{"id":55897,"date":"2020-12-06T08:35:58","date_gmt":"2020-12-06T13:35:58","guid":{"rendered":"https:\/\/olduvai.ca\/?p=55897"},"modified":"2020-12-06T08:35:58","modified_gmt":"2020-12-06T13:35:58","slug":"what-oils-troubles-mean-to-the-rest-of-us","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=55897","title":{"rendered":"What Oil\u2019s Troubles Mean to the Rest of Us"},"content":{"rendered":"
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What Oil\u2019s Troubles Mean to the Rest of Us<\/a><\/h3>\n<\/div>\n
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To the extent that stock prices reflect expectations of future value, investors don\u2019t like the prospects for oil, and oil\u2019s demise signals muted prospects for economic growth.<\/p>\n

Exxon-Mobil (XOM) was removed from the Dow Jones Industrial Average this past August, ending a run that began when the Dow expanded to 30 stocks in 1928. This leaves Chevron as the sole oil company in the index. For most of those 92 years, there were three oil majors in the Index (Standard of NJ\/Exxon, Texaco, and Standard of CA\/Chevron) \u2013 now there is one. Should you care?<\/p>\n

In one sense, no. The Dow is an actively-managed index, and 11 of the current 30 firms have replaced other names since 2000. (Exxon-Mobil was replaced by Salesforce.) The financial media treats changes in the Dow as measures of overall market levels, but little money is actually invested in DJIA-linked products. There\u2019s an interesting article in all that, but it\u2019s not this one.<\/p>\n

On the other hand, the Dow committee likes to include industries and companies that are growing and successful. Removing XOM is a measure of the decline of the economic status of \u201cbig oil.\u201d Over the last two months, both XOM and BP have approached their lows from this past March, which were in turn the lowest prices for those stocks since 1994 (BP) or 1997 (XOM). The S&P 500 has grown by a factor of four since 1997.<\/p>\n

The WTI price of oil is (as of October 2020) around $40 per barrel, which is the lowest since 2003 on an inflation-adjusted basis except for a brief period at the start of 2016 and a few weeks this spring. This reflects the abundance of oil supplies after the COVID-induced demand collapse, but it also is a price below what\u2019s necessary to operate much of the industry profitably…<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

What Oil\u2019s Troubles Mean to the Rest of Us To the extent that stock prices reflect expectations of future value, investors don\u2019t like the prospects for oil, and oil\u2019s demise signals muted prospects for economic growth. Exxon-Mobil (XOM) was removed from the Dow Jones Industrial Average this past August, ending a run that began when […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[19669,1849,589,2668,592,595,30683],"class_list":["post-55897","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-advisor-perspectives","tag-financial-markets","tag-oil-demand","tag-oil-exploration","tag-oil-price","tag-oil-production","tag-richard-vodra"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55897","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=55897"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55897\/revisions"}],"predecessor-version":[{"id":55898,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55897\/revisions\/55898"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=55897"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=55897"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=55897"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}