It’s absolutely maddening watching the first quarter results float in from the large cap energy companies. And the one image I continue see in my mind that I can’t shake is of lemmings going over a cliff.
This image alone truly sums up the complete idiocy of virtually all of the U.S. oil producers right now; they are showing no creativity or independence, doing what everyone else is doing, despite the fact that this behavior is leading them all to a very, very sad moment, if not their own ultimate demise.
What has become increasingly clear to me is that without a change in the mass behavior of major and mini-major oil E+P’s, we’re still a long way from the end of the oil bust, and therefore the next oil boom.
Oil has been overproduced since late in 2013. That glut decimated oil prices in 2014, finally bottoming at a low price below $30 and now recovered towards $50, but still well below a price that enables anyone to make a decent profit except for the conventional Middle East producers – and even THEY need a far better margin to support their national budgets.
But how have oil companies reacted? Did they stop drilling oil at a loss? No, not really – instead they cut their budgets for investments in new projects, trimmed costs to the bone and called on technology to make getting a barrel of oil out of the ground as cheap as possible.
Then, having merely cut the SPEED of their losses, they patted themselves…