Bloomberg Gadfly – Total’s Not-So-Excellent Adventure


Another excellent post by Liam Denning of Bloomberg Gadfly on a major conundrum for Big Oil, even after this week’s OPEC announcements helping short-term prices (it also references the post No Plan B in this blog).

The article summarises it thus:

So oil majors say low investment is teeing up the price spike of the millennium, but for a variety of reasons can’t fully capitalize on it. Moreover, if 2020 does herald the return of triple-digit oil, this will encourage every rival producer from the Permian basin to the Persian Gulf to go flat out and every driver to give at least a second thought to all those new, cheaper electric vehicles hitting the dealer lots.Total’s strategy of preparing for all of the above is simultaneously a reasonable one and a perfect expression of Big Oil’s big conundrum.

As promised in No Plan B, my take on this critical insight will be the next major post – provisional title, Plan B: The Unwalled Garden.

Meanwhile, please read Liam’s analysis in full to get the full background on why Big Oil is still in the investor penalty box even if a major price-spike should materialise (hint: after spending $1.2 trillion over the last ten years, oil production is down over 1.3 million barrels per day, and return on capital in single digits).