Without new investments, oil prices will rise sharply in the next five years, energy conference told
The International Energy Agency says there will be supply problems in three years if a two-year trend in falling oil investments continues into 2017. (Jeff McIntosh/Canadian Press)
That was the message of the International Energy Agency as the CERAWeek energy conference kicked off in Houston. There’s a worldwide glut of oil now, and the IEA said that supply looks adequate for the next three years, thanks to rising production from U.S. shale producers and Canadian oilsands projects that were sanctioned before the oil price crunch began.
However, oil investments dropped sharply in both 2015 and 2016, and if that trend continues into 2017, there will be a problem in three years.
“We have seen two years in a row of huge declines in upstream investment. If this is the case in 2017, if we don’t see substantial rebound, we may well see that the market tightens around 2020 and the spare production capacity shrinks,” said Fatih Birol, the chairman of the IEA, at a news conference in Houston.
Oil investment globally was $450 billion US in 2016. The IEA is hoping to see that increase by 20 per cent, a further $90 billion US in 2017. In 2016, oil investment in Canada was estimated at $37 billion, and the Canadian Association of Petroleum Producers expects it to rise to $44 billion in 2017.
Fatih Birol, executive director of the International Energy Agency, speaks about the state of the oil industry at the annual IHS CERAWeek global energy conference Monday in Houston. (Pat Sullivan/Associated Press)
Birol made reference to 2008, when prices spiked to more than $140 US per barrel, saying that without new investment, the oil market could be tighter in 2022 than it was in 2008.
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