With Oil Supplies Dropping, Look for Prices to Soar Again

Firms are delaying projects; millions of barrels a day face 'risk'
By Matt Cantor,  Newser User
Posted Mar 27, 2009 8:01 AM CDT
Oil workers prepare pipes Tuesday, March 10, 2009, near a new drilling site in the Sakhir, Bahrain, oil fields.    (AP Photo/Hasan Jamali)
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(Newser) – A tough economy and falling prices have hit oil firms hard, forcing them to cut back capital spending and delay projects. So when demand again increases, supply could be short, the Wall Street Journal reports, driving prices back up. Slowing investment could hamper future supply growth by some 8 million barrels a day in the next few years, a new study says.

The capacity plunge is a  “potentially powerful and long-lasting aftershock” of last year’s price drop,“ say Cambridge Energy Research Associates. A price collapse of this magnitude really registers on the Richter scale, and its impact on levels of future investment will be felt for years,” says an analyst.