From Wednesday morning’s Financial Times, an example of what happens when the price of oil drops. It’s Saudi Arabia, reviewing the capital investment it was planning back in the olden days, when oil was expensive:
Mr Buraik said he expects other countries to conduct their own reviews in the wake of changing dynamics.
“People would like to go to and re-evaluate, and maybe some projects were evaluated at $80 or $100 a barrel – now we are talking about $65 a barrel,” he said. “I think the whole oil industry, the new expansions, oil and gas, it will be re-evaluated – it will be reassessed based on the current economic circumstances.”
The International Energy Agency’s latest forecast suggests that this drop in infrastructure investment means we’re going to get screwed again by high prices soon enough. Bloomberg:
“There remains a real risk that under-investment will cause an oil-supply crunch” by 2015 as the decline in output from mature oilfields speeds up, the Paris-based adviser to 28 oil-consuming nations said. “The current financial crisis is not expected to affect long-term investment, but could lead to delays in bringing current projects to completion.”
On the bright side – less greenhouse gas emissions!