Unnecessary Fear of Falling Energy Prices
As the recent energy boom is currently in full stride, there are now increasing fears that production output will decrease as profits are now lower for big oil companies. Two Wall Street Journal articles talk about the recent changes by several of the big oil companies in international investments and drilling and exploration efforts. One article “Big Oil Feels the Need to Get Smaller“, found that the three big oil companies of Shell, Exxon and Chevron have been spending more on operations than they have been bringing in.
Another WSJ article, “Cheaper Energy Could Be a Mixed Blessing“, focuses on small to mid-sized energy companies that will struggle with lower oil prices. While this article has a similar fear as the other WSJ article, it also talks about how great the boom and lower prices are for the U.S. economy.
There is much opportunity for everyone during this energy boom. The fear of energy companies scaling back or suffering from falling prices should not act as a reason to keep the prices up. An open and free global energy market will adjust itself naturally to changing prices and opportunities. Lower prices can offer tremendous opportunities as well as open doors to new energy markets.
Global bidding and geopolitical movements have given us a price CORRECTION in the energy sector from a world view, not an undervaluation.
This may not be great news for oil companies, but it is great news for consumers and airlines.
“On Monday, Saudi Arabia, OPEC’s largest oil producer, cut prices for customers in the U.S”
http://finance.yahoo.com/news/oil-prices-4-lows-saudi-115049363.html
There has been speculation that the recent drop in oil prices from Saudi Arabia is due to a backdoor deal with the U.S. in an attempt to wage a proxy war with Russia. Russia who relies on oil/gas exports teeters on recession and could be pushed over by this. No doubt the Saudis want to maintain a place in the U.S. market, but never doubt U.S. policy to hurt the Soviets. Oh, I guess I meant Russians.