Who to listen to, vis a vie Oil Prices ?
Well, if you had to make a list...this guy would have to be at, or near the top.
If this doesn't add a bit of reality to the speculative Oil environment that presently exists...nothing I have to say will.
re: Oil Market History:
Fear & Respect it... learn from it; or be destined to repeat it...
Thanks to NowShesBlond for the link:
LEE RAYMOND, CHMN. & CEO, EXXONMOBIL:
"The last speech I heard on a paradigm was in 1996 and shortly thereafter the price collapsed down to $10. I don`t think that`s the paradigm the fellow had in mind when he talked about a paradigm. So I guess I`m a skeptic to a degree that there is a permanent and significant change in the price structure of oil."
******************************************************************************************************************************************************************
03/09/05:
One On One With Lee Raymond, Chairman and CEO of Exxon
SUSIE GHARIB: Despite soaring oil prices, the world`s largest publicly traded oil company is offering a conservative outlook on its future. ExxonMobil told Wall Street analysts today to expect nothing more than results what it called quote boringly consistent end quote. ExxonMobil is coming off a record year that saw its highest profits ever on revenues of almost $300 billion. When I talked today with ExxonMobil`s chairman and CEO Lee Raymond, I asked him why oil prices have remained stubbornly high.
LEE RAYMOND, CHMN. & CEO, EXXONMOBIL: The price, I believe, Susie, is representing what some people might perceive as a scarcity value of oil. If there was a shortage, what would the value be? Well, the value would be very high because the world economy runs on oil and it needs to have oil. So people are in essence risk waiting (ph) whether or not there`s going to be a shortage.
GHARIB: Mr. Raymond, you said today that you don`t think that there is a new paradigm on this structure on the price of oil. Yet is it still possible? Is it realistic to think of $80 oil?
RAYMOND: I can`t say that oil won`t get to $80. I just don`t know because I don`t know the political situation that could happen that could lead to that. The question about a paradigm is another question. The last speech I heard on a paradigm was in 1996 and shortly thereafter the price collapsed down to $10. I don`t think that`s the paradigm the fellow had in mind when he talked about a paradigm. So I guess I`m a skeptic to a degree that there is a permanent and significant change in the price structure of oil.
GHARIB: At ExxonMobil when you were doing your long-term planning, what price level of oil are you using?
RAYMOND: Way, way lower than 55.
GHARIB: We keep hearing that the reason that oil prices are surging is because of increased demand in China. Is that really the reason?
RAYMOND: I think Susie, that`s a little simplistic. I mean certainly China is growing and certainly they`re importing more, but there are a lot of other parts in the world that are growing, too and there are a lot of other countries are growing and that`s just going to continue as the world economy continues to expand.
GHARIB: As you look around the world in search of more oil, how important is Russia for ExxonMobil?
RAYMOND: Is Russia critical to Exxon? Well, first of all, we have a huge project there that we`re undertaking in eastern Russia. In terms of other opportunities in Russia, are they absolutely critical? Probably not. On the other side, I think over time once the government in Russia sorts out what they think their policy is with regard to the development of natural resources, that I would expect that there will be some opportunities for international oil companies and we`ll take a look at it at the time.
GHARIB: Can you make money in Russia? Can you count on being compensated for the oil developed there?
RAYMOND: That`s a legitimate concern. I mean, I was probably frankly a little more optimistic on that a couple years ago than I am now. And I guess my comment would be that I think for large investors, I would say a good dose of patience is probably what`s in order.
GHARIB: Many times you`ve emphasized Exxon`s good financial discipline. Given that the company has $27 billion in cash and by some estimates that number could go up to $40 billion this year, how do you plan to put that money to good use?
RAYMOND: We`ve been in these positions before where we`ve had a lot of cash and over time they`ve basically ... we`ve used it for investments or we`ve distributed it to our shareholders. And I think that`s the policy that we`ll continue.
GHARIB: Certainly Exxon could use all that money and write a check and make an acquisition. Does it make sense for you to make an acquisition?
RAYMOND: Well, I would be very reluctant to think about making an acquisition in the price environment that we`re in right now. As a matter of fact, a number of companies have made acquisitions when we went through a period not dissimilar to now in the early 1980s, purchased a lot of assets and I suspect if they go back and look at the economics, they were at best marginal because the price, a few years later, collapsed to less than $10.
GHARIB: Obviously you must be pleased with the performance of the stock. It`s done rather well in the last year. Do you think it can sustain that momentum?
RAYMOND: That`s even harder to talk about than oil prices. For many reasons, both the industry and the company, we have underperformed for a long time in the market because of people`s perceptions that the oil industry had no future which obviously isn`t true, as we`re seeing today. So therefore I think that the stock, the value, the price of the stock is probably a better representation of the future of the company and the industry.
GHARIB: Mr. Raymond, thank you very much. Appreciate your talking to NIGHTLY BUSINESS REPORT.
RAYMOND: Thank you. Nice the see you, Susie.
nightlybusiness.org |
