Having watched the commodities markets for well over 30 years, we used to believe that there was a certain methodology that one could apply to investing in these sectors based on shifts in industry capacity. In brief, when price rose, this would send signals to the market to add capacity, which inevitably would lead to over capacity and to falling prices, setting the stage for the cycle to repeat itself. In this scenario, decisions to expand or contract CAPEX were solely driven by the price of the underlying commodity as access to capital dictated as much. However, as we have discussed at length, in a post GFC world, Central Banks and capital markets in general have severed the relationship between rent seeking yield and the actual return generated on that dollar of investment. In short, the incremental yield of return necessary to finance growth has compressed to such an extent that the profitability of that growth has become almost irrelevant. However, the convergent forces of a global pandemic combined with ESG considerations have possibly brought a new return model to the global oil industry, one which we may see migrate to all commodity businesses. The decline in the relevancy of the industry has been well documented, but this decline increasingly represents a point of no return (pun intended). In a world where environmental concerns shorten the long term runway for its very survival, oil E&P companies are now legitimately transforming themselves into what we would typically think of as a basic utility. In this new business model, growth seeks to mimic the growth in the underlying demand for the commodity (2-3% in the case of oil) with any excess cash flow generated by outsized returns resulting from above average crude oil prices distributed to shareholders via discretionary dividends.