The crash in crude oil prices has many effects that extend beyond oil and oil companies. Some of these effects are difficult to calculate, however, lower share prices of companies that depend on the oil industry are one area with clear losers. (See also Zero Hedge's Low Oil Prices Are “Unequivocally” Bad For 756 US Steel Workers, 2 Plants Idled.)
How the Bear Market in Crude Oil Has Polluted Non-Energy Stocks
By Michael P. Regan at Bloomberg
Perusing the list of the biggest stock-market losers since the price of oil peaked in June yields some predictable results.
You have your large-cap energy companies like Transocean Ltd., Denbury Resources Inc., Nabors Industries Ltd., Noble Corp. and Halliburton Co., all down at least 45 percent.
Yet mixed in with all the obvious ugliness are some names that bring to mind the question asked of Billy Joel by those drinkers at the piano bar, or perhaps even some of the wedding guests who watched him walk down the aisle with Christie Brinkley: Man, what are you doing here?
The answer illustrates how much of an impact the energy industry has had on the bottom line of corporate America, whether it's companies profiting from the boom in domestic production or those that made big investments based on the premise that fuel will always be expensive. As such it helps explain why the entire stock market, not just the energy companies, tends to freak out when oil heads lower rapidly.
The big bets on high energy prices made by companies like Ford Motor Co. (down 13 percent since oil peaked on June 20) or Tesla Motors Inc. (down 10 percent) or Boeing Co. (down 3.9 percent) jump immediately to mind.
Not so obvious, unless you follow the stock closely, is the investment made by Fifth Third Bancorp (FITB), one of the regional lenders that tried to chase the fracking boom. (It's down 12 percent since June 20.)
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Losses are even worse among the industrial companies that provide the services and sell the pipes, valves and assorted doodads used to pump oil and gas.
Fluor Corp. (FLR), an engineering, maintenance and project management firm that counted on the oil and gas industry for 42 percent of its revenue in 2013, is down 27 percent since June 20. Flowserve Corp., whose pumps and valves are used in refineries and pipelines, is off about the same amount.
Caterpillar Inc., Joy Global Inc., Allegheny Technologies Inc., Dover Corp., Jacobs Engineering Group and Quanta Services Inc. are all down more than 20 percent since oil peaked at almost $108.
Full article How the Bear Market in Crude Oil Has Polluted Non-Energy Stocks – Yahoo Finance.
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