At $75, the oil company makes $25 profit. If oil drops to $50 it will be hard for some to even stay in business.
Where did you get that number? Not too long ago crude was under 40 dollars a barrel. The price to get it out of the ground has not gone up. Recently ExxonMobil made more money than any company in history for that reason.
hard to stay in business at 50 dollars a barrel?
LOL!!!!!!!!!!
I wonder how they all survived during that period of really cheap gas.
No company is making 33% profit. What they are doing is reinvesting income into the business. Just like operation and maintenance, capital expenditures are a necessary business expense. More drilling, more production, reducing bottlenecks, buying leases, buying companies with reserves, buying back stock, etc. Oil fields all decline production without continued reinvestment. The price will fall and lean times will come. Those that don't invest in their companies today will not survive those times. This is not the first or the last time of cycle.