Exxon Mobil Macroeconomic and Industry Analysis

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Exxon Mobil
Macroeconomic and Industry Analysis
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Since its founding by John D. Rockefeller in 1870, Exxon Mobil (XOM) has proven to be a leader in the oil industry (Mitkowski 1). So much so that in 1911, Exxon Mobil (Previously known as Standard Oil) had so much power in the oil industry that the government had to break up the company. Exxon thrived throughout the 1900s with the introduction of cars in America and numerous other advancements in society. Exxon continued to lead the industry during this time. With the struggle of Standard Oil of New Jersey in 1911, they could buy a 50% stake in an oil refinery in Texas, which diversified into oil exploration (Mitkowski 1). Since then, the company has been one of the leading drillers. They can overcome any challenges they face.
The coming has divided into two main segments of operation:
1 Oil and gas exploration, development, and production
2 Refining and marketing petroleum products
With the company divided into these three segments, it utilizes the integrated approach, therefore carrying out the Oil and gas exploration(upstream) and refining and marketing of petroleum products (downstream). Exxon’s refineries are 60% larger than the industry average, with higher capacity for low-grade feedstock and better integration with chemical facilities and operations. Competitors will find it impossible to match such size and efficiency. In 2010, Exxon bought XTO Energy, bringing reserves in significant shale gas fields and technology to expand around the world. This deal demonstrates Exxon's leadership's convincing logic. Not just in that region but also the capital. From the facts above, Exxon is at an advantage compared to its competitors, which makes XOM a stock that should be at the core of an energy holding. This is a great stock for growth, even for conservative investors.
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Macroeconomic Analysis
Since the recovery of the United States economy after the COVID-19 pandemic, the economic recovery has been strong. The strong recovery has been supported by the government stimulus package both for households and businesses. Consequently, the unemployment rates have rapidly declined while workers' demand is still strong. The aggregate demand for goods and services is also high, further pushing the demand for employees in the labor market. Employers have been forced to offer gifts and incentives to attract staff while increasing their compensation. As a result, the factors of the cost of production have increased. The unprecedented demand in the labor markets and the increase in aggregate demand have forced producers and manufacturers to hike commodity prices, leading to Inflation. The Federal Reserve noted that the inflation rate increased more than expected to levels last seen forty years ago. Inflation has further been accelerated due to the Russian invasion of Ukraine. Russia is among the leading oil and gas producers, and due to the U.S. sanctions, the supply is reduced, leading to soaring fuel prices.
Industry Outlook
The Petroleum Industry is significantly dependent on the geopolitical environment and inflation rates. As a result, the sanctions on Russia are likely to exa...