Over the past year, oil companies have seen the price of their product fall by half.
Yet, the visiting professor and chair of the Kings Policy Institute at Kings College London writes, there is a “poverty of strategic thinking” on what to do about this, beyond blind trust that “prices must rise again”.
“There is no serious analysis of the reasons for the fall and no answer to the question why well paid staff and very well paid boards of directors missed the warning signs and pressed on with investments that depended on prices of $100 a barrel or more.
“There is no analysis of the gas market, an increasingly important part of the business for most of the big companies, and why prices there are falling and likely to drop further.
“Above all, there is no sense in any of the earnings statements I have read of companies repositioning themselves to manage a world in which prices and margins could well stay low for a long time.”
Supply continues to exceed demand, stocks are very high and hang over any prospect of rapid price increases.
“The energy market has left the era of scarcity and entered an age of plenty.”
“The urgent need is for strategies to match the circumstances in which the major producers find themselves.”
Those that take the necessary steps first will thrive because the world still needs the technology, skills and reach that only these companies can offer. Those who cannot change will pass into history.