Financial Times commentaty "Nationals’ champion: How the energy-rich rely on Schlumberger" by Carola Hoyos.
It relates how Schlumberge, an oil service firm, is benefitting from the rice of National Oil Companies (NOC) and while staying in good terms with Independent Oil Companies (IOC).
When consumers cry out for involuntary blood letting of oil executives, they are venting their anger on the IOCs like Shell and Exxon, among others. While being ignorant on the culpability of the NOCs.
But who is to blame?
I point to the USA, China and India. USA for such a voracious consumer, China and India for becoming voracious consumers.
Remember the US $10 barrel of oil? I do. That was when NOCs and IOCs cut spending on research, exploration, drilling, production and refining of crude oil.
While consumption has been steadily increasing since then but NOCs and IOCs, mindful of the $10 oil, did not resume their activities to increase output, demand was met by merely using up idled production capacity.
Then consumption by China and India grew apace and the mess in Iraq cut production. Whatever excess capacity existed disappeared, even the Saudis had probably less than 5% spare capacity left, too small to affect prices.
Children? What happens when you have more demand than supply?
Some will point out that oil producers are not opening the tap to prolong high oil prices. Wrong. High oil prices slows down world economy which will slow demand for oil which will cause oil prices to drop. And who knows how low it will go if the world economy goes into a recessionary tail spin. By the way, Oil in the ground is worth US $0.00. If I have oil to sell I would definitely sell as much as I can NOW.
But who says oil producers are not pumping and selling as much oil as they can?
