The Brent crude oil index hit $37.19 per barrel last night, with the WTI index going to $35.52. That continues to be good news for consumers at the pump and for some portions of the home heating market, but it puts a lot of pressure on the oil companies. It also affects employment in the oil and gas industry in a negative fashion, with layoffs being in the news for the last few months. There are a few wildcard predictions running around that oil could be back above $100 per barrel next year, but it’s difficult for many market analysts to describe how that happens right now.

So how is the industry coping? The Motley Fool has been looking into Chevron’s business model for the coming year and finding that American energy companies are having to make some significant strategy shifts to survive in this new economy. This from CEO John Watson:

[W]e’re working on reducing costs across the company and are beginning to see the results. Compared to prior-year day periods, enterprise operating costs are 7% lower, in the third quarter to third quarter comparison they’re 12% lower. On another basis, year-to-date upstream unit operating expenses are down 13% versus last year. At this point, we have identified spend reductions of approximately $4 billion on an annual full run rate basis. About half of this is coming through organizational reviews and portfolio rationalization and about half working through the supply chain. On the organizational side, lower investment activity, portfolio changes and efficiency reviews across the upstream, gas and midstream and the corporate and service company groups are expected to result in employee reductions of between 6,000 to 7,000. A similar number of contractor reductions are anticipated over this same period.

Chevron is sticking with its long term development projects and continuing to expand into shale oil resources. They’ve had to tighten their belts for the time being, but you simply can’t be short sighted and pull your head into your shell like a turtle. They know the demand isn’t going away, no matter what the green energy warriors would like to see, and when the world’s need for energy drives prices back to profitability levels they’ll be ready for it.

The company has faced other expenses apart from a depressed market. As we’ve been covering here for several years now, Chevron has been the target of a shakedown attempt by a slick Manhattan lawyer and some corrupt government officials in Ecuador. The Chevron Shakedown has blown up in the faces of the would be pickpockets, but it’s not a cheap battle to wage in courts around the world. The energy giant did get some good news this month, however, when they were awarded a major settlement in Gibraltar. (Bloomberg)

Chevron made more progress in its table-turning campaign against plaintiffs’ lawyers suing the oil company over pollution in Ecuador.

The Supreme Court of Gibraltar has ruled that a company set up by the plaintiffs’ attorneys to collect billions of dollars in court winnings must actually pay over $28 million to the oil giant. The decision, issued Dec. 9, sheds light on the unusual machinations in a case that has dragged on for more than two decades with no sign of resolution anytime soon.

Here’s the short version of the story. It seems that Steven Donziger wasn’t very trusting of his Ecuadorian partners in the shakedown, so he set up an asset recovery company in Gibraltar. The plan seems to have been to funnel his money from the judgement across the ocean into that account so that the government of Ecuador couldn’t take it all away from him. But Chevron went after the recovery firm as being part of the overall fraud scheme and the courts there agreed, entering a multi-million dollar judgement in Chevron’s favor.

The company issued a statement in the form of a well deserved victory lap.

“This decision is yet another example of how the international scheme against Chevron continues to erode,” said R. Hewitt Pate, Chevron’s vice president and general counsel. “We will continue to seek to hold the perpetrators of this racket accountable for their actions.”

All I can say is, give ’em hell, boys. You can catch up on all of our Chevron Shakedown coverage here.

Article edited to correct the spelling of Gibraltar.