The INCREDIBLE Truth about Energy Prices … And What The Future Holds

Simon Binks, Cost Centre Services

Why are energy prices are at their lowest for several years?

Simple really. The International Energy Agency (IEA) warns that the Opec producers, mainly Middle-East countries continue their stranglehold on global supply with the intention of driving non-Opec producers out of the market. This is having dire consequences on Opec oil revenues as they flood the market with cheap oil – currently around $50 a barrel – but it’s a risk they are taking because they’re forcing companies to abandon high-cost projects across the world. These competing or even supporting projects are simply not viable with oil prices so low.

The result will be a potential oil crunch in the future as the world economy has no option but to rely on Gulf supplies and, of course that will mean increased oil prices, meaning increased energy prices.

In any case, the Middle East is a maelstrom of sectarian conflict that could further compromise the availability of oil supplies and push up prices even further.

The oil industry requires fresh investment of £430 billion a year just to keep output in line with demand. With old wells becoming depleted and the declines steepening at something like 20% a year due to a lack of new investment its easy to see where all this is going.

Energy prices will increase, probably quite significantly so companies must not sit back and enjoy the windfall of cheap oil. Instead, they are encouraged to start cutting their energy dependence now.

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