High oil and gas prices enhancing credit quality

PETROLEUM

The energy industry has withstood a record number of credit downgrades in the past year, and yet oil companies seem to be eluding credit rating agency scrutiny. This oversight can be attributed to stronger-than-expected oil and natural gas prices. If energy prices fall, however, oil industry credit ratings are likely to follow suit.

The primary target of the downgrades has been a debt-laden power industry, weakened by the Enron bankruptcy and the California energy crisis. “We haven’t had a lot o