Reductions in investments and low oil prices could curb future supplies, leaving the world to face a new energy shock when the economy picks up, according to a study.. While some of the biggest companies, like Exxon Mobil and Royal Dutch Shell, say they will keep their investments unchanged this year, many other producers are curbing investments because of the crisis..
“Seven consecutive years of rising oil prices — unprecedented in the history of the oil industry — have come crashing down, thus burying the notion that the commodity price cycle was a historical relic,” said the report, a field-by-field study of production trends.
Many experts have voiced even darker concerns in recent months. Christophe de Margerie, the chief executive of French oil company Total, recently said that producers would find it challenging to bolster supplies even to 90 million barrels a day by the middle of the next decade as projects get canceled.
Oil prices have fallen by 63 percent from their peak of $147 a barrel last summer. They are now trading around $54 a barrel after OPEC producers curbed supplies to prevent a price collapse.
But even at this level, many producers warn that oil prices remain too low to sustain increased investments.
Global oil demand is headed for its second consecutive drop this year. Over time, as populations grow, most experts expect oil consumption to rebound as emerging economies become richer. Any slowdown in investments now will translate into higher prices.
This month, oil producers meeting in Vienna also warned of a possible price shock when the demand for oil picks up again in coming years. As many as 35 new projects in nations belonging to the Organization of the Petroleum Exporting Countries may be delayed by 2013.
“I have often described unsustainably low oil prices as carrying the seeds of future spikes and volatility. In a low-price environment, the trend is often to focus on survival instead of expansion,” Ali al-Naimi, the Saudi oil minister, said recently. “If we place a low priority on preparing for the future, that lack of action can come back to haunt us through supply shortages and another round of high prices.”
The same concerns are also worrying economic experts from consuming countries, including the International Energy Agency and the International Monetary Fund.
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