In an era dominated by headlines of geopolitical tensions—from Middle East conflicts to trade wars—the real threat to global energy stability may lie in something far more mundane: neglect. While trillions of dollars pour into renewable energy sources, promising a green future, the oil and gas sector grapples with chronic underinvestment. This imbalance risks creating supply shortfalls that could spike prices, especially as emerging technologies like artificial intelligence (AI) drive unprecedented energy demands. The question isn’t whether renewables will play a larger role—they will—but whether traditional hydrocarbons and new nuclear capabilities can keep pace to avoid an energy crunch.
The Trillion-Dollar Bet on Renewables: Big Spend, Modest Gains
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Global investment in clean energy has surged to unprecedented levels, reflecting a collective push toward sustainability. In 2024, total energy investment exceeded $3 trillion, with $2 trillion directed toward clean technologies and infrastructure.
Projections for 2025 show this figure climbing to $3.3 trillion, including $2.2 trillion for clean energy.
Renewable energy development alone attracted a record $386 billion in the first half of 2025, a 10% increase year-over-year.
To meet ambitious goals like tripling renewable capacity, annual investments would need to reach $1.5 trillion by 2030, up from $570 billion in 2023.
Yet, these eye-watering sums have yielded relatively modest additions to the global energy mix. Renewables, including solar and wind, have added capacity, but their intermittent nature means actual energy output (measured in terawatt-hours or quads) often falls short of expectations. For context, while clean energy investments now outpace fossil fuels by a 2:1 ratio, the world still relies on hydrocarbons for over 80% of primary energy. The trillions spent have expanded renewable generation, but not enough to offset the natural declines in oil and gas production without significant backups.
Hat tip to Art Berman and Jak Prandelli on X:
The next oil shock will come from negligence @jackprandelli ?
Energy blind nonsense.
Energy companies are not service organizations whose mission is to follow the advice of energy amateurs like you who call their expertise negligence.
Don’t use my feed to get attention. https://t.co/9bXyBGLpfs pic.twitter.com/7ODdEVFWOU
— Art Berman (@aeberman12) October 15, 2025
Underinvestment in Oil and Gas: Ignoring the Decline Curves
Oil and gas fields don’t produce indefinitely; they follow predictable decline curves, where output drops annually without reinvestment. Conventional fields decline at 3-7% per year, while unconventional shale plays can plummet 15-40% in the first year alone.
Globally, without new upstream investment, oil output could fall by 8% annually and gas by 9% over the next decade.
Tight oil and shale gas decline even faster, with potential drops of over 35% in one year if neglected.
Upstream capital expenditures (capex) in oil and gas have rebounded since the 2020 COVID slump, reaching an estimated $600 billion in 2024.
However, this is still below levels needed to fully replenish reserves. From 2019 onward, nearly 90% of investments have gone toward replacing lost production, with $570 billion projected for 2025.
A halt in upstream spending could cut oil supply by 5.5 million barrels per day (mb/d) annually, up from under 4 mb/d previously.
Industry capex rose 53% over the last four years, but net profits only increased by 16%, signaling squeezed margins and hesitation to commit more amid policy uncertainties.
This underinvestment stems from a mix of factors: regulatory pressures, investor demands for ESG compliance, and the allure of renewables. The result? A potential supply squeeze that could dwarf geopolitical disruptions.
AI’s Voracious Appetite: Can Nuclear Step Up in Time?
AI’s rise is supercharging energy demands, particularly for data centers. Electricity consumption from data centers worldwide is projected to more than double by 2030, reaching around 945 terawatt-hours (TWh).
In some scenarios, demand could hit 1,050 TWh, representing up to 12% of U.S. electricity.
AI alone could account for 35-50% of data center power use by 2030, with total U.S. AI capacity potentially exceeding 50 gigawatts (GW).
Training a single leading AI model might require over 4 GW by then.
Globally, data center power demand could surge by 165% by 2030.
For AI to thrive without blackouts or sky-high costs, reliable baseload power is essential. Nuclear energy, with its zero-carbon emissions and high-density output, is a prime candidate.
However, timelines for new builds are a bottleneck. Traditional large reactors can take 5-10 years or more to construct, often delayed by regulations and costs.
Small modular reactors (SMRs) promise faster deployment: designs like GE-Hitachi’s BWRX-300 could be built in 2-3 years, with some aiming for under 24 months.
Over 80 SMR designs are in development, with construction starts like Canada’s BWRX-300 planned for 2025.
By 2050, projections show 17 GW of new nuclear by 2045 and 34 GW by 2050, but this assumes aggressive scaling.
Will nuclear come online fast enough? Optimistically, SMRs could help meet AI’s needs, but current pipelines—about 70 reactors under construction globally, mostly in Asia—suggest delays.
If not, reliance on fossil fuels will intensify, exacerbating the oil and gas investment shortfall.
Investment Shortfalls and Price Spikes: Through the Roof or Stabilized?
To avert a crisis, upstream oil and gas investments must rise 22% by 2030 to match growing demand and inflation.
Global oil demand is forecast to increase by 2.5 mb/d between 2024 and 2030, plateauing around 106.9 mb/d by 2030—a 5.5 mb/d rise from 2023.
BP now sees demand growing through 2030, scrapping earlier peak predictions, while Goldman Sachs projects a peak in 2034.
OPEC anticipates rises through at least 2050.
Underinvestment could flip this into volatility. While some foresee surpluses and stable prices in the $60-73 range by 2030, others warn of shortages pushing prices higher. Lower prices from surpluses might deter investment further, creating a vicious cycle.
If demand outstrips supply due to neglect, prices could “go through the roof,” impacting economies reliant on affordable energy.
The Bottom Line: A Wake-Up Call for Balanced Energy Policy
The next oil shock won’t stem from wars or embargoes but from years of neglecting hydrocarbon infrastructure while over-relying on renewables’ promise. AI’s energy hunger underscores the urgency: without swift nuclear deployment and renewed oil/gas and coal investments, supply constraints could lead to economic turmoil. Policymakers must foster a balanced approach—boosting all low-carbon options without starving the systems that power the world today. Otherwise, the shock from neglect will hit harder than any geopolitical storm.
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