Funny, the level of investment in the global oil industry hasn’t dropped off a cliff lately. Yet oil prices have shot up like asparagus in April. What’s going on here?


What the experts are really telling us is that a higher level of investment is needed now than was the case previously in order to produce the same increment of new oil.

Hmmm. Let’s drill deeper, metaphorically speaking.

In fact there’s still oil being produced today that could profitably be sold for $30 a barrel. Quite a lot of it. But—crucially—there’s not nearly enough to meet the demand that would exist if all oil were selling at such a price. That $30 oil comes from super-giant oilfields discovered back in the 1950s, ’60s, and ’70s. The industry just doesn’t find oilfields like that anymore, and the old stalwarts are now entering their retirement years and seeing declining rates of production. Now what’s available for prospecting are plays in ultra-deep water, where it costs a half million dollars a day just to rent a specialized drilling rig (of which there are only a few in existence). We’re talking NASA moon-shot level of technology here. That’s not $30 oil; it’s $75, $100, or $150 oil. No one would be interested in it, except for the fact that $30 oil is getting so scarce.