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PHOTO CAPTION: Shell's Kulluk arctic drilling platform runs aground on Kodiak Island in Alaska.

Exxon, Shell Woes Are Good News for Electric Car Makers

Falling profits at Exxon Mobile and Shell and high oil prices open the window of opportunity for EV companies, writes Forbes contributor Peter Kelly-Detwiler.

Published: 03-Feb-2014

On the same week that Tesla shows off its cross-country “cannonball run,” (aiming to break the transcontinental record for driving an EV from the left to right shore of the U.S. in three days), bad earnings and production news comes from the oil patch. This could be really good news for Tesla and its competitors, among them, the Chevy Volt, the Nissan Leaf, and the forthcoming BMW i3. The more expensive oil gets, the more marginally attractive EVs become.

Fourth quarter earnings are out from Shell and Exxon Mobile and they confirm a trend many have pointed to for a long time: the hydrocarbons may still be there, but they are getting more and more expensive to recover. Both Shell and Exxon pointed to declining output, while at the same time bearing enormous investment burdens (Shell’s 2013 capital spending exceeded $44 bn).

Shell’s fourth quarter revenues declined from $7.3 bn to $2.2bn. At the same time, the company took a major torpedo to the bow with its Arctic mishaps, which to date have cost them over $5bn while yielding nothing. The company has also allocated over $30 bn to a project in Kazakhstan which is eight years behind schedule. To worsen the situation, Shell reported a 6% drop in oil production. Annual earnings were down 23% below 2012.

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