This page has been archived and commenting is disabled.
BP Set To Slash 100s Of Jobs Amid Oil's "Unequivocally Good" Slump
The slump in oil prices has BP "concentrating minds on making the organisation more efficient" which means, as The FT translates, the 'unequivocally good news' of lower oil prices is accelerating plans for the oil giant to reduce its headcount. The Sunday Times reports, BP is to ax middle managers and freeze projects as Brian Gilvary, the finance director, said: "what you’ll see with this simplification plan is that headcounts are starting to come down across all of our activities in upstream, downstream and in the corporate centres — essentially the layers above operations." Gilvary added that the company would slash the oil price assumption used to set its day-to-day budget.
BP will announce on Wednesday that hundreds of jobs will be lost at offices in London, Sunbury and Aberdeen as part of huge global staff cuts resulting from plunging oil prices and the Gulf of Mexico spill.
Bob Dudley, the chief executive, will tell a meeting of City investors, that major financial savings will be made as support staff in areas such as procurement, legal and communications are scaled back.
BP is accelerating plans to reduce its headcount, in a sign of how global oil companies are looking to control costs in the face of a lower oil price.
The oil major is looking at its non-operations staff, including back-office employees, that have been kept on as the company has shed production assets in its portfolio.
“Oil is concentrating minds on making the organisation more efficient and the right size for the smaller portfolio we have now,” BP said.
...
Analysts expect cuts in exploration spending and possible project deferrals.
...
Brian Gilvary, BP’s chief financial officer, told the Sunday Times: “We have got flexibility in our programme to trim into next year if that’s what we need in a new world of oil at $70 or $60, or whatever the number is.”
* * *
Lower for longer it is then... welcome to high-yield credit hell...
»
- 7459 reads
- Printer-friendly version
- Send to friend
- advertisements -
It's called a self reinforcing downward spiral.
This is good news, they can now spend more time with their families. And with basic income and automation, nobody need to work in the future.
What's REALLY good about this is that with gas prices off roughly a buck, the government can raise gasoline taxes by a buck and you won't notice any difference.
I'm not a "mark my words" kind of guy, but there it is. That's where this is headed next.
Politicial suicide, sweet.
A 50% drop in a commodity price is like a good hangin'
"Concentrates the mind"
Lets do some simple math to see just how stupid this "Cheap oil is bad" argument is, especially when compared to the headline of "OH NO BP WILL LAY PEOPLE OFF BECAUSE OF LOW OIL PRICES!."
So, they say hundreds of jobs will be lost at BP right? Lets go with a high number and say 900, thats about the highest you can get in the "hundreds" right?
Lets multiply 900 by $100k per year (a pretty nice salary by anyones standards) = $90 million dollars a year. Ok.
In 2013, the United States consumed a total of 6.89 billion barrels of petroleum products. Lets round down to 6 billion just to make it easy and multiply that number by $100, what oil used to cost. Answer = $600 billion.
So with oil moving to $70 a barrel, well multiply that by 6 billion barrels of oil and come up with $420 billion.
So, in conclusion, the economy is LOSING $90 million of consumer spending, but GAINING $180 billion in consumer spending from money saved on oil (600-420=180).
Sooooo what exactly is the problem with low oil prices?
It's not about few hungred in BP, it's about of thousands in shut of projects which has contracts with private firms, it's about tax from this companies, it's about junk bonds and credits.
Most important one are shale oil companies - are a ponzi companies, they have negative cash income, so they exist from other people money...
So what? They are selling a product that is unprofitable with their current business model. In a free market that means you either down size, revise your business plan, or go bankrupt. Why is this a bad thing?
It isn't.
ZeroHedge logic: oil going up or down is bad for the economy. Gold going up or down means you should buy it, never sell.
because after oil companies go bankrupt - banks next -after banks - countries, or they bail out banks again and you will see 2008-2009 again but much much worse.
It's not bad for all, it's just bad for bankrupt shale companies and big banks, and for usa
It's actually going to be more painful then the article leads one to believe. Multiply BP X the hundreds of oil and oil related companies that “lay off” [to be euphemistic about it]. In this saturated jobs market good luck finding another decent paying job. Ok, so one may think ‘old Joe’ can cash out his pension plan and live on that, right?
Oh, oh. Guess where most if not all of Joe’s pension cash is invested? His plan is chock full of the oil stock in the very company that’s down 50%, the company he worked for.
I predict an acceleration of the depression we are in as even more Middle Class people simply stop spending on anything but essentials b/c they are tapped out in the extreme.
plus with oshitcare there to help out they can get rid of those dirty smelly working jobs and spend time at home with the kids.
ZHers, help me out here...
The idea with any investment is to buy low and sell high. So oil is plummeting and we hear how BP is laying off or whatever and the fracking drilling applications have come to a screeching halt. Why is this? If I were a drilling company, I'd be driliing like mad right now and then capping anything I found in preparation for the certain increase in price that will happen sooner or later.
