Occidental Petroleum CEO Vicki Hollub told world leaders at the World Economic Forum in Davos, Switzerland, that the global crude oil supply will dwindle in 2025 without more drilling.
Hollub predicted that a lack of newly drilled oil would lead to a “persistent” shortage.
“In the near term, the markets are not balanced; supply, demand is not balanced,” Hollub said, per Reuters. “2025 and beyond is when the world is going to be short of oil.”
Hollub explained that oil exploration efforts between the 1950s and 1970s resulted in a supply that was five times higher than demand at the time. In recent decades, the trend has reversed. Now, as demand outpaces supply and older oil fields are declining in terms of production, it will become impossible to sustain the market. Hollub said he expects that by 2025, the price per barrel of crude in the United States will exceed $85. It is around $74 at present. Over the last decade, U.S. oil production has focused on shale oil extraction, which Hollub claims offers a much shorter lifespan than drilled oil.
The Trump administration issued a five-year production plan in 2018 that would have seen about 90% of U.S. coastal waters opened for oil exploration following a moratorium that had been in place since the 1980s. Opposition to the plan by environmentalist groups prevented any significant investment in offshore drilling.
Upon assuming the White House, President Joe Biden reinstated the moratorium, ending any potential for new investment. The Biden administration also canceled the Keystone XL Pipeline, which would have purportedly facilitated greater American oil independence and opened up vast oil fields in Alaska. Keystone was abandoned by its chief Canadian backers after Biden revoked a permit authorizing the project on his first day in office.
In 2022, the Biden administration submitted a revised five-year production plan that included only three oil rigs, all in the Gulf of Mexico, the fewest number of drilling platforms authorized since 1980 following the Carter administration’s efforts to promote environmentalism. Anywhere between 11 and 41 leases are typically sold every five years.
“It’s a slap in the face to American energy workers and a pat on the back to [Vladimir] Putin and OPEC dictators,” Sen. Bill Cassidy (R-LA) said in a statement at the time.
Hollub said he believes that investments in other power sources will eventually offset the loss of supply. However, it will be decades before these technologies are positioned to fill oil’s role in today’s economy. An example of how far off reliable green energy technology is was showcased in Chicago this week when freezing temperatures left electric car drivers stranded when the vehicles’ lithium-ion batteries would not take a charge.
Even if former President Donald Trump does regain the White House in 2024, his administration will face an uphill battle against environmentalists and a court system that has increasingly upped the pressure on the oil and gas industry over environmental standards.
