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Drop in oil industry spending fuels fear of shortages, price spikes

An investment slump in the global oil industry is delaying projects worldwide, and raising concerns about future production shortfalls and another bout of record high prices in coming years.

Even conservative estimates suggest global crude production could be 7 per cent below previously forecast levels in 2014 if current investment trends continue. As demand picks up, the supply shortfall would drive prices higher, says a recent report from the Cambridge Energy Research Associates, a Massachusetts-based consultancy.

But the price spike may be coming sooner than many people expect, said Matthew Simmons, a Houston-based investment banker who has become the most prominent prophet of looming oil shortages.

“We’re on the verge of having a shortage and that would really send the prices soaring,” Mr. Simmons said in a telephone interview. “How soon could the shortage happen? Our stocks are already too low in too many areas.”

Globe & Mail

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