Supply-demand imbalance boosts oil prices

Faced with rising global demand and record prices, the oil companies have a powerful incentive to find, pump and sell as much crude as they can. Instead, they’re having a hard time keeping their output level, much less expanding it. Big, untapped oil fields – often called “elephants” in the industry – are harder and harder to find.

“There aren’t many elephants or super-fields left,” said KenMedlock, an energy research fellow at Rice University’s Baker Institute for Public Policy. “The major (companies) are looking for places to make large investments, but they haven’t found many.”
The Organization of the Petroleum Exporting Countries, meanwhile, refuses to pump more oil, saying there’s enough on the market. But that refusal may mask problems within the cartel, analysts say. While some OPEC countries could increase production if they chose, others such as Iran and Venezuela haven’t invested enough money in their oil fields and have seen their production decline as a result.

“The best they’re going to do is plateau,” said David Kirsch, director of market intelligence for the PFC Energy consulting firm.

San Francisco Chronicle