In the late 1980s, some people in the oil industry were said to have bumper stickers reading, “God give me one more boom and I promise not to mess it up.” (When the price was over $100, I joked about people investing in bumper stickers.) With the recent recovery in oil prices to $50 a barrel, and soaring investment in the Permian, voices can be heard warning that shale producers are threatening to ‘mess it up’ again, while others warn that the decline in upstream investment will lead to tight markets in 3-5 years. In fact, this theme originated in the post World War II era with British petroleum economist Paul Frankel who described the industry as prone to cycles of over- and under-investment. (My mentor, Morry Adelman, disagreed, stating that over-investment seemed the norm.) During my four decade career, complaints from various sectors of the industry regarding insufficient […]