NPR Isn’t Scared by $100 Oil
National Public Radio's "Morning Edition" stories on $100 a barrel oil this week have featured some underreported views on the industry: The economy is surviving the higher costs, and the oil companies are using the profits for future exploration.
Reporter Jim Zarroli told NPR listeners what was supposed to happen, saying, "Time and again, economists from Alan Greenspan on down have warned that oil prices are inflationary ... Interest rates go up, borrowing becomes more difficult, and growth slows."
But, Zarroli also pointed out the unique trend that gets little coverage: Despite the rise in oil prices since March 2007, the economy has continued to grow at a strong pace.
There's more than one way to survive the rising cost of oil.
"Morning Edition" also reported November 14 that even though "high oil prices also help drive up the price of exploration," oil companies are investing now for future fuel.
"Companies often use fatter profits to search for new deposits, or to go back and suck the last drop from retired wells," said reporter Christopher Joyce.
Those $100 bills are going to search for new deposits in places like the Gulf of Mexico, where drillers must drill in deeper water and farther out at sea - making exploration more expensive. Joyce pointed out that higher prices can also help pay for the most current technology needed to squeeze more oil out of those old wells.
Incidentally, The Economist's November 8 print edition cautioned as oil companies released their numbers for the third quarter that "Record oil prices, it turns out, do not translate into record profits."
ExxonMobil, the publication pointed out, reported a 10-percent drop in profits in the third quarter, and profits also fell at Chevron, Eni, BP and ConocoPhillips.