Publications: The Petroleum Economics Monthly

Will Investor Aversion Bring Higher Oil Prices? (September 2018)


Each week and sometimes daily, policymakers at the International Energy Agency, ministers from oil-exporting countries, consultants at firms like Wood Mackenzie, and some former government officials now at nonprofit policy institutions hammer away at the oil industry’s failure to invest sufficiently in reserve development. The common view of such individuals is that underinvestment will lead to a production decline. Prices must rise, they assert,because consumer demand for oil will stay strong. Despite such efforts, one very important segment of the global population refuses to be spooked by these dire pronouncements: the investment community. Indeed, investors, to put it bluntly, have developed an aversion to the oil sector.


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