October 27, 2006
Big Oil is at its peak. Investors in industry giants like Exxon Mobil, Royal Dutch Shell and BP have enjoyed a very good past few years as energy prices have climbed. But if the next few years are less rewarding, rising costs as much as lower oil prices will be to blame.
Look at Shell. Investors have raised their hats to the European energy giant, which just produced a stronger-than-expected rise in third-quarter earnings. Yet Shell’s underlying picture was more worrying. Margins thinned, as its cost of sales rose twice as fast as revenue, and Shell’s return on capital slipped from 26% in the second quarter to 23% in the just-ended quarter.
Other firms are also suffering. BP’s earnings fell from the second quarter, as did ConocoPhillips’s. Even at mighty Exxon Mobil, which just announced a record $10.5 billion quarterly profit, costs edged ahead faster than revenue.
The drop-off in profitability is inevitable. Costs are soaring as the industry catches up on two decades of underinvestment when oil prices were low. Oil firms are also moving into bigger and more complex projects to try to boost reserves. This has bid up the price of pipes, engineers, oil rigs and steel. Meanwhile, rising oil prices are no longer providing a helpful tailwind.
Investors have noticed the problems. In the U.S., oil shares have done no better than the broader market since the start of the year. In Europe, oil producers have even underperformed by about 12%. Falling profitability plus lower share prices are two reasons why another wave of consolidation could yet sweep the sector.
–Jonathan Ford, Edward Hadas, John Paul Rathbone
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This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
