As You Sow Report: Oil Industry Fundamentals "Weakening" Under Structural Pressure
Major Caution to Investors: You've Been Here Before; 5 Years After Issuing Report Highlighting the Growing Risks of Investing in Coal, As You Sow Examines the Oil Industry, Finds Cause for Concern
OAKLAND, Calif., July 13, 2016 /PRNewswire-USNewswire/ -- Higher extraction costs. International supply competition. Falling profit margins. Mounting debt. Shrinking cash. Competing technologies. Regulatory risk. Indicators are flashing yellow for the oil industry, which is in danger of "weakening" if major oil companies continue to operate as though in a business-as-usual environment, according to a report released today by the nonprofit As You Sow. In 2011, near the height of U.S. coal consumption, As You Sow published a report highlighting the growing financial risks for investors with stakes in the U.S. coal industry, correctly predicting the structural basis for what has become a permanent decline of that once mighty industry.
Available online at http://www.asyousow.org/unconventionalrisks, the new As You Sow report, Unconventional Risks: The Growing Uncertainty of Oil Investments, concludes: History is replete with companies that failed to recognize the inevitability of change in their markets. Once dominant players in world markets, oil majors now share problems found at many risky companies, including increasing cost structures, deteriorating financial fundamentals, changing demand for their product, and management that has failed to address key areas of risk."
Danielle Fugere, As You Sow president, chief counsel and report co-author said: "We are in a period of accelerating change, which will fundamentally affect the oil industry. Investors need to understand the deepening structural risks in the oil industry, which have become more pronounced over the last decade. The future is not set in stone for oil companies, but their failure to acknowledge signs of change and plan appropriate action could be disastrous."
Amelia Timbers, As You Sow Energy Program Manager and report co-author said: "The oil majors are caught in a negative feedback loop. Every time oil prices are high enough to allow the majors to break even, high oil prices simultaneously create market conditions that accelerate long-term oil demand destruction, ironically reducing the frequency and extent of oil price rebounds in the future."
As You Sow is a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy and coalition building. www.asyousow.org.
CONTACT: Pat Mitchell, (703) 276-3266, [email protected];
Danielle Fugere, (415) 577-5594, [email protected]
SOURCE As You Sow
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