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Rising fears of future oil shortages

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Published at: www.iht.com

Michael LynchConsultantMichael E. Lynch

ExxonMobil, Royal Dutch Shell, Chevron, Total taking no chances

March 29, 2009

Jad Mouawad in New York reported that sharp reductions in investment coupled with low oil and gas prices could reduce future supplies. This was based on an analysis by Cambridge Energy Research Associates (CERA). The consulting firm said a drop in production could be a “powerful aftershock following the oil price collapse.” Some large companies will keep 2009 investments unchanged from last year but many producers are cutting budgets. CERA predicts that 7.6 million bbl/day may be deferred or cancelled. In 2008, CERA predicted that production capacity would rise to 109 million bbl/day by 2014. But the new analysis suggests that cutbacks could reduce that to 101.4 million. Seven years of rising crude oil prices has stopped. Christophe de Margerie, CEO of Total thinks producers will find it difficult to supply 90 million bbl/day in the next decade. Global oil demand is expected to drop again this year. The longer prices stay low, the greater the negative effect.