Universidad Tecnológica de El Salvador
Low Oil Prices Today May Not Mean Low Investment Tomorrow
Report

Low Oil Prices Today May Not Mean Low Investment Tomorrow

Carole Nakhle
GIS, 2016
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Editorial Rating

8

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  • Innovative

Recommendation

Oil prices have fallen steadily since their mid-2014 highs, so global energy firms are weighing the cost implications of their future oil and gas investments. Analysts using traditional metrics would predict that the low price of oil would constrain short- and medium-term investment in infrastructure, capacity and exploration, leading to significantly higher prices over the next decade. Yet as this insightful report from energy economist Carole Nakhle discloses, other factors that might upend conventional thinking are affecting the energy investment climate and supply flows. getAbstract recommends this brief but astute recap of the global energy complex to executives and business managers.

Summary

A common worry pervades the Organization of Petroleum Exporting Countries (OPEC), which produces more than 41% of global oil, and the International Energy Agency (IEA), which represents 29 advanced nations that are net oil importers. Both have sounded the alarm on the dangers of low oil prices to short- and medium-term oil and gas investment and to long-term supplies and price. The IEA reported a 20% decline in investment in oil and gas in 2015. According to OPEC, a lack of funding for capacity, operations and exploration today may lead to significant supply disruptions and $200-dollar-per-barrel...

About the Author

Carole Nakhle, an energy economist, is the director of Crystol Energy, a consultancy.

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