Big Oil’s Smaller Cushion

Energy investors are smiling. Crude prices are skyrocketing, energy companies are enjoying record earnings, and share prices are climbing.

But those smiles may be gone soon. Big oil profits may not last.

Record energy prices have diverted attention from the oil industry’s dirty little secret: Production is falling and reserves are on the decline. Rather than address the problem, most oil companies are sinking their money into share buybacks and dividends to boost their stock prices.

Without new investment, companies run the risk of not having enough oil to sustain record profits and may hasten a far worse energy crisis. The country’s national security, based largely around cheap and plentiful oil, could be put at further risk if oil becomes scarce and prices rise.

The Street