(October 7, 2020)
After 92 years of membership, oil giant Exxon Mobil has lost its place on the Dow Jones Industrial Average. The Texas-based company, which was the longest-serving member of the top stock index in the U.S., suffered substantial losses due to the economic crisis triggered by the pandemic and has been forced to substantially curtail capital spending.
Once the most valuable company traded in the world, Exxon Mobil – based in Irving, TX, – had to scale back capital investments considerably earlier this year after a decrease in oil demand. The company lost $1.1 billion during the second quarter of the year. Total revenue for the quarter, at $32 billion, was less than half of what it was during the same period in 2019.
“Simply put, the demand destruction in the second quarter was unprecedented in the history of modern oil markets,” explained Exxon senior vice president Neil Chapman. “To put it in context, absolute demand fell to levels we hadn’t seen in nearly 20 years. We’ve never seen a decline of this magnitude and pace before, even relative to the historic periods of demand volatility following the global financial crisis and as far back as the 1970s oil and energy crisis.”
Despite the sharp economic downturn, the oil giant remains optimistic. Its removal from the Dow will not have a significant impact on the company, according to a spokesperson. “This action does not affect our business nor the long-term fundamentals that support our strategy,” they told NPR. “Our portfolio is the strongest it has been in more than two decades, and our focus remains on creating shareholder value by responsibly meeting the world’s energy needs.”