As a storm barrels down on GOM, shutting in 1 Mmbo/d of oil, another storm just hit the New York Stock Exchange. Exxon…Venerable Exxon. Former global super power and once the world’s largest company, was replaced in the DJIA by Salesforce.com (that little software company that sales people hate because they have to track all their customers and contacts and thus commoditize the relationship).

Many misinterpret my comments about the death of the oil and gas industry as implying we won’t be using oil and natural gas for decades into the future. We will. But, like coal, you don’t need hundreds of companies to produce it. You need 10.

In most foreign countries, where the rule of law is shaky (don’t get me started in the riots here), their answer has been an NOC. Run like the government with loose limits on spending and returns, they are defacto energy departments executing development plans in parts of the world where the development of the resource is economic below $50/bbl.

Here, Exxon has been adding debt to pay the dividend for years and overall, industry here has responded to the downturn with the only two arrows in the quiver: headcount reductions and reductions in capital. As if today, for XOM, without being in the Dow, the cost of capital just went up.

#hottakeoftheday