For years, oil companies in the U.S. could count subterranean, untapped oil reserves as assets in their financial statements, which lead to highly inflated numbers. Now, with oil around $40 a barrel, the cost of pulling it out of the earth is greater than the sale price (at least for fracking), so the SEC is requiring companies to remove these fictitious assets from their books since investors cannot gain any value from oil that won’t be touched. With billions of barrels of oil disappearing off books overnight, already tense investors are growing more fearful of a complete oil collapse. [more...]
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