Big oil companies admit they are ‘losing their shirts’ due to the shale gas boom and low gas prices. It all stands in stark contrast to a couple of years back when oil majors were telling shareholders not to worry, ‘we’re Big Gas as well’.
Quarterly results are normally a fairly predictable affair in energy. Depending on what companies have been up to – some are up, some are down – but they all ultimately reflect whatever’s been happening on international oil markets. With benchmark prices averaging historic highs ($114/b) in the first half of the year, bumper profits should be rolling in. And true enough, big oil has delivered some big results this time round. But read between the ‘numbers’, and it’s becoming alarmingly clear – big oil has major problems cross subsidising cheap gas right now, and nowhere more so than in the United States. Something has to give.