What am I missing here? Is it that the cost overhead of drilling is so enormous? Bet even if this is the case, wouldn't you put money aside exactly for this kind of thing?
If I were buying houses, stocks, gold, tulip bulbs, or anything else, isn't the basic idea the same? Buy low/sell high?
Thanks for any information that can be provided.
You are missing the point that if they drill now they cannot pump and pay it back. On top of that, they would be increasing supply as demand is dropping which is a recipe for even lower prices making the whole thing even more upsidedown.
One would think, along your lines of thought, they would be looking at picking up other's operations when their competitors go bankrupt and increasing their output without increasing global output - all for pennies on the dollar. Of course, it will be obvious by who does the consolidating who was oh so fortuitously positioned for just this scenario.
Gosh, Tyler said high oil prices are better for me. It must be true. I don't mind economic bad news (how is my gas bill going down bad news again?) as straight up news but don't try to sell be that I need to pay more for, for, for my own good.
Someone is getting paid like a mofo there.
my best friend's mother makes $82 /hr on the internet . She has been without work for five months but last month her pay check was $20842 just working on the internet for a few hours. browse around this website... www.yelptrade.com
Gulf of Mexico spill? Really, just now?...really?
Normal course of business.
Business will reduce costs in order to make a profit. Governments will increase subsidies to make them profitable
ceo gotta gits hiz bonuses bitchez
Here we go....I was selling into the oil patch in Calgary in the 1980s. I remember everything booming on a business trip late 1981. On a second trip in 1982 everything came to a complete stop and most capital spending was frozen. There were dozens of cranes building in 1981 - then almost nothing. Used to be boom and bust for years - and the last decades have been boom. Guess it has gone on long enough for the younger among us to forget the busts. Sigh....
On Zero Hedge, high prices are bad and low prices are bad.
But to the average consumer, low prices are always good.
you need to have stable prices - bubble or bubble bust are bad
Oh no! HUNDREDS of jobs!?!?! How will the BILLIONS of dollars consumers save possibly overcome those jobs!?!?!
they are telling about only office workers=) not about companies which have not got any work now, like steel companies or hard construction companies or oil drills companies xD
I agree with your point, Xq. I'm already seeing big savings at the pump.
Laying off people is Bullish... Think of the profits man....
ake We Don't need no Stinking Customers.... man.
$18 billion in potential fines is really gonna help.
Cheap gas will allow me to look for more work that doesn't exist
funny, dudley forgot to mention BP has a 20% share of rosneft. last year he was saying that 20% had made a big difference to the bottom line.
This time is different
I love $2.00 a gal. gas.
it's all good- when white collar jobs are gone then the more conservative supporters come to understand the plight of the blue collar workers cant find decent paying jobs and all the propaganda about "work ethic" of the poor is not the problem
if the numbers are true that 9.2 milion of the 10.2 million jobs created during Obama's watch are in oil and gas producing states then it is coming down fast
perhaps Ron Paul can comeback in and will have a built in constituency
" that hundreds of jobs will be lost at offices in London, Sunbury and Aberdeen".
Not a surpise that! With North Sea drilling unable to match existing well depletion, Britain's lease on life from the 80's, has been on a steep nose dive downwards. More holes drilled with less and less oil found is an expensive business. With prices in the crapper, it just doesn't pay to poke marginal hole in the North Sea. The BP workers will see their highpaying prestigious jobs head for the crapper. But hey, they can always become property speculators or estate agents, everybody else is!
Britain's economic recovery plan is a house price inflation bubble based plan. If they can force prices up, they can fix the economy. Thus all the tax benefits for buyers, all the free first time home buyer credits, the open borders policy seeking to bring foreign ownership in to boost house prices. All is good, except for the young native Britain seeking to own a home and form a family, they are fuck out of luck, with starter homes at prices that used to fetch property in exclusive London addresses, will now just get you a flat in Lambeth. The young are encouraged to take on 40 year mortgages with 60% of income earmarked for mortgage service. How about that, when you are 30 and forming a household, massive fucking mortgage till you are 70! Eh!
<< they are fuck out of luck >>
I could not have said it better!
Super bullish! Now instead of doing useless bullshit like drilling holes in the ground to pipe out black goo nobody needs they can maybe get jobes doing something worthwhile like making iPhone apps or liking facebook posts for money.
If they are not so technically inclined the DNC is always hiring,
Repeat after me "Vota por Hilary en 2016 ella le dará mucho más cosas gratis ."
therideneverends,
vote for shithilery...or in an another reality trav777
My buddy lives in Houston says the other Big Oil corporations are going to slash 10-15% ... for starts. If oil plunges to $60 it will be a bloodbath for them he indicated.
Forward !
First we build them up. Then we knock them down. Then we offer them help and own their souls until the end of time.
Or
Maybe I'm the only one seeing the pattern?
This is what I have been saving money for. Now I can buy gas and go somewhere. But, I don't want to go anywhere in the winter. Hope it lasts til summer.