A top executive at BHP Billiton has warned that oil prices might go up because the industry has not yet invested enough in new sources of supply.
Tim Cutt has argued that as the American shale boom will reach a peak in the years to come, the sector will have to exploit alternative sources of energy efficiently to avoid a price spiral. If this prediction is correct, it might have implications for the long-term cost of products like Mobil Gargoyle Arctic 300 and Q8 Dynobear 32. Mr Cutt added:
“In the past four years discoveries were less than 10 billion barrels per year and in 2014 they amounted to less than six. That’s only a fifth of current consumption! This is a staggering trend and represents an opportunity and responsibility.”
However, forecasting too far in advance is tricky and supply is apparently ahead of demand for the moment. According to Mr Cutt, at present there is an excess of over one million barrels per day.
It is also the case that the industry will have an influence over what will happen in the future. If oil companies work at enhancing their productivity as Mr Cutts has recommended, this could maintain prices at a lower level than would otherwise be possible.
It was suggested that the corporations could invest more heavily in exploration than they have planned to do. However, if the industry ignores what Mr Cutts has said, the economic impact could be far reaching.
