ExxonMobil is expected to report another quarterly revenue decline when it announces its earnings on Thursday, further supporting the theory that big oil companies are actually struggling, according to one portfolio manager.
"And I think the bigger picture here, the bigger story for both the [major oil companies] and I think the domestic oil industry in general is the lack of free cash flow," said Tim Gramatovich, chief investment officer at Peritus Asset Management. "You know production continues to fall. And what's happening out there in general is that it costs more and more to continue to keep production flat ... and also replace your reserves."
And investments in shale oil are overhyped, Gramatovich suggests. In oil production, the easiest production happens first. Gramatovich explained. Over time, production gets more complicated and more expensive, and production levels are lower, he said.
"It's going to be skirmish, not a revolution," he said.
And U.S. hopes for energy independence are misguided, according to Gramatovich.
Americans consume 19 million barrels of oil per day and produce about 6 or 7 million barrels of oil, Gramatovich said, and even the most generous estimates say that we can only produce 10 million barrels.
“Energy independence is a joke,” he told “Big Data Download.”
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