The oil giant ExxonMobil was a member of the Dow Jones for almost 100 years, now it’s over. The oil industry has determined the fate of the world for decades, but it is becoming less important. The industry is hoping for Donald Trump’s re-election.
Oil giants such as ExxonMobil, Shell and Chevron can feel the world changing. The importance of fossil fuels is waning as technology stocks boom and climb from record to record. The old economy is in crisis. This can even be seen in the Dow Jones Industrial, the world’s most famous stock index.
ExxonMobil, the longest-standing company in the Dow at 92, has now to leave the index. In 1928 the largest US oil and gas company was included in the Dow under the name Standard Oil of New Jersey.
The oil killers climate change and corona
There has long been speculation about the end of the oil age. Renewable energies are on the advance worldwide, the topic of climate change is accelerating the abandonment of oil and increasing interest in wind or solar energy and in alternative types of drive.
Then there is the corona pandemic, which has ensured that the demand for oil has collapsed worldwide – and with it the oil price. Just a few days ago, the International Energy Agency (IEA) lowered its forecast for crude oil demand for the current year and the coming year due to the pandemic.
Even the oil giants’ latest quarterly figures show how serious the situation is. ExxonMobil posted a loss of $ 1.1 billion in the second quarter of this year. At Chevron the minus was even more than eight billion.
Tesla boom: who still needs oil?
For many years ExxonMobil had been one of the most valuable companies in the world. For the last time, the oil giant made it to number one on the list in 2013. Since 2008, the stock market value has roughly halved. How much the assessment of the future prospects and the importance of the oil industry has changed can be seen if you look at the market value of the electric car manufacturer Tesla.
The share has gained more than 900 percent in the past twelve months. No matter how sustainable the price gains are, Tesla is currently as valuable as ExxonMobil, Shell and BP put together.
The whole industry in crisis
The departure from the Dow Jones could be interpreted as another sign that the entire oil industry is in decline. This is particularly true for the US fracking industry, which is currently being shaken by a wave of bankruptcies.
At the end of June, the US fracking pioneer Chesapeake Energy had to file for bankruptcy protection because of the sharp fall in energy prices. In addition to falling prices for natural gas and oil, the excess supply as a result of the US fracking boom also weighed on business. There are now more than 50 oil and gas companies that have gone bankrupt.
Make the Oil Industry great again
US President Donald Trump is an important supporter of the domestic oil industry. He would do whatever it takes to help, he said in April in view of the Corona crisis and plummeting oil prices: "I am a big fan of our big energy business. We will take care of our energy business."
At that time he had also received the heads of major US oil companies, including the bosses of Chevron and ExxonMobil, in the White House: "I will support you 1,000 percent," he had announced. Trump’s critical stance on climate change is well known.
Moving away from fossil fuels
The Democratic US presidential candidate Joe Biden wants to stand up for renewable energies if he is elected and take active action against climate change. Biden presented a nine-point plan for a "Clean Energy Revolution". From day one of his takeover in government, he not only wants to "repair the damage that Trump has caused", but also wants to move further and faster on the topic of clean energies.
The US expert of the German Society for Foreign Policy (DGAP), Josef Braml says that a US President Biden would probably rely heavily on renewable energies – "and thus only understand what the markets have long been showing, namely the move away from fossil energies".
For the already badly shaken US oil industry, a future President Joe Biden would therefore be anything but good news.