Am I the only one happy about Exxon’s earning report?
May 2nd, 2008Consumers are outraged that the increased price of oil translates into high gas prices. The media is even pointing out the not-so-strange parallel that the 17% increase in profits for Exxon in Q1 corresponds to a 17% price increase during the same time at the pump…Airlines are desperate and announce drastic changes in their pricing, flight schedule, and even flight speed (who knew) to make up for skyrocketing energy prices.
Even shareholders don’t seem to be thrilled about Exxon’s $10.9 billion quarterly net income performance judging by the initial media reports.
Oil prices have gone so high that they have become for some a new gold standard in times of looming recession and depressed US$. Speculating on oil of course contributes to higher prices, thus inflation, thus economic downturn, thus more oil speculation…
So, what makes me happy with this despite this catastrophic scenario I just described? Actually, the crisis itself is actually my reason to be optimistic. I think we are in need of a good old fashioned energy crisis.
Why?
The industries the most (negatively) affected by this crisis are the automotive and the airline industries. Both could use a major shakedown. We know that large corporations and governments’ openness to change is very limited in general and almost inexistent in times of prosperity. Haven’t we all heard the old adage “if it ain’t broke, don’t fix it”? The good thing with a structural crisis like the one that is now at our doorsteps is that it inflicts pain to business-as-usual, and therefore makes radical change more accessible.
The transportation industry is vital to our way of life and players in the auto world and airlines now need to step up to the plate and make some hard decisions to initiate and follow through on structural changes to find new ways to go about their businesses.
Undoubtedly many incumbents won’t survive the shift of direction and gear, but do they have a choice?