Recession? What Recession -- Part II
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The US economy lost fewer jobs than expected and unemployment nudged up. “It strongly argues that this downturn will be mild and short- lived,” said Mark Zandi, chief economist at Moody’s Economy.com. “As long as businesses hold the line on their layoffs, the economy will weaken, but it won’t unravel.”
This is especially true for law firms that represent energy companies, specifically oil companies. In recent weeks:
- BP reported that its profit increased 63%, to $7.62 billion.
- ConocoPhillips posted a 37% percent increase in profit, to $4.37 billion.
- Royal Dutch Shell net income in the first three months of the year rose 25%, to $9.08 billion.
- Exxon reported its net income rose by 17% to $10.9 billion.
- Chevron said first-quarter profit rose 9.5 %, to $5.17 billion
- A huge underwater oil field discovered late last year has the potential to transform Brazil into a sizable exporter and win it a seat at the table of the world’s oil cartel.
And for law firms, there's even more good news: the companies have all sorts of difficulties that require the hiring of lawyers:
- They are in an increasingly difficult business environment, marked by rising costs, tightening access to oil fields, and declining profits for refineries.
- Truckers and drivers are angry at the oil companies, so much so that the price of gasoline has become an issue in the presidential campaign.
- They may face windfall profits taxes and end to subsidies.
- There is a drop in oil production due to international contracts, under which oil companies must give a larger share of the oil they produce back to the host governments as prices rise.
- Exploration and production costs have doubled in recent years.
- In refining, profit margins have dropped as refiners were unable to pass through all the price increases in crude oil prices.
- Oil executives have been called before Congress to defend their profits in the last two years.
It's time to stop focusing on real estate, construction, banks, mortgage companies and airlines. Go where the money is: energy, steel, industrial metals, coal companies and railroads. See the 10 Best Performing Industries on MarketWatch.com.
