Cyclical investment was highlighted as a factor in continuing raw material price swings at the Agenda Offshore conference, part of the Nor-Shipping exhibition in Oslo on 2-5 June.
While raw material prices are hard to forecast, they reflect switches in investment already set to bring fresh price increases, said keynote speaker Harald Magnus Andreassen, a Swedbank analyst based in Oslo.
“Because of the current low level of investment, the price of oil will be higher in 2020 than what it would have to be,” he predicted.
Inadequate investment in production in the 1990s combined with a surge in Chinese demand from the turn of the millennium to inflate a super bubble, he said in a keynote speech on 3 June.
Rising demand and climbing prices triggered a tidal wave of investment, but the financial crisis then derailed growth forecasts, bringing the currently low prices of raw materials, said Andreassen.
Eirik Wærner, chief analyst at Norwegian oil and gas company Statoil, characterised Norwegian politicians as bipolar, either euphoric or depressed in their outlook for the industry.
Investment should be directed towards new oil and gas production to meet rising demand, particularly in Asia, even though renewables and other new energy sources are rapidly changing the sector’s outlook, he argued.
Andreassen said investment in solar power has brought what could be described as a tipping point in these sources’ importance.