A highlight from Big Oil Is Seeing Big Earnings Again

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Also on a run. Big oil is making big money again. Companies like exxon and shell have just reported their first prophets for twenty twenty one and it's like the pandemic is already a distant memory. They are rolling in cash. Npr's camilo domino's is here to talk about. What's going on camilo high louise okay. So when we say they're rolling in cash. How do these earnings compared to what they were bringing in last year well last year was a catastrophic year for the oil and gas industry to just look at one company as example you can take exxon mobil in two thousand and twenty. They had their first annual loss in decades. They lost twenty two billion dollars that that doesn't happen to one of the world's biggest oil companies and then this quarter. Exxon just reported almost three billion dollars in profit. It's a similar story for other giant oil companies. Last year was absolutely brutal. And you might have expected that the recovery from that would take some time but instead this year just started off with a bang. And why what's changed. Well some of it is the same forces that we heard david talking about the widespread economic recovery prices oil prices have recovered more double what they were in their lowest points. Last year They also saw in the oil and gas industry this specific phenomenon. They cut costs. Because of the pandemic in order to survive. You had companies. That dropped project weren't performing very well. A ton of people were laid off at oil and gas companies. This means that now the companies are lean. They have low costs. They're positioned to bring in high profits. And i should also note opec pulled a lot of supply off of oil markets to prop prices up which was very effective and has also been a big boost to these companies. Okay but i'm trying to square vis with all these existential questions. We keep considering about the future of well. Climate change the biden administration is talking about transitioning away from oil away from gas. How do we square that with these. Big profits yeah. It's a huge question and it's an interesting one for investors because it's not just the biden administration you have major investors in oil and gas who are thinking about what happens to how we get energy in the future and in europe you have oil companies that are promising to cut their reliance on oil and gas their their core products in transition to green energy. So it's fair. To wonder is is that going to be harder to do is more difficult to walk away from oil when it super profitable like it is. I spoke to goulburn soy. He's with rice dead energy in norway and he said there is a way that this could actually speed up that transition. So of course no a key question would be. What are you going to use and spend all this money on making. What do you think is going to be. It's going to be a mixture so he says some companies will spend this money on paying down debt paying dividends to their shareholders sticking with the current business model that made them this money but other companies could use this cash infusion to bankroll their pivot to renewables like shell and bp have promised so does it make the transition slower or faster. It'll probably be both depending on what company look at an how about you. What are you watching for next. Well there's a lot of key things to keep an eye on and the months ahead we've got one. The question of whether producers are going to boost their output of oil and gas. They've actually been pretty restrained which is not a word that's always associated particularly with the us oil and gas industry. They've been making less than they could. They keep doing that Watching what shareholders. Think of these plans when they're big meetings next month and of course keeping an eye on policy we mentioned the biden administration will they make moves that will affect what companies decide to do. Here thinks camilla thank you. Npr's commu domus game. This message comes from npr sponsor. Ford the all electric mustang mach e and a twelve foot rocket. Take off the rocket launches up into the atmosphere while the all electric pony takes off toward the horizon at full speed visit four dot com for a new perspective on range.

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