[Denny]

Thsi is in Business Week's next issue. Why Exxon won't produce more

In a nutsheel, even at today's record prices, Exxon doesn't see the point in plunging that much of its massive cash flow into new exploration. Liley, its competitors think the same way.


"Texas-based Exxon is the largest publicly traded company in the energy business. In fact, it's the most profitable company in the history of capitalism, earning a record $40.6 billion on sales of $404 billion last year. Yet even with prices at the pump near all-time highs, Exxon isn't planning on producing any more oil four years from now than it did last year. That means the company's oil output won't even keep pace with its own projections of worldwide oil demand growth of 1.2% a year.
...

"We don't start with a volume target and then work backwards," Tillerson explained. Instead, he said, his team examines the available investment opportunities, figures out what prices they'll likely get for that output down the road, and places their bets accordingly. "It really goes back to what is an acceptable investment return for us," Tillerson said. In other words, producing incremental barrels just to ease prices for consumers is not part of the company's calculations."

[cube]

$this->bbcode_second_pass_quote('', '
')"Texas-based Exxon is the largest publicly traded company in the energy business."

[LoneSnark]

Slavery was a competitive enterprise consisting of many competing firms. While the market price of all slaves at the height of U.S. slavery was many times annual GDP, the situation is no different from installed steam engines at their height, industrial motors at their height, motorized vehicles, or installed computer infrastructure today.

[DantesPeak]

Yes the reason is very simple - it now costs private companies more to find oil than the current price. Yes there are some exceptions, mostly due to luck. Speaking of luck, isn't that what these big oil companies are hoping for when they spend a $1 billion on just one well? Even then, sometimes anomolies occur and costs keep escalating out of sight.

Maybe someone could make a survey of all the money private companies have spent the last five years and compare it to the projected returns. The reason we are not noticing returns are dropping is because we are looking at the results from projects five to ten years earlier, and not looking very closely at the expected returns we will get on the investment made in the last five years. Since no one is keeping track of this, declining or even negative return on investment is going mostly unnoticed.

[Starvid]

$this->bbcode_second_pass_quote('', 'I')n other words, producing incremental barrels just to ease prices for consumers is not part of the company's calculations