I read about this a couple of months ago but have heard nothing since. The gougers at the oil companies will be jumping off ledges if the myth of declining supply proves a lie. That's the scam they've been using to rob us for half a century now.
That's not how the economics of the oil induistry works. Oil companies buy reserves, either directly or by spending money to find them, and then they spend money extracting and producing the reserves, then they hope that when they pull the reserves up, the price is higher than what they paid to find and develop the reserves.
There are a lot of pitfalls along the way. Ideally you want to buy cheap, and then hope by the time you develop the fields prices are higher. The oil companies are making a fortune right now because reserves that they bought and or discovered prior to this run-up are being produced. However, they face a dilemma. What happens if they pay a lot for rserves now? By the time those reserves work their way on to the market, prices could be down and they could get creamed.
All of the companies are facing this dilemma. The relatively flat nature of the futures curves has enabled a certain degree of insurance. For example, Kerr-McGee was able to buy Westport last summer and then sell forward a lot of the Westport production at a reasonable price in order to minimize the downside risk.
The long history of the industry, however, is boom and bust. Boom when low cost reserves are sold at a high price, and bust when high cost reserves are sold at a low price.
The question is, like the stock market in 1999, is this a "new era" of ever increasing prices?.
If it is, is that good for the energy industry? Theoretically it is if it means that they can be certain that they can acquire assets now that they can produce and sell at higher prices later. However, if it goes up too much more, than suddenly they will be competing with alternative energy sources.
In addition, the current high prices offer another problem: If Exxon pays to high prices now, then they lose money later. However, Exxon's main competetion is state-owned firms in places like S.A. and Venezuela where the main goal is not profits so much as it is production growth and maximizing employment. Thus Exxon faces the dilemma, do we grow at high prices now, or do we let the government frims grow faster than we do? It is a big dilemma.
If in fact oil bubbled up from deep down, perhaps Exxon would be better off. After all, it would free them from competing with bloated national governments simply because the known reserves lie under the land of those governments. Industry profitability would then be based around who has the best technology and efficiency, an area where the US private companies would theoretically do quite well.