Government policies to fight climate change are discouraging oil companies from investing heavily in new production even as they turn in record profits — a dynamic that could spell tight supply and high prices as clean energy alternatives seek to fill the void.
Crude oil prices have surged above $90 a barrel and some analysts predict they will nudge above $100 by year's end. But instead of spending big to boost output, companies are boosting dividends or buying back shares to reward investors.
Environmental groups say slowing production growth could accelerate a move to renewable energy and curb carbon emissions. However, lack of drilling investment could exacerbate energy shortages in poor countries and fuel inflation, company executives warned at the World Petroleum Congress in Calgary this week.