Zurich, Switzerland

There’s no doubt crude oil is trading at a “Libyan” premium because of the ongoing civil war affecting that country and the future delivery of its sweet crude. But apart from short-term speculation and a bunch of hedge funds driving prices higher, lofty oil prices are a fact of life – and for good reasons.

With the exception of the offshore deepwater Brazilian shale discovered two years ago, there hasn’t been a major oil discovery in almost forty years. Prices are high because long-term supplies are declining. And the discovery of domestic shale in the United States or elsewhere won’t curtail or reduce high prices.

A Bloomberg report this week confirms that North Sea oil is running scarce – one of the last major sources of Brent crude. Increasingly, Brent crude in London has commanded a steep premium compared to West Texas crude oil and is now widely regarded as the leading international benchmark for crude oil.

According to Norwegian-based Statoil ASA and Italy’s ENI SpA, all four wells drilled in the Barents and Norwegian Seas this year failed to discover new oil or gas. That marks the biggest failure rate since Norway began drilling for Black Gold back in 1966.

Norwegian oil and gas production peaked in 2000 and has been declining ever since. It’s the same story facing Mexico’s giant Cantarell oil fields, discovered in 1976 and now pumping far less oil since production peaked in 2002.

Oil is getting harder to find. The major oil companies are projected to spend more than $500 billion dollars this year on oil exploration, a record sum, according to Barclays Capital. The higher oil prices stay, the bigger the dollars dedicated by Big Oil to finding that scarce Black Gold.

Over the next several years, the oil services and equipment companies are where you want to be as daily rig rates head through the roof. Oil services companies are making a bundle amid high oil, especially in deepwater locales. Use short-term weakness to build your positions.