The Elasticity of Oil Supply

Exxon pursues only projects that will turn a profit even in the leanest years, Mr Tillerson explains; so in the fattest ones, the returns are eye-catching. True to that policy, he will not be seduced into making expensive investments on the assumption that the oil price will remain high. … Traders, he argues, are pushing the price up on speculation about possible future supply shocks, rather than any actual shortfall.

Despite this choosiness, however, Mr Tillerson maintains that Exxon is not short of opportunities. … it is helping to tap the world’s biggest gas field in Qatar, and has just signed a deal to develop an oilfield in the United Arab Emirates. Unlike most other Western firms, it recently sold its stake in a Venezuelan field rather than submit to higher taxes

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