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Published on : Jan 20, 2015

Last year, Peter Voser, the chief executive of Royal Dutch Shell had given warnings about the major consequences that could possibly arise from the failure of the energy industry to invest in ensuring that the world has sufficient gas and oil for meeting the rising global demand for the same. According to Mr. Voser the very first priority should be towards investing huge amount of funds in new supplies and also maintain it through times of political and economic turbulence. Failure in doing so will lead to another critical situation and volatile prices. 

The discovery and tapping of an oilfield can take up to decade and finally bring it into the process of production. Majority of the oil majors have been giving their predictions based on such principles. If the problem of fluctuations in prices of oil cannot be tackled and managed, it will eventually lead to bigger supply side issues. The risk facing the current market is that most of the oil companies will cut back too fast and too hard thereby setting the consumers all across the globe for a major shock that will involve an unprecedented hike in a barrel of crude oil of more than US$100. 

Instead of paying heed to these warnings and the problems that may arise in the energy market, most of the oil and gas companies these days are aiming towards controlling capital expenditure. Companies like Shell are engaged in the evaluation of the project pipelines to sieve out schemes that may not be making much sense in a world of low oil prices. Furthermore, some pessimistic pundits have also stated that the price of oil could become as low as US$20.