What’s Going On Here?Late last week, energy giant Shell announced it’s slashing the value of several parts of its business in response to weak oil and gas prices. Not cool, man. What Does This Mean?The rise in US natural gas production – much of it a byproduct of oil-drilling – is causing a global supply glut that’s pushed prices to multi-decade lows. That’s forced many energy producers to consider revaluing many of their natural gas fields. And in light of that thought experiment, Shell – one of the largest natural gas producers in the world – cut the value of several parts of its business by $2 billion.
The company had some other bad news to share, too: it warned that profits at its petrochemical business would be lower than originally expected due to a weaker global economy. Investors are now getting nervous that lower earnings will impact the company’s ability to reduce its debt and meet the share buyback targets it’d promised. And given how unpredictable the company’s financial results tend to be, those worries might not be entirely misplaced. Why Should I Care?For markets: Back in my day…
Oil and gas companies make up around 4% of the US stock market these days, down from over 10% a decade ago. And that’s not just down to an oversupply which has persisted despite years of production cuts. They’re also falling out of favor with investors amid fears that electric vehicles and renewable energy – along with new government regulations addressing climate change – will cripple both fossil fuel demand and energy companies’ futures.
Zooming out: Less of the negative energy, please.
Shell’s not the only major energy company reassessing how much its businesses are worth: this year alone has seen US giant Chevron slash the value of its assets by $11 billion, Spain’s Repsol by $5 billion, Britain’s BP by $3 billion, and Norway’s Equinor by $2.8 billion. | 
