re: Bloomberg: Big Oil Goes Looking for a Career Change

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The real question is how the O&G companies will fare.

When the Saudis flooded the market and the supply glut hit in ‘14, the price of oil dropped from $110/bbl to $30-40. At the time, I was all but certain we would see $100+ oil again in the next 5-10 years. That was the conventional wisdom in the industry - “boom and bust” - and many of us didn’t realize how crazy it was that oil got to $110 in the first place.

In hindsight it really might have been a sea change for the industry. Before 2014, it was just an exploration game. The steps were: find oil, drill production well, profit. For proof, look no further than McMoRan’s $1.2B Davy Jones debacle. They didn’t care how expensive it was to drill the wells - they knew if they could produce oil (they couldn’t), it would be profitable.

The explosion of shale production has changed that. And after 6+ years of lower oil prices, it seems pretty clear that shale will continue to be the swing producer. So now the name of the game is efficiency, and lower profit margins will stick around for the foreseeable future.

So while I don’t think it’s likely that EV’s will have a majority of the global market share any time soon (meaning 15-20+ years, IMO), I do think the O&G producers’ license to print money has expired permanently. XOM is no longer the blue chip stock it once was. Employment in the industry will continue to fall/stagnate. It doesn’t mean O&G is going away. Just means that big oil’s best years are likely behind them.

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