By Elizabeth Martinez,
Money and Investing Writer
Since the Hippie-revolution started in the 1960’s, the US population especially has become increasingly aware of climate change, and the need to search for alternative fuel sources.
This movement helped to inspire the creation of many alternative energy inventions, from the first commercial scale geothermal electric plant which was built in California in 1960, to the world’s first solar powered village in Arizona in the late 1970’s. Since the 80’s however, the US has mostly focused on modifying its energy collection resources, and passing legislation to combat climate change.
This shift in the American value system has hurt many gas and oil companies since the beginning of this movement. Even much larger companies, such as Exxon Mobile (NYSE:XOM), have been affected by the consumers demand for cleaner energy.
According to the companies 10-K form, they believe that their major risk factors stem from their susceptibility to economic and political changes primarily. They state that “even in countries with well-developed legal systems where ExxonMobil does business, we remain exposed to changes in law”. This seems to be a double edged sword for Exxon, as during the Obama administration, it served as a hindrance, but now during the Trump administration, this may actually serve to benefit the company.
That being said, in the last month alone, Exxon Mobiles Stock prices have gone down by approximately 7 percent to $83.86 at 4:00 PM on January 31, 2017. The company’s optimism has led their actual earnings to be consistently lower than their expected earnings over the last two plus years. With the recent political promises for decreased oil and gas company regulations however, Exxon may actually be able to reach the high standards of profit which they set for themselves in the upcoming quarter.
Now is the time for companies such as Exxon Mobile to start really branching out. If they are in fact able to turn things around for themselves and reach their profit goals, it may be wise to start digging around in the alternative energy fields, so that if policies are to revert back to their more strict ways, they will still remain profitable.
This would be especially useful for Exxon, since previously, they have relied heavily on their consumers with cars and trucks to buy their products to keep their sales up. Besides consumer environmental consciousness increasing and their current major competition, there is a new player in this market which could further harm their profits. Namely, the invention of electronic cars. As these vehicles become increasingly affordable to the public, the need for gas and oil among consumers further decreases.
Sure, people have been making this claim for years now, but the claim seems to bure strengthening in merit as the company Tesla Motors INC (NASDAQ:TSLA) has already begun the production process of its Tesla Model 3, an electric car which the company promises that before government incentives drive the price lower, will only cost consumers approximately $35,000 US dollars. These cars are already available to consumers for pre-order.
As anyone in the business field knows, the Market can be a very unpredictable and even unstable place. Though we cannot know what the future of these companies will be, it is clear that Exxon Mobile and Tesla Motors are definitely two top players to watch in the coming months.
A version of this article appeared in the Tuesday, February 7th print edition.
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