“Integrated oil and gas companies have operations that span the full energy value chain. These companies, which represent a third of VDE’s assets, explore for and produce oil and gas, transport it, refine or process it, and sell it to end users. The integrated model has historically provided firms like Exxon Mobil and Chevron with competitive advantages. By integrating across the energy value chain, these firms are able to gain much tighter control over the production and sale of oil and gas, and they get to keep profits they would otherwise have paid out to middlemen in the form of economic rents,” according to Morningstar.
The majority consensus is that overall S&P 500 company earnings will be negative after the plunge in oil prices weighed on the energy sector and a strong U.S. dollar pressured multi-national companies’ overseas revenue, reports Maggie McGrath for Forbes.
Some estimates pin the first-quarter earnings contraction for the energy sector at roughly 60%. Even with that less –than-encouraging earnings outlook, VDE is up 3.3% this month. [Energy ETFs for the Contrarian]
Vanguard Energy ETF
