[drew]

$this->bbcode_second_pass_quote('mistel', 'I') just don't buy that. These companies are not buying thier oil on the NYMEX at $68? BBL. They have reserves in the ground. Thier costs are probably the same at $20 BBL or $70 BBL. Why else would they make record profits when pump prices peak? If they were only making 7% return on the dollar, they would make less when prices peak because gas usage falls, not much but it does. The price of oil on the NYMEX is an imaginary number. It has no relationship to what EXXON pays for a BBL o f crude.

[Revi]

I think those big oil companies control only a fraction of all the oil left in the world. Most is in countries that have nationalized it. They know they aren't getting any more after their present inventory is gone, so they are selling what's left, taking the profits and running.

[backstop]

Leanan -

while I accept the general constraints on good investment prospects as an hypothesis,
it does seem hard to credit that there isn't any further exploration or known fields' development that larger fractions of profits could be going into
IF the market 3 to 8 years hence looked profitable.

Similarly, the options of joint endeavours with national oil companies could be pursued far harder
IF the profit motive were as strong as conventional economics would expect for an increasingly scarce vital resource.

And most of all, back in '97 they had excellent cover (with Kyoto negotiations getting under way) to start moving investment into the sustainable in a very big way -
both widespread Reforestation for Energy and city-scale Offshore Wave Energy could have been heavily developed to be competitive with FFs by now.

Yet none of these options has been pursued and, as the NYT article puts it "Gradual Liquidation" has been gathering pace.

Beside the "Nowhere worth drilling" and "Fear of the downslope" hypotheses, there are also third & fourth possibilities,

the third being that the industry is just being looted for shareholder-gain by crassly stupid executives who fell for the "Greed is Good" delusion;

and the fourth being the expectation of eventually being held to account for ruinous climate damages, just as big tobacco was -
the difference being that unlike big tobacco they cannot promise pay the fines out of sales in other countries.

Notably it is that "Fear of a Climate Damages suit" that best explains the otherwise bizarre lack of investment transfer to the sustainables -
which would potentially be a plum target for the prosecution to aim at.

What's the betting that in reality all four factors are playing a part in the decline of investment ?

regards,

Backstop

[nero]

I think that article missed asking the natural question. Did Exxon pump more oil in 2005 than they did in 2004? All this concentration on shares and profits sometimes distracts us from asking the more fundamental questions.