oil

So, the Big Three automakers pleaded their cases yesterday before congress, and it turns out that they need a butt-load of cash. 34 billion dollars, to be exact.

GM may need a total of 18 billion dollars by the time the dust settles. The company would need immediate access to 4 billion dollars to pay the rest of its bills through the end of the year, and another 8 billion for the first quarter of 2009. The automaker would then need access to an additional 6 billion dollars if turnaround efforts fail.

Apparently, Warren Buffet can’t always get what he wants. French energy giant Electricite de France bid more than 4.5 billion dollars for a 50 percent stake in Constellation Energy’s nuclear power business. The deal is nearly twice the amount offered by Warren Buffet to purchase all of Constellation.

Warren Buffet originally bid for the company in September for 26.50 a share. Constellation’s stock price has been battered during the financial turmoil of the last few months. The company’s stock has lost over 75 percent of its value during the last year, making it ripe for the taking.

November auto sales have not been released yet, but are expected to be abysmal. Analysts expect a 28 percent drop for the month and sales are expected to be below a million cars for the third consecutive month, but things could be a lot worse (and they still might be). Some European countries have experienced drops as steep as 50 percent.

Maybe now that the price of gas is falling, people will decide to buy some big American gas guzzlers…or not…

It’s time to get those big American cars back on the road. The Hummers, the SUVs, the pick-ups… now that gasoline is back down to 2005 levels, who cares about energy conservation?

Gas has hit a national average of $2.02 a gallon, and looks destined to fall below 2 dollars within the coming weeks. Already, residents in more than 20 states are paying less than 2 dollars, with some paying in the $1.50 range.

Crude oil was down below 50 dollars today, a low that hasn’t been seen in 22 months. Only 4 months ago, oil hit an all-time high of almost 150 dollars a barrel, but the global economic slowdown has wreaked havoc on the commodity’s price.

As the economy worsens, demand for oil may continue to fall, driving prices down even further. Some analysts think it could hit 30 dollars, much to the dismay of OPEC. The cartel has already announced a plan to cut oil production by more than 2 million barrels a day to stop the price decline. And OPEC hasn’t ruled out the possibility of future cuts.

Well, it looks like the big automakers are on their last legs, and, like any company nowadays, they are trying to prove to Washington that they are too big to fail.

On Monday, President-Elect Obama urged President Bush to support a much-needed injection of cash into the struggling domestic auto industry. President Bush responded with a firm “maybe.”

Apparently, very few people have driven Fords lately. Yet again, the iconic Detroit auto-maker has lost a boatload of cash as sales dropped over 20%. This time Ford was able to blow 7.7 billion dollars in cash, bringing the company’s reserves at 18.9 billion. Of course the company blamed consumer confidence, oil prices, and tons of other variables out of their control. But isn’t Ford really to blame for its poor performance?

The auto industry as a whole is struggling, but Japanese automakers are not hurting nearly as bad. Companies like Ford continue to produce an uninspired line of passenger cars and gas-guzzling SUVs that lack the style and efficiency of their Japanese competitors. Perhaps this is the reason why the company continues to bleed money.

Apparently, what goes down…must go up. Oil prices rose by more than 6 dollars today. A cut in production from OPEC, an expected increase in U.S. oil consumption over the past week, and the weakening dollar all combined to bring the cost of oil to more than 70 dollars a barrel.

But analysts hope that soon the roller-coaster ride of oil prices will end. As supply and demand levels settle, so should the price of oil. In the meantime though, it looks like the price will climb. Hopefully, we won’t see $150 a barrel again.

General Motors has had some serious bumps on the road to success in the past couple of years, so it’s no surprise that when the auto maker heard out about the $700 billion bailout plan, it salivated and put out its hand for a slice of the pie.

GM’s chairman, Rick Wagoner, has been lobbying Treasury Secretary, Henry M. Paulson Jr., for up to $10 billion to help out with the financing of the automaker’s likely merger with ailing Chrysler.

Exxon Mobil posted the biggest quarterly profit in U.S. history! Its third quarter net profit was $14.83 billion, up from $9.41 billion last year.

So where is all this money coming from? Exxon said that oil production was down 8% compared to last year, and also said it is spending 26% more to locate new sources of oil.

Oh wait, that’s right…WE’RE paying for it.

The Civic-desperate can rejoice! Tokyo-based automaker is offering reduced financing to people who want to own the Civic. Now you can get the company’s most popular model for as little as 1.9%. In fact, almost all of the Civic models are eligible for the new financing. Now may be a good time to get that new Hybrid you’ve had your eye on.

All of these maneuvers are a part of an industry-wide effort to drive car sales in a slowing economy. For the last few years, while U.S. automakers fell on hard times, companies like Toyota and Honda snapped up market-share. But now, even the Japanese automakers are bracing for hard times.

So here’s how it went for the oil companies:

1. Lots of demand
2. high prices for oil
3. everyone complains
4. global economy collapses
5. demand decreases
6. price of oil decreases
7. oil companies complain

And so OPEC has agreed to cut production for the first time in two years. If supply shrinks to demand, that might solve the problem.