In the exploitation of many depletable resources, two separate investment activities can be distinguished that must take place if production is to continue in an orderly fashion: exploration and development. This paper describes a quasi-equilibrium model for these activities, based on competitive behavior within the industry, on slowly rising exploration costs, and on a price-inelastic demand. It is shown that if, with advancing depletion, exploration costs rise markedly and development costs relatively less, a little-recognized user cost arises that can be quantified. This user cost engenders a rental that may exert an even stronger upward pressure on the price of the extracted resource than the better known scarcity rent. The model is useful for examining the evolving characteristics of an extractive industry as the resource declines, such as price, life-reserve index, and investments in exploration and development. It can also be used to predict industry behavior if the price is externally influenced, e.g. by government regulation, by foreign cartel-controlled imports, or through a “back-stop technology” that sets a future ceiling on price. The domestic crude oil industry is used as an example. It is shown that if backstop technologies turn out to be high-priced (e.g. $25 per bbl equivalent), their commercial feasibility may be further off than generally realized. Moreover, their advent may be preceded by a period of enormously burdensome investment needs in the declining crude oil industry, or by increasing dependence on foreign oil.