While I agree that "it's different this time" is a dangerous phrase, it's far more dangerous when applied to phenomena based on human psychology (e.g. asset bubbles) as opposed to phenomena based on the consumption limited resources (e.g. fossil fuels, pollution, etc.). With limited resources, sooner or later it will be different.
All in all, the board consensus seems to be that there is no oil shortage, only a shortage of easily/cheapy attained oil. As JimP has noted, there is nothing in this thesis that implies a loss of cyclicality. That's all fair enough and in keeping with my beliefs.
However, there's also nothing in that thesis that suggests that the profits associated with finding/attaining/refining/selling new fossil fuel supplies will not be reallocated in the future as the cost of the whole process increases. I expect it will be reallocated but to which group? Majors, OSX, independent E&P's?
Generally, value is delivered to the guys doing the necessary jobs that others can't do. So, what's going to get harder in the expensive oil world? Finding doesn't seem too hard. Transport doesn't seem too hard. Crude refining doesn't seem too hard. Selling doesn't seem too hard. Now, getting it out of the ground and into a refinable product may be quite hard. Does this point us to drilling tech companies? If so, who? Likewise, funding expensive projects with high technical risk may be quite hard. Does this point us to the majors and away from E&P's with lousy balance sheets? Is there soon to be a growing need for pre-refining technology if some supplies are substandard as they emerge?
Answers anyone? |
