The Gulf of Mexico shelf is sinking and the deepwater market is barely staying afloat. The shelf market and the deepwater market, like the rest of the world’s oil producing regions, is dependent on the price of oil. Oil price is dependent on supply and demand. The basic assumption was that demand would always increase but that sometime in the future there would be a peak supply of oil. This thought is now being challenged. Rather than demand driving prices, supply may be the price driver from this point forward. This is not good news for either the shelf or deepwater which have high recovery costs.
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