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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 Staff

Posted Mar 27, 2009 8:01 AM CDT
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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.

Oil workers prepare pipes Tuesday, March 10, 2009, near a new drilling site in the Sakhir, Bahrain, oil fields.
Oil workers prepare pipes Tuesday, March 10, 2009, near a new drilling site in the Sakhir, Bahrain, oil fields.   (AP Photo/Hasan Jamali)
An oil worker rolls a barrel Tuesday, March 10, 2009, near a new drilling site in the Sakhir, Bahrain, oil fields.
An oil worker rolls a barrel Tuesday, March 10, 2009, near a new drilling site in the Sakhir, Bahrain, oil fields.   (AP Photo/Hasan Jamali)
A customer pumps gas at a gas station in Menlo Park, Calif., Thursday, Feb. 12, 2009.
A customer pumps gas at a gas station in Menlo Park, Calif., Thursday, Feb. 12, 2009.   (AP Photo/Paul Sakuma)
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COMMENTS
Showing 3 of 4 comments
justme
Mar 28, 2009 12:04 PM CDT
The "drop in prices" was only following a record rise in prices. There is no shortage right now. Oil companies are crying poverty all the way to the bank.
Doctor-Zaius
Mar 27, 2009 4:44 AM CDT
The Tesla is just one of many technologies right around the corner. 2011 is the big year when OPEC figures out they are on the extinction list.
bacimom
Mar 27, 2009 3:54 AM CDT
The new Tesla has got a $40k deposit and won't even be in production until 2010 or 2011 according to NPR.

A 'bull run' on energy on its way?
New York Times

 
oil production • oil supply • oil prices • oil demand

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