‘Oil and Economic Growth: A Supply-Constrained View’

Steven Kopits, Managing Director, Douglas-Westwood (energy consulting)

Center on Global Energy Policy, School of International and Public Affairs, Columbia University, February 11, 2014

kopits-40-oil-majors-capex-and-production

Key trends

  • oil majors’ production has fallen even as capital expenditures (capex) soared (until recently)
  • now they are cutting back capex to pay dividends, which is likely to precipitate a drop in oil production
  • essentially, the oil price is too high for more and more consumers to increase their demand (they reduce it instead), and too low for more and more producers to grow supply (they decrease it instead – see above)
  • is this the ‘beginning of the end‘ of a global economy running on affordable & abundant oil and cheap credit?
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