Lower oil production is the real story

The profit is what captures everyone’s attention, but there’s a bigger concern hidden amid the numbers of Exxon Mobil’s earnings.

The company’s worldwide oil production fell 10 percent, to just under 2.5 million barrels a day.

The problem isn’t unique to Exxon Mobil.
While Exxon Mobil boosted production from fields in West Africa and the North Sea, the gains weren’t enough to offset declines from aging oil fields, the company said.

The company blamed the decline in part on its contracts with oil-producing countries, which allow those countries to claim a larger share of oil volumes as prices rise. In other words, the higher prices go, the less oil Exxon Mobil gets.

Other major oil companies also offered a stark production picture. BP’s was unchanged from a year earlier. Shell reported a gain only because it boosted natural gas production, which offset lower oil output. ConocoPhillips reported an increase but attributed it to its 20 percent stake in Russia’s Lukoil.

With national oil companies now holding most of the world’s reserves, companies like Exxon Mobil are left with few places to look for new production.

The public, though, has little concern for Exxon Mobil’s travails. We only care about what we see from our side of the pump, and that means the price and the profits of the company whose name is atop the sign.

Exxon Mobil has reported earnings between $9 billion and $11 billion in almost every quarter since late 2005, and every time it does, the public outcry grows.

It’s not a question of whether $11 billion is too much or not enough. It’s a question of whether 2.5 million barrels is.

Houston Chronicle