At the 2008 Oil & Money Conference in London, OPEC officials warned that recent, sharp falls in oil prices as well as the global economic crisis is leading to decreased investment in oil project. In the long term, this could result in shortages. With respect to the last 6 months, during which time oil prices have seen record highs and sharp declines, its not hard to see why investors are shying away from oil. Investors do not have confidence in the stability of the oil market and are scared to put their money in. This creates a situation in which development projects can not be financed and must be sidelined which in turn leads to a shortage of supply down the road. According to Nabuo Tanaka, head of the International Energy Agency, "We need investment now or a supply crunch may come in again but in a more acute way." In order to combat this, the entire energy industry must set aside short-term windfall profits in favor of a more sustainable, long-term plan aimed at stabilizing oil markets worldwide.See the article here with Lexis Nexis Access.
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