…so I’m not going to write very much.
During the first world oil shock (1971 – 74), the US was unique among developed countries in enacting a byzantine system of oil price and distribution controls aimed at preventing the ipact of higher prices from affecting the country (don’t ask for details).
One facet was to price oil from already producing wells substantially below world market level. The idea, I guess, was to prevent owners of oil from enjoying a profit windfall from the upward spike in oil that was occurring at that time. One unintended effect of the legislation was that the supply of such “old” oil began to shrink rather rapidly.
After controls were abolished during the Reagan administration, curious as always, I asked executives of a number of big oils whether the falloff in “old” was due to lack of new investment or to a deliberate decision to shut the wells down to await for higher prices. The answer was uniformly the latter.
I think something similar is beginning to happen in the US today–not the price controls, shutting wells in.