12-26-2014, 10:29 AM
Strife Wrote:Exxon obviously buy oil... but they don't buy it at current market prices. They sign like a 30 year agreement with oil harvesters and pay that rate over the agreement. Since they do that, the oil price going up or down, doesn't really have much of an impact on their stock. So Oil may be $100 a barrel, but Exxon may only be paying $30 for it(no idea actual cost).
Pretty much every commodity has a futures market - you can get hosed on it too if things significantly trend down, but the hope is you negotiated a rate that will work in your favor over time. A long term slump in oil prices could fuck a lot of their futures though depending on when thye were purchased.
Shipping contracts being done like this helped exacerbate the recession in our industry (and by proxy everyone else) as a bunch of people agreed to vessel rental rates years in advance and ended up getting massively hosed once a glut of new vessels came onto the market.