Why Big Oil should just 'kill' itself

NOW that oil prices have settled into a long-term range of US$30-50 per barrel, energy users everywhere are enjoying an annual income boost worth more than US$2 trillion. The net result will almost certainly accelerate global growth, because the beneficiaries of this enormous income redistribution are mostly lower and middle-income households that spend all they earn.

Of course, there will be some big losers - mainly governments in oil-producing countries, which will run down reserves and borrow in financial markets for as long as possible, rather than cut public spending. That, after all, is politicians' preferred approach, especially when they are fighting wars, defying geopolitical pressures, or confronting popular revolts.

But not all producers will lose equally. One group really is cutting back sharply: Western oil companies, which have announced investment reductions worth about US$200 billion this year. That has contributed to the weakness of stock markets worldwide; yet, paradoxically, oil companies' shareholders could end up benefiting handsomely from the new era of cheap oil.