"Exxon" Essay by The Research Group

"Exxon"
Industry regulation and structure, company history, financial analysis, alternative fuels, strategy and recommendation. Uses charts and graph.
# 14318 | 2,250 words | 10 sources | 1999 | US
Published on Jul 21, 2003 in Business (Companies) , Business (Industries)


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Description:

The petroleum industry is subject to influences of interest rates since it is a highly capital intensive industry. As interest rates increase, the cost of capital to the participating companies also increases and the profits of these companies are likely to fall in the short-term (although price increases in the longterm can help offset these problems). As a result, the recent increase in interest rates may have a detrimental effect on Exxon and its competitors as they try to make up the losses which may have resulted.

From the Paper:

"Economic Analysis

The petroleum industry is subject to influences of interest rates since it is a highly capital intensive industry. As interest rates increase, the cost of capital to the participating companies also increases and the profits of these companies are likely to fall in the short-term (although price increases in the longterm can help offset these problems). As a result, the recent increase in interest rates may have a detrimental effect on Exxon and its competitors as they try to make up the losses which may have resulted. Exploration, a highly risky activity, must continue despite interest rate hikes, but price increases are difficult to put into place if there is a surplus of petroleum products on the market. Since this is currently the case, this industry might see some difficult times which could adversely affect all but ..."

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