Campbell pointed out that the oil majors’ reserves “show no sign of increasing. In fact as they are raking in record profits…it becomes a golden moment to start up a lot of dubious projects, in exploration and drilling. So many of the holes being drilled now are dry ones. Yet so many of these dry holes being drilled mean a reduction in taxes paid by the oil companies. Of course they are offset as running costs against profits,” he claimed.
“As a result if you want to look for good places to invest then the companies that drill and explore are in a great position,” said Campbell. “Those companies profit on both success and failure. The contractors are in a fabulous position. But as far as finding more reserves go, it is not happening. The downward trend is relentless with no sign of it changing.”
Oil is undoubtedly a good investment – the prices will continue to go up, and up. This situation acts to contradict the claim that the markets will avert the impending energy crisis; there is no incentive to invest heavily in alternate energies, at least from an individual investor’s point of view, when the returns from oil are guaranteed to be stratospheric.