There was a time, when I was younger, when a successful oil company was one that found lots of oil. I remember recommending British Petroleum years ago as a firm that was particularly good at finding giant oil fields. In fact, earnings announcement reports praised them this week for achieving 4% volume growth in the fourth quarter and more than replacing their reserves. But this good news, based partly on fields found years ago, doesn’t look to be the norm. Today, as big oil announces record profits for 2004, you have to ask yourself: Can anyone out there find oil anymore?

We’ve all read about the problems that Shell has had with its reserve replacement rates. So does it jar anyone else to learn that at the same time Shell wasn’t finding oil, they were unveiling annual profits that beat historical standards for public companies in all of Britain? Exxon Mobil’s full year net profits climbed to a record $25.3 billion, even though the company’s oil and gas production was flat. In a move typical of the industry, the company bought back $9.95 billion of its own shares last year.

Analysts Sanford Bernstein report that the three-year rolling average reserve replacement ratio for the largest oil companies will be at its lowest level in a decade. It’s certainly not because they didn’t have the money to look for oil.

Wall Street praises the companies for their “caution” while oil stocks seem more like the vehicle for grandmothers in search of fixed income dividends and minimal risk.

What happened to those wildcatters of yesteryear? Do they only search for stock and dividend plays now, not promising extensions to geologic structures?

Some say Wall Street is to blame. By focusing squarely on return on capital employed and return on average capital employed, it is argued that Wall Street is actually discouraging potentially ambitious explorers from searching too much.

The “Street” is using $20 a barrel as the “reversion to mean” oil price even though the derivatives market would allow a company today to lock in $38 oil for five years. This Wall Street mentality is coupled with the corporate mindsets that access-to-acreage issues plague the industry and that a good chairman can’t be wasting money on marginal, risky prospects. People seem to forget that there was a time when Alaska and deepwater Gulf of Mexico were marginal, risky prospects.

And if the industry is just too afraid to explore for oil, what about making investments in alternative-energy businesses? There are lots of governments out there with incentives. U.S. states too. General Electric thinks that could be a business. Why is it considered too esoteric and marginal a business line for the oils?

I hate to say this, but I must. If Big Oil won’t “risk” its money on creating energy supplies, who will? Certainly not OPEC.

I sometimes wonder if I am the only one losing sleep over this. I wake up in a sweat in the middle of the night thinking: How will the world have enough energy supplies if the companies that are supposed to deliver them consider spending on oil and gas exploration too risky and investment in alternative energy a waste of time? Can I count on the national oil companies of China to heat my home, run my car, and charge my cell phone?

I hear people like Martin O’Neill, chairman of the British parliamentary trade and industry select committee, say he is “not against” a windfall profits tax. John Kerry’s advisors told me the same thing privately on the “q-t” when they thought he might win the presidency. I think to myself: If I really had to stand in line for gasoline because oil companies can’t (won’t?) find oil any more, surely a liberal Democrat could introduce a bill to tax away Big Oil’s profits. If they did, the U.S. deficit would drop, and the U.S. government could afford to invest more money on alternative energy.

“Oh, if you have a windfall profits tax, we would have to lower our investment in finding resources,” the companies would whine. “You would take away our incentive to explore.”

“What incentive?” I would reply coyly. “The incentive to buy back your stock?”

Ms. Myers Jaffe is a research fellow at Rice University.