Posted on 02/02/2016 1:10:01 PM PST by Lorianne
BP is to axe another 7,000 jobs after reporting an annual loss of $6.5bn (£4.5bn), the worst in its history.
Shares in the oil company dived 8.6% to 335p by the end of trading on Tuesday, wiping almost £6bn off the stock market value of the business, and helped drag down the wider FTSE 100 index of leading shares in London.
The poor financial performance of BP, followed by a 68% fall in quarterly profits from rival Exxon Mobil in the US and further weakness in the price of crude, depressed stock markets on both sides of the Atlantic on Tuesday. The FTSE 100 finished the day down 2.2% at 5922.01 points, while in New York, the Dow Jones fell more than 230 points, or 1.4%, in early trading.
(Excerpt) Read more at theguardian.com ...
It just seems that we're in unchartered territory here, and nobody, globally, knows what will happen and what to do about it.
British Petroleum: R.I.P.
Now, when BP says it’s cutting thousands of jobs, I believe them. Believe the Chinese lies? Nope. The two cultures are as different as night and day.
Bernie Sanders has two reasons to smile this afternoon. I would remind him to be careful what one wishes for.
So nobody suspected they were in trouble until they announced their earnings? Strange are the ways of the stock market...
What’s worse is that backs are heavily invested in oil companies. The dominoes could fall.
How many of those 7K are related to the ^severe^ downturn in the North Sea?
Hydro/Troll is sucking wind right now.
Crap like this is why Sanders has as much support as he does.
100 percent true.
Where were all the naysayers when the country was bleeding manufacturing jobs for the last 2 decades?
BS. The reason oil company profit margins are far less than many other industries is because they spend it, chasing future oil production.
Why not tariff all goods equal dollar percentage if it was good for the economy?
Why selectively punish our refining industry?
you know the reason...
rayciss!
:-)
It would be hypocritical to tariff oil imports and save the oil industry and not do the same for manufacturing.
Of course - over time. High commodity prices are a tax on industrial end users that process them into consumer products. The problem is the huge amount of capital poured into the commodity sector - capital that has been and will continue evaporating into thin air through bankruptcy filings - stock that is written down to zero and debt that is repaid at pennies on the dollar, if at all. People who invested in these companies will be hurting now, whereas the benefits are diffuse and a lot more gradual. But that's the rough-and-tumble of capitalism for you.
Capital is invested in a sector to the point of overcapacity. A product glut leads to major price drops and massive losses. This causes the closure and liquidation of companies in the sector. Upon which the sector is starved of new capital. Then product scarcity leads to price increases and fat profits. New capital is invested in the sector to chase these profits, and the cycle has gone full circle.
The problem for commodities today is that it has gone through 15 years of a bull market driven by rampaging Chinese demand that saw China's economy expand ~8x from $1.2T in 2000 to $9.4T in 2013. The Chinese economy has either slowed down or may be contracting. Which means the commodities overcapacity ramping up for the next few years - through investments started several years ago - will exacerbate the pricing issues in the commodities world. In short, the bear market in commodities probably has several years to run, since it's only been in existence for a couple of years, coming as it does on the tail of a 15-year bull run.
You speak of the normal cycle that would bring supply and demand back in check. But as with other things such as the labor market, do the cycles function in a global economy?
Sure. Commodities have always been part of the global economy*. There is a single price for commodities, subject to transportation costs and the quality grade of the commodity in question.
* It's labor and land that have been uniquely local, until the invention of the intermodal shipping container, which internationalized manufacturing by making it much cheaper to transport something from across the globe from a low-labor and -land cost country, than make it locally in a high-labor and land-cost country. Companies used to make products for foreign markets in those markets to save on transportation costs. With the invention of the modern shipping container, it is now cheaper for them to assemble those products in foreign low-labor cost markets and ship them back to their high-labor cost home markets.
That is why manufacturing jobs have been going abroad for decades. Even China is seeing this effect, as Chinese plant owners move their plants to Indonesia, Vietnam and Cambodia to capitalize on lower labor and land costs, even as Chinese land costs have skyrocketed, and Chinese incomes have gone up 10x or more over the course of 20 years, which is how annual Chinese car sales went up from 1m in 1992 to 20m in 2015.
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