While lower fuel prices might be great for consumers, they’re not so wonderful for oil producers, who see their profit margins shrinking. The price of crude oil has dropped by more than 50% compared to last summer, which is hitting the earnings of major oil companies like Exxon Mobil and Chevron hard.
In fact, Chevron announced a staggering 90% drop in net income for the second quarter compared to the same period last year, and Exxon reported its profits were cut in half during the same timeframe.
This week, a number of oil companies, including Chevron and Royal Dutch Shell, have announced significant job cuts to save costs. Some analysts suggest that the energy sector is just starting to adjust to this new normal of lower oil prices.