Oil discoveries at 70-year low

Supply shortfall ahead – No Sh!t Sherlock (as we say in the UK).

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Who would have thought that a lack of investment would lead to a massive reduction in the amount of oil discovered in the past couple of years?

Explorers in 2015 discovered only about a tenth as much oil as they have annually on average since 1960. This year, they’ll probably find even less, spurring new fears about their ability to meet future demand.

Just one tenth of the amount that has been discovered on average over the past 55 years.

Why is this significant?  Well, because without replacing the reserves that are being used up we will find ourselves in a situation where oil becomes limited and prices will rise – hugely.

Not this year, or next, but in the coming 5 to 10 years. And this isn’t just a small reduction in the amount being discovered;

Just 2.7 Bbbl [billion barrels] of new supply was discovered in 2015, the smallest amount since 1947 . . . This year, drillers found just 736 MMbbl [million barrels] of conventional crude as of the end of last month.

 

New discoveries from conventional drilling, meanwhile, are at rock bottom, there will definitely be a strong impact on oil and gas supply, and especially oil.

For big business, big oil and countries like Saudi Arabia that can ride out the storm of low oil prices the future prospects look very good. Don’t be surprised to see oil at $200 per barrel within 10 years – nearly double any previous record high prices.

For smaller companies, individual employees and shorter-term investors the past couple of years have been pretty awful and look set to remain stagnant for the remainder of 2016 at least.

More on the Oil Price

petrol fillup

Following my previous post about the potential impact of Oil Prices, it was good to see Opec agreeing with me!

In a recent report they too are concerned at lack of investment;

Crude oil rebounded after OPEC Secretary General Abdalla El-Badri said insufficient investment could push prices to $200/bbl.

While low oil prices are something of a silver lining, remember that every silver lining has a cloud.