When a politician says something particularly if it is slogan, while it maybe nice to hear, you may agree with it, you should not automatically invest in it. An example is President Trump said, one of the ways he was going to unleash the oil industry was to allow it to drill baby drill. This has meant changes in regulations to make it easier to drill and allowing drilling on more federal lands. For those in the oil industry, that can be good thing, but the oil and gas industry is a commodity based which means it is dependent on the price of oil. Too much of a good thing is bad for prices.

In an article from Reuters, CEO Ryan Lance of ConocoPhillips said the company will cut 20 to 25% of its workforce in a restructuring. The price of oil and gas has fallen which translates to cutting expenses including staff, slowing capital spending and reduce drilling.

Costs have risen by about $2 a barrel, making it harder for the company to compete. CEO Lance said the controllable costs has risen to $13 a barrel in 2024 from $11 a barrel in 2021.

ConocoPhillips has identified more than $1 billion of ways to cut costs and improve margins on top of the more than $1 billion it cost savings from its acquisition of Marathon Oil last year. The reorganization should be completed by 2026.

Linking to dividend paying stocks, the 3 largest oil companies in the US – Exxon, Chevron and ConocoPhillips are profitable companies but they still need to retain margins to generate profits to reward shareholders. The process maybe easier to drill for oil and gas, but market prices determine when and how much they will bring on stream to ensure they continue to make profits. Listen to the politicians but invest on the commodity prices determined by the market.

There are more questions than answers, till the next time – to raising questions.