobil - USD 35 billion
Shell......... - USD 23 billion
BP............ - USD 19 billion
Total........ - USD 17 billion (est.)
Chevron... - USD 14 billion
(oil & natural gas production, from Petroleum Review, October 2005. 2005 numbers refer to first half only.)
BP to return $50bn to shareholders
BP said on Tuesday it expects to return $50bn to shareholders in the next two years, the most generous payout yet from the energy group, which is benefiting from high oil prices.
The estimate is based on an average price for Brent crude oil of $41 a barrel, well below today's price of $63. At an average of $60 a barrel the figure could rise as high as $65bn, compared to $40bn in dividends and share buybacks from 2003-2005.
John Browne, chief executive, made the projection in a strategy review that coincided with the company's fourth quarter results, which were below market expectations - despite breaking an annual record for the company
High Profits, Sluggish Investments (NYT, behind sub. wall)
A decade ago, Exxon invested more than $2 for every dollar it distributed to shareholders. Last year the figure was 70 cents.
In 2005, it reduced the number of shares outstanding by 4 percent.
There is a phrase for that strategy: gradual liquidation. It is an excellent strategy for a company in a declining industry with few investment opportunities. Let us hope that is not the case here.
Hope is all that's left. Listen to former Secretary for Commerce Dan Evans, on Hardball (Feb. 3):
When we came out of the mid-40s, America was producing about two-thirds of the global supply of oil and we were consuming about half of that. Today we consume about 25 percent of the oil in the world and we only produce about five percent of it.
There is not enough supply of oil to continue to allow this global economy, as long as--as well as the domestic economy, to grow at its full potential, and so we have to change courses and we have to really begin to apply some new technology and bring some alternative sources of energy into the mix.
And what he`s saying is we need to change courses. We cannot continue to go down the path that we`re going down, because there is not enough supply of oil in the world to grow our economy or the global economy at its full potential.
Chris, that is my bottom line. The world is producing oil, the Middle East, every country at its full capacity and it`s very unlikely that we`re going to be able to see supply in the world grow from the levels where we are right now. There`s a debate about that. I`m one that falls in the camp that says it`s going to be very, very hard to do that. But what I do know is China needs to continue to grow, India needs to continue to grow, America needs to continue to grow. So what that simply says is we`ve got to develop new forms of energy for the United States and the world.
That's just one more acknowledgement of peak oil (that obvioulsy flew right over Chris Matthews' head - go read his answer to that, it would be hilarious if it weren't so tragic) in a long line, but I'd like to link it to the above numbers.
The commodity cycle goes as follows:
- demand is growing faster than supply, and this is likely to last as China, India and others keep on growing
- oil prices go up, in order to tame demand, which works to some extent, as this graph found on the Oil Drum shows:
- this should also trigger new investments in production, as it has become more profitable to do so, and both lower demand and higher supply should tame prices.
Why are they not investing? Because there are no reserves left accessible to them. A number of countries are totally closed to them, and those that are open put increasingly tough conditions - and only offer extremely difficult and costly fields, like ultra deep offshore, Kashagan in Kazakhstan, or oil sands in Canada. The fact that these fields are extremely difficult actually hides the investment situation, as the oil companies are barely investing more money in fields that cost a lot more to develop - which means that they will get less production from that money...
So the big profits of the oil majors are not the triumph of the industry, they are its swan song, and it is actually right that money is taken out of the industry and given back to shareholders to invest elsewhere.
Our task is to make sure that this elsewhere includes those industries that will help us cope with an oil-poor world.
Just a final point: if you think that gasoline prices are high, think again:
The only way we will encourage the transition to that elsewhere is to make it more profitable, and one way to do this will be to make it more attractive than burning cheap oil. Yes, oil is still way too cheap, especially now that we KNOW it is getting scarce. It needs to be taxed.
Use that money to focus on new industries instead of giving it to (dangerous) foreign producers, because prices will increase until consumption really drops - it can be forced upon us, or chosen and done in an orderly way.
It's still our choice, but it won't be for long. The oil industry is DYING.