Oil investment crashes to 60-year low, incubating next energy shock

While wells are depleting at an average rate of 9pc annually, oil discoveries have dropped to the lowest level since 1952 and the global economy is becoming reliant on supply from political hotspots. Much of the fall in spending is in stable political areas. In the North Sea investment has dropped  to £1bn from an average of £8bn over the last five years. Worldwide, annual investment in oil and gas projects has fallen from $780bn to $450bn over the last two years and there is no sign of a recovery next year. Drillers are not finding enough oil to replace lost production which could cause a rise in prices.This decline tightens the future stranglehold of the OPEC cartel and Russia on global oil supplies, although the consequences will not be obvious until it is too late. The big national oil companies in the Gulf have costs of $10 a barrel or less, and most have kept up investment.  Saudi Arabia seems determined to raise output and push for market share, even though low prices caused are disrupting its public finances with a budget deficit of 16pc of GDP.  Saudi's main object is to ost projects in the Arctic, in African deep waters, in the Canadian oil sands, and Venezuela’s Orinoco basin.