Does lower crude oil mean lower for Exxon stock?

Not directly, but sort of.





The lower the price of crude, the lower the base cost of materials is for an oil company. However, ALL other costs are vaguely fixed: salaries, G%26amp;A Overhead, bonus structure, cost of goods sold, etc. So, a lower crude price means a specific lower ';at the pump'; price (there is a very complicated algorithm in there), plus or minus a few pennies per gallon. Unfortunately for the company, if they can only demand X amount of money per gallon, because of the algorithm, then they may or may not be making enough to pay for the regular costs and still make a profit.





There is a ';sweet spot'; where the relation of the price of crude to the price at the pump allows the oil company to have a decent profit, without going into realms of obscenity. Unfortunately, if the price of crude goes further than that, then the price at the pump will rise, but, because the (mostly) fixed costs remain about the same, then the company makes more money. So, in a round about way, they make a higher profit when crude is higher.





So, yes, a low price of crude can reduce the perceived value of the stock of an oil company, and thus the price per share. And, conversely, high crude prices can push the price of the stock very high.Does lower crude oil mean lower for Exxon stock?
No. That lowers their cost not their price at the pump or their profit.

lip plumper