Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

Political Climate Shifting Against The Oil And Gas Industry

Commodities / Crude Oil Nov 10, 2015 - 12:41 PM GMT

By: OilPrice_Com

Commodities Oil and gas companies have had a tough time over the past year trying to weather the storm of falling oil prices. But the political and financial winds are moving in the wrong direction for the industry, raising more "above ground" problems at a time that they can ill-afford it.


Drilling oil and gas wells requires a lot of money. For companies that have seen their revenues vanish because of collapsing oil prices, access to credit is obviously critically important. But U.S. financial regulators are growing concerned about a pile of energy debt that is deteriorating in quality. A report from the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve singled out the oil and gas sector when it concluded that credit risk was rising across the United States.

For example, there is at least $34.2 billion in loans in the banking sector that have a credit rating suggesting they are "substandard," "doubtful," or "loss." That figure is up from just $6.9 billion in 2014. Put another way, about 12 percent of all loans to oil and gas companies are rated "substandard" or worse.

Low oil prices are undermining the ability of some companies to pay back their debt. However, increased oversight from banking regulators could force banks to take corrective measures, which could mean reducing their exposure to high-risk energy debt. Such a development does not bode well for oil and gas drillers. Tighter credit conditions – which could also be impacted by a pending rate increase by the Federal Reserve in December – will make drilling more expensive.

In the political arena, things are not any better, with last week being a particularly rough one for the energy sector.

First, the attorney general in New York announced an investigation into ExxonMobil, for what it sees as evidence that the company lied about the dangers of climate change. The probe comes on the heels of reports from InsideClimate News that the oil major's own scientists knew about the threat of climate change decades ago. But, according to the report, ExxonMobil buried the science and instead began funding think tanks and scientific research to sow doubt about climate change.

Critics of ExxonMobil have called for an investigation by the U.S. Justice Department, a chorus that includes three democratic presidential candidates and a growing number of members of Congress. But the NY attorney general investigation has taken the scandal to a new level. Att. General Eric T. Schneiderman subpoenaed financial records, emails and other documents from the Texas-based oil major. The investigation, as The New York Times put it, "focuses on whether statements the company made to investors about climate risks as recently as this year were consistent with the company's own long-running scientific research." ExxonMobil confirmed receipt of the subpoena and was still forming a response on November 4. But Kenneth Cohen, vice president for public affairs at ExxonMobil, denied the allegations. "We unequivocally reject the allegations that Exxon Mobil has suppressed climate change research," he said.

Finally, President Obama rejected the Keystone XL pipeline on November 6, which will only come as news to readers living under a rock. The immediate reaction is to look at the effect on oil markets; analysis that has been beaten to death over the past seven years. Still, as of the fourth quarter of 2015, there's good reason to think that the rejection hurts oil sands producers because of limited pipeline capacity. Even Keystone XL's proponents agree. Joe Oliver, the former Canadian minister of natural resources and minister of finance under Prime Minister Stephen Harper, wrote in the Financial Post about the urgent need for new pipelines. He says that Canadian oil producers would lose $100 billion over the next 15 years if no new pipelines are built. The business atmosphere is likely to get much tougher for Canadian oil now that a new government has promised a more rigorous environmental review for pipelines.

But the political fallout from Keystone XL is probably more significant than the immediate effect on oil markets. The project was rejected because of its impact on greenhouse gas emissions, a potential precedent for climate change action. The world may look back on this point as the first in a series of moves in which fossil fuel projects must climb an ever steeper political hill in terms of gaining approval. As alternative energy projects become cheaper and cheaper, the political establishment is finding that taking on the energy industry is not as intimidating as it once was.

Bloomberg published a pretty glaring chart that sums up how the industry has for years overestimated its long-term prospects. Based on last week's developments, which included the launch of an investigation into the world's largest oil company and the rejection of the most politicized energy project to date, the "above ground" problems for the energy industry are growing much worse. That could complicate the future fortunes of oil and gas companies.

Article Source: http://oilprice.com/Energy/Energy-General/Political-Climate-Shifting-Against-The-Oil-And-Gas-Industry.html

By Nick Cunningham of Oilprice.com

© 2015 Copyright OilPrice.com - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

OilPrice.com Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules