Huge oil’s third successive unhealthy quarter in 2013 drew none of the spectacular headlines of its dismal second quarter results — no Economist cover stories about “the twilight of the SuperMajors.” Perhaps weak oil income are not information.

However there remains to be a lot to wonder about. Chevron, Shell, Total and Exxon Mobil all got here in with lowered income – largely blaming refining margins, but cheerfully asserting that they were pumping more oil. But, of course, if you happen to pump more oil and make less cash, this is not an excellent enterprise to be in – which seems to be the place things are headed. There was appreciable proof that the Supermajors themselves don’t fairly know the place they’re going. Shell had used its abysmal second quarter results to gracefully exit from the limitless black gap that the Chukchi Sea exploration had turn into. It used this quarter’s results — a 3rd under last 12 months’s – to announce that its new slogan was “Once extra into the breach dear hearts” and that it will resume exploring and drilling in the Chukchi. Nicely, if it goes anywhere in Alaska — the corporate said it had not finally determined but can be filing exploration plans.

This is hardly the kind of arduous-eyed, a long time-in-advance planning that Massive Oil has offered to traders – and it raises the question of whether the pursuit of steadily costlier and tough to produce crude reserves, yielding smaller and smaller refinery margins, on the premise the there’ll at all times be a sufficient shortage of transportation gas to sustain a $a hundred+ market for extreme oil is warranted. Bloomberg sounded a cautionary notice: “Energy producers on average want oil prices round $96 a barrel to interrupt even on wells drilled in Permian layers known as the Cline Shale and the Northern Mississippian Lime,” in line with Mike Kelly, an analyst at International Hunter Securities LLC. That compares to average break-even costs of round $78 a barrel within the Eagle Ford Shale just a few hundred miles east of the Permian, and $84 in the Bakken of North Dakota.

Oil companies clearly hope they can keep the escalator rising. Confronted with uncertainty about when — or if — the Keystone XL pipeline will ever carry additional tar sands oil from Alberta to the refineries on the US Gulf Coast, Canadian oil corporations have busily invested in relying on rail shipments as an alternative. The increasing flexibility that rail has given North American production firms, in both the Bakken and the Tar Sands, is one of the explanations refinery earnings are down — and oil majors bleeding income. Petroleum Machinery But that flexibility additionally locks in an added $5/barrel premium delivery cost, and in many circumstances denied producers the entry to surplus US refining capacity they’d counted on to deliver down their costs.

However so long as oil stays above $one hundred, the tar sands are still a great funding.

Will sky excessive prices remain? Only if oil can retain its monopoly in transportation. In reviewing the final 40 years, BP’s chief economist, Christof Ruhl, factors out that since 1973 “expensive oil lost out the place it faced competitors from cheaper fuels….where oil confronted competitors from other fuels, its market share pale away: In 1973, oil’s share of global energy era peaked at 22 percent; today it’s just 4 percent.”

And transportation alternate options are respiratory down oil’s back. Oil alternatives like electric vehicles already cost lower than oil to buy and operate. Oil’s solely defense is its skill keep the market share of its opponents from attending to competitive scale.

But the world’s fifth largest economy — the Pacific coast stretching from California through Oregon and Washington to incorporate British Columbia, spent the final month making clear its intent to challenge this oil monopoly.

First these states and provinces — joined by 5 others within the Northeast — launched a major new initiative to remove anti-aggressive highway-blocks hampering electric automobiles market share. “The aim, they mentioned, was to attain gross sales of at least 3.Three million automobiles that didn’t have any emissions by 2025.” Their interventions would come with extra and standardized charging stations and supportive building codes and electricity charge structures, and state fleet purchase commitments.

Then, having dangled an electrification carrot to disrupt the oil monopoly, the West Coast tier – California to British Columbia – also committed themselves to utilizing a low carbon gas customary stick, to mandate that rising shares of their transportation fleets by powered by fuels which can be cleaner than — and therefore other than – oil.

The states within the electric vehicle initiative account for 25 percent of auto gross sales. The northeastern player — Connecticut, Maryland, Massachusetts, New York, Rhode Island and Vermont — are highly possible in the following few years to affix the West Coast in creating a market mandate for non-petroleum transportation gas. Once they do, this mixed, bi-coastal effort to explode the market share of each electric vehicles and different fuels, can have launched a powerful and disruptive pincer motion at the guts of oil’s monopoly power — the US motorcar market.

There is plenty of stress on the big oil firms to recognize that their future is as smaller players — shareholders demanding that in the present day’s profits be returned to the owners, not squandered on oil exploration so as to add stranded belongings to the reserve accounts. The brand new state initiatives recommend that shareholders could be well advised to demand, not plead, that the income their investments have earned be returned, not wasted.

A smaller oil trade is an unavoidable final result of a weakened oil monopoly, lower oil prices and local weather security. Which doesn’t mean you is probably not shopping for a variety of gas from a company known as Exxon in 30 years. However most of it would not be fossil carbon.