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I want to highlight a situation that I haven't seen addressed yet (that I know yet). This is the fact that nearly ALL the oil companies are slashing spending by HUGE amounts.

Calgarians will see more layoffs, canceled projects and losses on investment this week and over the next several weeks as oil and gas companies deliver what analysts are predicting will be the worst fourth-quarter results in years.

The contrast with the third quarter, when many companies reported record profits, couldn't be more stark. As oil prices plunged from all-time highs last summer and credit markets tightened, trust companies have chopped distributions to investors, stock prices have plummeted and 2009 spending plans have been cut to the bone. (More here.)

Now I'm not oblivious to the fact that Oil prices are down about 70% from their peaks but why is EVERYBODY doing the exact same thing?

In my logic as a businessperson and investor, I would be licking my lips at the thought of being able to hire excellent people from other companies that were laid off for the sole reason that their employer is being severely prudent. 

So are their any brave executives out their with real balls anymore? 

Yes, I have found two so far: Petrobras and Shell.

Shell is looking to increase spending by 10%.

Shell is still bruised by its experience in the late 1990s when the price of oil fell to a 25-year low. The company responded in 1999 by slicing $6.2bn off its $15.7bn capital expenditure programme, which included a $3bn reduction in its budget to explore for new sources of oil. This contributed to the reserves scandal of 2004, when the company had to downgrade a fifth of its reserves, resulting in the departure of chief executive Philip Watts.

Richard Griffith, analyst at Evolution Securities, said: "Shell does not want to make the same mistake as in the late 1990s, when it slashed spending in response to a fall in oil prices. The chickens came home to roost when it had to downgrade its reserves in 2004 - the company had not been spending enough money looking for oil." (More here.)

In our case with Oil companies, I'd consider Shell's plan to increase spending by 10% to be reasonable. Instead of totally cutting off spending like all the other companies are doing, their are still growing it, although modestly.

If Shell is ambitious, Petrobras is the ultimate educated gambler.

Petrobras has one of the most ambitious expansion programs in the world. In 2009, Petrobras is aiming to produce oil and natural gas that's equivalent in energy content to about 2.8 million barrels a day of oil. It hopes to raise that to about 3.7 million barrels a day by 2013 and 5.7 million barrels a day by 2020—a whopping 7% annual rate of production growth from 2009 through 2020.

The planet is going to need every drop of oil that Petrobras can squeeze out. According to the company's projections, the production from existing fields will fall from a little over 80 million barrels a day to maybe half of that even if new techniques are used to slow their rate of decline. So just keeping global production flat is going to require lots of new fields. Says Gabrielli: "We [the world] need to replace one Saudi Arabia per three years."

The huge drop in oil prices from last summer's peak isn't diverting Petrobras from its course. "If we don't invest now we can't get the benefits when the price goes up," Gabrielli told me. (More here.)

This last statement seems so obvious to me, it's ridiculous. And like I mentioned earlier, because everybody else is firing, you can be hiring all their best people and locking in cheap construction and exploration contracts because all the drillers etc. are soooo slowwww right now. I bet they'd love to drill for you at huge discounts just to keep some work going so they don't have to lay off their crews as well.

My conclusion to take from this is that when Oil rebounds (I don't know when, nobody does), we will face prices much higher than $147. We will be unprepared globally and there will probably be shortages all over the planet. 

And we will be able to blame short sighted executive who were too afraid to keep their original plans when they are not even playing with their own money, but investor's money.

In the meantime, keep your eyes out for movement in Shell and Petrobras as they should be the leaders when Oil rebounds.