But the headlines were there. On November 1, America’s largest public company (and the world’s largest oil company) reported a 10 percent decline in profits to just $9.4 billion, far below market expectations. To be sure this is still a huge profit – one of the largest in history, a history of records created by the company itself – and now, it is the inevitable victim of its own success. Exxon Mobil sneezed, and coming on the heels of recent declines by BP and ConocoPhillips and similar trends expected by other multinationals, the stock market caught a cold and dropped 362 points that day.

Most analysts, short-sighted as usual, tried to micro-interpret the situation, blaming downstream margins, operating costs, etc. Oil-field service companies had demanded huge increases, drilling rigs were hard to come by for a while, and daily rates went up and up. But I say this again: if I were working for a major multi-national, I would be worried silly over the future.

Just last August the “record” was $75 oil. At that time, I wrote: “But what keeps the price of oil high first and foremost are geopolitical headlines fueled by the energy militants: Hugo Chávez in Venezuela, the Iranian mullahs, and decidedly Russia under Vladimir Putin….There is again an underlying real issue: the shutting off of major multinational oil companies from these countries’ reserves. In spite of record profits I would be quite worried about the future of these super-giant companies had I been sitting in their boardrooms.”

I went on to say that we were even luckier that other far bigger headlines, such as a potential war with Iran (which could easily move us past $100 oil) had yet to happen. In the meantime, we should have been thankful for $75 oil. Well, what do you know?

The largest Western oil companies suffer from a political squeeze game: at home environmental activists and global warming enthusiasts are forcing governments to look at Big Oil as the enemy within. Oil is bad, solar is good. This flies in the face of some simple inconvenient truths. The world still draws 87 percent of its energy from fossil fuels (oil, gas, and coal, with oil right at 40 percent of the total).

But rhetoric and Gore-ism are not devoid of danger. There is little political capital in the United States and western Europe to support the predicament now facing the big investor-owned oil companies. And that’s a problem. They are shut out of new reserves by energy militants such as Venezuela and Russia, or are facing increasing tax burdens on their joint ventures in both hostile and presumably friendly countries. It is hard to benefit from oil prices if one does not own the oil, especially in prolific, easy-to-produce, high-margin areas. Worse yet are production-sharing agreements in which oil companies do all the work, put up all the operating costs, but are taxed through the teeth as oil prices rise. High oil prices mean downstream operations have to pay a much larger price for what the upstream division got – an ever-decreasing profit margin.

The future of Big Oil looks bleak, and depending on one’s point of view, this could be something to lament or rejoice, except for this: the impact on energy supply and consumer prices will be swift and large. Perhaps this is what governments of certain producing and consuming countries want, for different reasons. But the latter should think long and hard – less about prices and more about supply. It’s hard to fathom a modern world functioning properly with energy shortages, and from my vantage point now, there is little light at the end of the tunnel.