Exxon Mobil Corporation (XOM), Valero Energy Corporation (VLO): Cheap Oil May Be Here Before You Know It

Essentially, though it may appear on the surface as if Saudi Arabia has control, it is between a rock and a hard place. Cutting oil production enough to make a difference hurts too much on the bottom line. Butler goes on to examine the impact of falling prices, noting that countries dependent on revenue will feel pain, but companies that need high oil prices to sustain expensive production techniques have more time to wait this out.

The bottom line
I’ve often said that trying to predict oil prices is a fool’s errand, but understanding who is affected by what happens when the price goes up or down, and how, is something that all oil and gas investors should know. What happens, for example, to a company like Exxon Mobil Corporation (NYSE:XOM) that’s investing $37 billion a year to find and produce all of this expensive oil? How will Valero Energy Corporation (NYSE:VLO) stock perform, given that the falling price of Brent means eroding margins for refiners? All things to consider instead of making assumptions about oil prices, given they have proved to be unpredictable and impossible to control.

The article Cheap Oil May Be Here Before You Know It originally appeared on Fool.com is written by Aimee Duffy.

Fool contributor Aimee Duffy has no position in any stocks mentioned. If you have the energy, follow her on Twitter, where she goes by @TMFDuffy. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.