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The oil market is ruled by a cartel. So the classical notions of supply and demand are useless.
US majors receive highly preferential tax treatments (Depletion allowance, etc.)
They effectively don't seem subject to anti-trust anymore.
They have tremendous political clout, resulting in anti-conservation policies. Witness the rejection of CAFE standard increases.
They receive a huge subsidy from US military spending to protect international assets.
They are allowed tremendous cost shifts (externalities) to the public sector in the form of greater public/private health care spending and pollution cleanup.
10% return after expenses on that level of revenue is tremendous. Many companies would kill for that kind of return.
The energy markets, including oil, are a very poor universe to view with the lens of classical supply and demand. Cartel economic theory is far more appropriate.
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