Bill’s note: We’ve been reporting in the oilandgasinsider.com since the beginning of 2016, that the massive cuts in new capital expenditiures for oil and gas exploration would lead to oil price hikes. Now the results of those expenditiure cuts are appearing in new oil discoveries.
Oil price spike inescapable and here’s the facts…
- 2015 new oil discoveries are 1/10th annual average dating all the way back to 1947
- 2015 Oil industry new discoveries are only 2.7 billion barrels
- 2015 worldwide oil consumption at 35 billion barrels
Why do we have the largest oil consumption deficit in 69 years?
- Oil at less than $50 a barrel makes many fields around the world uneconomical to explore
- The oil industry has slashed $1 trillion in new investment from 2015 to 2026
- EIA expects oil demand to expand to 105 million barrels per day by 2026 up from the current demand of 94 mb/d
- Large scale high volume drilling like deepwater projects have been scraped
- Large scale projects take years to be productive
In conclusion…Supply could fall 1.5 billion barrels short per year by 2018 to 2020. If this does play out, then…
Oil Price Spike Is Inescapable
References; Wood Mckeszie, Energy Information Agency, , Oil Price Spike Inevitable, By Nick Cunningham, OilPrice.com, August 30, 2016