including investment in enhanced oil recovery projects - will only accelerate the already high decline rates, especially in offshore ageing fields. In fact, after three years of positive growth, non-OPEC supply is expected to fall in 2016; only one year after the deep cuts in investment. Beyond 2016, the fall in non-OPEC supply is likely to accelerate, as the cancellation and postponement of projects will start feeding into future supplies, and the impact of previous record investments on oil output starts to fade away. An important part of the current narrative is that these cuts in investment and output can be quickly reversed when oil prices start rising again. This is attributed to the view that investment cycles are becoming shorter and the supply curve more elastic. But this is wishful thinking. Previous cycles have shown that the impact of low oil prices is long lasting, and that the scars from a sustained period of low oil prices can't be easily ‘erased'. During sharp downturns, the industry tends to lose talent, technical expertise, financial resilience, and the confidence to embark on new investments. Unfortunately, none of these adverse impacts on our industry can be quickly reversed. The extreme price movements that we have witnessed recently are very harmful for producers, consumers, and industry players. For producers whose economies are highly reliant on oil revenues, they undermine their development plans and complicate their macroeconomic management. For consumers, oil price volatility induces uncertainty in the general macroeconomic environment, reducing investment and capital formation, and undermining the viability of their energy policies. For the oil industry, sharp price swings make future planning extremely difficult, delaying much-needed investment in the oil sector. The impact of such price instability is not just confined to the oil sector; the spillovers are being strongly felt in other parts of the energy complex - such as renewables and natural gas. This is because price instability undermines the viability of energy policies - of both producers and consumers - that are aimed at increasing the share of renewables in the energy mix, and enhancing energy efficiency. As we saw back in 2008, high oil prices proved to be unsustainable, and the price fell sharply following the great financial crisis. But this works in the opposite direction. A prolonged period of low oil prices is also unsustainable, as it will induce large investment cuts and reduce the resilience of the oil industry, undermining the future security of supply and setting the scene for another sharp price rise. Just as the assertions, heard a few years ago - that the oil price would reach $200 a barrel - were proved wrong, so the recent assertion that the oil price has shifted to a new low structural equilibrium - will also turn out to have been wrong. --More 11:55 LOCAL TIME 08:55 GMT تغريد
