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Jim Chanos must have ulcers.His short position in XOM must surely be eating its way through his stomach lining-not to mention his bottom line...Of particular annoyance to the legendary practitioner of that most ''Unamerican'' practice of short selling is that he knows he is right.Yet the juggernaut that is Exxon keeps chugging ever higher, aided and abetted by ''Helicopter Ben'' who keeps the balloon that is the stock market fully inflated with hot air while speculative hot money sends crude ever closer to triple digits on the flailing wings of an overprinted greenback. Kynikos should not despair.The rise of XOM is over.

Exxon lack ambition.Its failure to move on BP while it was there for the taking is a clear demonstration of this.They cannot grow organically-growth by acquisition is the only way forward, and who better than a BP brought to their knees? Let us not forget that Exxon have swallowed a large rival before. Its how they got the 'Mobil' in their name. I'm sure they have not forgotten what they learnt from the "Valdez"...useful for cleaning up the evil BP brand.They have the cash but not the hunger. It would have been a very compelling acquisition creating a mind boggling cash machine...

That opportunity is now of course gone. BP and Rosneft have become unlikely bedfellows making the Russians BP's biggest share holder and rendering BP 'undigestable'  with the Kremlin a very poisonous pill indeed. BP shall forever be the one that got away.

Exxon's unimaginative management, led by the rudderless Rex Tillerson continue with their boringly consistent share buy back program that serves only to pad executive pay and burn capital in bad times, while denying  dividend increases through the good. It shows a complete lack of vision and this is perhaps the biggest problem facing them.

They may believe that they got a good deal with the acquisition of XTO, cleverly paid for in what I'm sure they themselves believed to be overvalued stock, but the fact is they paid way over the odds for what is in effect a long term bullish bet on natural gas at a time when there is a global glut of the stuff. Improved production technology and an abundance of world wide reserves make it unlikely the price of natty will reach those nose bleed inducing prices seen a couple of years back. Expect XTO to drag heavily on XOM's earnings.

If cheap money and rising crude are responsible for XOM's recent good performance, then it stands to reason that  as the cycle comes to an end XOM's share price should come under increasing pressure. As Britain lurches towards a double dip ( and how can they avoid it after their recent horrific 4th quarter GDP results?), as Europe's PIGS wallow in their filth and as the US flatters to deceive, continued energy demand will have to come from the emerging market and the two primary drivers-China and India.

Hard landings, soft landings, bubbles and meltdowns...who the hell knows what's in store for these two great white hopes of the world economy? One thing for sure is that both have placed that double wammy of high inflation and an overheated economy at the top of the' things to do list' for 2011. As monetary policy is reigned in aggressively, expect demand to slow as the current commodities boom fades .

Exxon report next week. Hit or miss I believe XOM will struggle to keep hold of its 2010 gains. Mr Chanos, here is where you double down on your position. The chickens aren't quite roosting yet, but they are certainly on their way home.

Short from the 78s