EIA Chart Tells the Story
I browsed over to the EIA website to review This Week In Petroleum after I saw the big crude stock draw for the previous week, which came in at -7.6 million barrels. The 7.6 million barrel decline is surely news in its own right, but I was startled by the picture painted in the graph directly above this paragraph.
The graph clearly shows what many have long been saying: the end of easy oil is over. While this graph is speaking directly to the situation in America - where "the big increase in spending has not resulted in significant increases in reserves" - many other oil producing regions and/or nations are experiencing the same thing. Increased spending on exploration & production is not leading to increased oil discovery. Which means there won't be growth in oil supply. Which means price will continue to rise. Which means inflation will continue to be a huge problem, since oil is an underlying component of lots of products and of course, gasoline.
When you see a graph like that, you want to ask the economists what we do now. They have been the ones saying higher price will spur E&P spending, which will bring oil to market and subsequently drive price lower. I don't see that happening in this graph. In fact, the opposite is true. No wonder the major oil companies are buying back shares and not sinking more cash into E&P ,,, it just doesn't make good sense anymore.
Times have changed ... just look at the data.