What's in it for Chevron and Oil Drilling?

Introduction

Oil, also known as Black Gold, is the world's prime energy source. It is used in everything from internal combustion engines, machinery installed in factories, in power generators that provide backup power during a blackout, etc to almost about any mechanical device. As a result, it is always in demand and because of this high demand, the commodity trades very well at high prices especially when supply is low.

About ten years ago, oil prices were at their most brilliant, almost USD 0.89 per gallon. At this rate, a tank of gas in an average four door sedan filled up for about USD 10.00. Now, that same tank fills up for about USD 40.00.

Over the past century, man has learned how to drill crude oil, process it and use it in its different forms. The results have been brilliant and disastrous at the same time. Brilliant because thanks to its discovery as a fuel which has allowed us to travel great distances using air planes.

Disastrous because of accidents such as the BP oil spill in 2010 in the Gulf of Mexico which officially became the worst oil spill disaster in history and the spill was actually visible from outer space. As a result, marine life was severely affected and the effects were felt as far away as New Orleans and this spill also hit the seafood industry.

Oil price hikes have also recently started to affect the prices of other commodities as well. For example, food prices go up too. The reason is simple, since we need cars and trucks to transport the food items to and from the farms and / or processing factories / facilities and those cars are powered by oil, when the price goes up, so does the cost of transportation. To cover that cost, the price of the food items being transported are raised as well...

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...ot ideal for the short term investor.

Stock performance has shown a good performance historically. Investors and shareholders are hoping that the two new rigs they are installing in the Gulf of Mexico will provide ample returns. Opponents and environmental groups are hoping that this doesn't become another BP disaster.

How much of the world's oil supply will get used up eventually in the next hundred to two hundred years is going to be ultimately decided by how much demand there is. The former US President George Walker Bush insisted that we need to find cleaner and renewable sources of energy and the current Obama administration has also shown signs of this.

As the world moves away from oil as a fuel, its demand will gradually fade and maybe by that time energy companies will invest in newer technologies to keep themselves afloat and their shareholders happy.