15 June 2010 | Andy Allen and Lindsay Clark
Fallout from the BP oil spill in the Gulf of Mexico could increase oil price volatility and cause future supply shortages, an energy consultant has warned buyers.
As the political storm over the BP crisis simmers, Steve Wilhite, CEO of American energy consultancy Summit Energy, said local energy markets could no longer be considered in isolation. “Energy markets are increasingly globally driven. The days when you can just pay attention to your own back yard are long gone.”
Wilhite said there were fears that the catastrophic oil spill in the Gulf of Mexico could affect the future of deep water drilling. He also cited potential conflict in Iran or a repeat of the 2008 natural gas dispute between Russia and Ukraine as other issues that could affect the stability of energy supply.
His comments follow the release of a report from think-tank Chatham House this month, which said: “An oil supply crunch in the medium term is likely to be due to a combination of insufficient investment in upstream oil and efficiency over the last two decades and rebounding demand following the global recession. This would create a price spike prompting drastic national measures to cut oil dependency.”
Richard Ward, CEO of Lloyd's insurance market, which contributed to the report said: “Prices are likely to rise, with some commentators suggesting oil may reach $200 a barrel.”
Wilhite said that since oil prices slipped back from a high of $147 a barrel in July 2008 a degree of complacency has set in. “We’re seeing a ‘creeping floor’. When the price settles back after rising, it settles back higher each time,” he said.