With oil prices down because of economic gloom, oil majors aren’t investing as much in finding new supplies.
The Economist recently highlighted the IEA estimate that overall investment in exploration and production will drop by 15-20%.
Here we see in an Economist chart just what that trend looks like on a year-to-year basis, with a staggering plunge taking place from 2006-2007:
Your first thought might be, “Why did investment drop so hard in 2007, when the recession hadn’t taken hold yet?”
But a better question is, “What will the oil price do once demand is restored and exploration has left us scraping the barrel bottoms?”
Read Chris Nelder’s updated oil price outlook for the answer.