Oil Falls to 5-Year Low, and Energy Companies Start to Retrench
By CLIFFORD KRAUSS DEC. 8, 2014
HOUSTON — The price of crude oil continued to collapse on Monday, plunging to a five-year low, as oil giants began to scale back their drilling ambitions and pare the ranks of their workers.
On the same day that the American oil benchmark traded around $63 a barrel, down more than 4 percent, ConocoPhillips announced it would cut investment spending in 2015 by 20 percent, the biggest sign yet that major oil companies are contracting.
The announcement came on the heels of BP’s notice that it would cut middle management and other jobs in the months ahead.
Both moves suggested that the 40 percent drop in oil prices since July had spread pain beyond small exploration companies that were highly leveraged and most vulnerable to oil price swings.
“We are setting our 2015 capital budget at a level that we believe is prudent given the current environment,” said Ryan Lance, ConocoPhillips’s chairman and chief executive.
But even with the sharp cut in investments, the company projected that its oil and gas production would grow 3 percent next year because of recent start-ups of major projects in Canada, Europe and Asia, as well as increasingly productive wells being drilled in the Eagle Ford and Bakken shale fields of Texas and North Dakota.
http://www.nytimes.com/2014/12/09/bu...retrench-.html
US personal finance
Six reasons why the crash in oil prices is nothing to worry about
Oil prices are falling! Oil prices are falling! But don’t run into that bunker just yet, writes Suzanne McGee
Oil prices are plummeting. The US price for a barrel of crude has fallen to less than $78 a barrel, the lowest level in years. That comes hard on the heels of a summer-long 25% dip in prices that pushed gas at the pump below $3 a gallon – the lowest level since 2010.
It’s not a real crash: the world doesn’t really need more oil. Much of the drop is Saudi Arabia’s latest pricing shenanigans in negotiating with Opec.
A crash in oil prices looks dire. But this may make less difference than you might imagine to your day-to-day finances.
There is one exception: gasoline. Refined from crude oil, the price of gas tends to move in sync with oil. There are regional variables – is there enough refining capacity? What are the local fuel emission regulations? – that can alter those dynamics, and there’s usually a lag before crude oil price declines start showing up at the pump.
Cheaper gas could relieve some of the pressure on our beleaguered household incomes, just in time for the holiday season. And anything that spells relief on the cost front for the 95% of us who have struggled throughout the “recovery” would be welcome news, indeed. The retailers wouldn’t mind a bit, either, given their problems making money from the cash-strapped middle class.
There’s even an argument that lower gas prices at the pump could act as a kind of mini-economic stimulus.
The theory may be sound, but I’m wary of glib suggestions that cheap oil is a panacea. Betting one’s future financial wellbeing, or that of an economy, on a volatile commodity price, seems like a less-than-compelling idea. Especially since, right off the top of my head, I can see several ways in which cheap oil isn’t going to give your personal bottom line a boost.
http://www.theguardian.com/money/201...-nothing-worry