The focus on the electric vehicle is dis-incentivizing investments in long-cycle capacity. While shale provides enough short-cycle production to prevent the market from running into shortages, the lack of long-term investment keeps the physical markets tight. Concerns about EV demand displacement is taking more future supply off the market through lack of financing. Decarbonization is actually having a net tightening effect on the oil market.

【Oilfield Service Provider benefits the most】

Cost tends to rise in the Expansion phase of the oil investment cycle, led by perceived future supply shortages, easy credit, market fragmentation and rising inefficiencies. Cost inflation compounded at 10% per year in the 2003-13 period, destroying the producers' returns and only partially benefitting oil services.

In contrast, during the Contraction phase, returns improve slowly but consistently, led by an oligopolistic market structure, better management of the supply chain, and advantaged resource access.