Cash-flush Oil Industry Has Less Appetite For Debt

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Debt,Earnings,Financing

Demand for loans from the oil and gas industry fell by 6% last year as the industry managed to deleverage.

Last year, profits in the oil industry were noticeably lower than in the previous year. Pretty much everyone in oil and gas booked a decline in the bottom line as prices deflated amid falling concerns about supply security. Cash, however, remained high. And it appears this cash has allowed the industry to lower their demand for borrowing. Demand for loans from the oil and gas industry fell by 6% last year, Bloomberg reported this week.

'Someone betting heavily that the demand for fossil fuels will keep on rising significantly is clearly taking a view that is at odds with existing forecasts,' one climate activist from an organization called the Network for Greening the Financial System told Bloomberg at the time. Yet the existing forecasts must have some inaccuracies if oil and gas producers are becoming increasingly financially independent, needing less in borrowed capital than before.

 

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