commented on Why Is Shell So Bent On Losing Money in Arctic Drilling?
It's a safe bet for Shell, in the long run (which is the view they take). It may take crude prices a couple of years to go back up to where Arctic production would be profitable, but that's where they're headed. If Shell gets in some exploration in the meantime, it will pay off. All the layoffs that are now occurring in the oil exploration and production sector will put downward pressure on costs, so there will be a convergence of high prices and low costs in the future.
One thing the oil companies can count on is inelastic demand for oil. When prices started plunging after last summer, a lot of economists thought Americans would treat the windfall like a tax cut, buy lots of toys, and thereby pump up the economy. That didn't happen - they blew it all on gas, including buying gas guzzlers instead of hybrids or other high-efficiency vehicles. That's what is driving demand up, with prices following.