Oil sector’s next test: 2006

According to Oppenheimer’s Mr. Gheit, annual 2006 earnings are expected to jump 7 percent for the majors, 30 percent for the exploration-and-production independents and 10 percent for the refiners.

Longer term, perhaps the biggest issue facing the energy industry is its increasing difficulty finding enough new fossil fuel each year to replace what it is producing. In 2004, several oil companies failed to book enough new “proved reserves” to replenish the oil and natural gas they produced, at least according to the reserves-accounting method favored by the Securities and Exchange Commission. The oil industry, arguing the SEC’s accounting method is too pessimistic, is trying to persuade the SEC to change its method.

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