Exxon’s chairman and chief executive, Rex W. Tillerson, spoke about the quarterly report in the New York Times, saying “Global economic conditions continue to impact the energy industry both in the volatility of commodity prices and reduced demand for products.”  And while July is traditionally the peak season for gas prices, rates have tumbled from a year ago when prices at the pump soared to over $4 a gallon in the US. According to the NY Times, “Exxon’s report caps a week of lower earnings across the energy industry after oil prices tumbled from last year’s record levels and the global economy slowed down. Oil prices, which had reached a record closing price of $145.29 a barrel last July, recently traded around $63 a barrel.”

While some analysts have begun to see the light at the end of the tunnel, many maintain that the global recession will “reduce oil consumption around the world for a second consecutive year, the first time that has happened since the early 1980s.” As a result, “Oil companies, which are struggling to adapt to a new environment of lower prices and slower demand, have responded by slashing costs, paring down drilling activities and shutting some operations.” This does not bode well for the energy sector or the economy, as companies are forced to eliminate jobs in an effort to trim overhead.

In light of the current situation, it will be interesting to see what kind of changes emerge beyond traditional cost-cutting measures. Will companies struggle to hold onto their old methods or find new innovative strategies that will leverage new opportunities in the industry?