What's going on?

ExxonMobil, one of the world�s largest energy companies, made half as much money in the second quarter this year than it did last year � that�s a big drop! The huge decline in the price of oil, from about $100 per barrel to about $60, was to blame.

What does this mean?

The earnings disappointed investors, who were expecting a bad number but not one as bad as this. Consequently the stock sold off more than 4.5%. Interestingly, Exxon said that it is cutting its budget for finding and developing new oil supplies by 20% - the industry on the whole is doing this as well, which will eventually lead to less oil being produced and, probably one day, a rebound in the price of oil.

Why should I care?

1. It shows the huge impact on some corporate profits that the low price of oil is having. In July, oil sold off even more sharply so the results for Exxon and other oil companies could be even worse for the third quarter (which started July 1^st).
2. At some point, less oil will be produced and the price of oil will recover. In the interim, many companies will struggle and some might go bankrupt. The big companies, like Exxon, will almost certainly survive and ultimately benefit from the more streamlined industry, but there is probably further weakness to go until that occurs.