The Days of the “Oil Tycoon” May Be Over

John D. Rockefeller, the Oil Baron himself probably couldn’t have imagined the events of this morning as the price of oil dropped to an all-time low. Oil prices plunged into negative zero on Monday as demand for energy has collapsed amid the coronavirus pandemic. Traders on Wall Street dumped billions of shares in oil stocks because they do not want to get stuck owning crude without a place to store it.

The sell-off might also be attributed in part to market mechanics. The May futures contract for West Texas Intermediate, the US benchmark, is about to expire. Therefore, most investors are already focusing on the June contract, leaning out the trading volume which fuels volatility.

Making real money in oil is complex. It’s a massively cutthroat competitive industry. Oil Tycoons have amassed their fortunes by diversifying in the oil and energy sector. Like Rockefeller, most industry leaders keenly understand ways of mitigating and managing risk. While oil speculators can potentially reap huge profits by hitting a deposit, they are also faced with substantial financial loss, if the efforts result in failure. For this reason, most oil tycoons strategically narrow their focus to the refining business, where profits are smaller yet more stable. They’ve also discovered ways to exploit the traditionally discarded oil by-products, by using them to create…