OCTOBER 27, 2009
THE WALL STREET JOURNAL
The recent surge in oil prices hasn’t benefited Big Oil much, and the moment may be passing.
BP reports third-quarter results Tuesday, kicking off a week of results from the world’s biggest integrated oil companies. ConocoPhillips reports Wednesday, Exxon Mobil and Royal Dutch Shell on Thursday and Chevron on Friday.
It is expected to be a tough quarter for the group, in part because year-ago comparisons will be brutal.
![[oil stocks performance]](https://i0.wp.com/s.wsj.net/public/resources/images/MI-AZ492_AOT_NS_20091026184847.gif?resize=184%2C252)
In the third quarter of 2008, crude-oil prices on the New York Mercantile Exchange averaged $118 a barrel, lifting revenue in exploration and production. Exxon’s $14.83 billion in net income then set a record for profit from recurring business by a U.S. company.
Fast forward to the third quarter just ended, when oil prices averaged $68 a barrel. Analysts expect Exxon’s income for the period to be less than half of the comparable quarter last year.
Oil has recently surged back to $80 a barrel, a 71% run-up since March 9 that outpaced the S&P 500-stock index, though oil dropped below $79 on Monday.
The burst would seem to be a boon to these companies. Yet, the Dow Jones U.S. Integrated Oil and Gas Total Stock Market index is up less than 21% for the same period.
Part of the problem for some of these companies is sheer scale, which makes it difficult to significantly add to reserves or production.
“Investors are leaning more toward smaller-cap companies because they can see more potential for growth,” said Oppenheimer analyst Fadel Gheit.
The group also is exposed to the dismal refining business, in which just 81% of capacity is in operation due to low demand.
There also is reason to doubt the sustainability of $80 oil, with global inventories still high and demand still weak.
U.S. oil supply at last count was 339 million barrels, higher than its long-term average and up nearly 28% from last year.
Under the circumstances, oil should be priced closer to $50 a barrel, said Mark Gilman, analyst at the Benchmark Co.
“We’re at these prices due entirely to excess global liquidity,” Mr. Gilman said. “When it corrects, it’s not going to be pretty.”
Write to Mark Gongloff at [email protected]
Printed in The Wall Street Journal, page C1
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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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