Policy-making doublethink, geopolitical discord and corporate strategic somersaults have led to a lack of investment and left a huge risk of an energy crisis in the years ahead largely stemming from confused ideologies and toxic communication
It seems odd to be starting 2026 warning of an impending energy security crisis when all the talk is of a potential oil market glut and a wave of new LNG supply. But an increasingly polarised energy debate over the past decade has left traditional oil and gas companies and investors in a mess and damaged the prospects for affordable, accessible, sustainable and reliable energy. While some signs are positive, it could still get worse before it gets better.
The problems started with a poisonous cocktail of Western complacency over energy supply, panic over climate change and holier-than-thou moral crusading that led to the demonisation of fossil fuels and the scapegoating of Big Oil. Peak demand and net zero became slogans of wishful thinking rather than credible future scenarios. But rather than tackle this misinformation head-on, many energy leaders—aside from a few across the Middle East—went into retreat, either saying very little or championing only their renewables projects. Some even mistakenly changed strategic direction, wasting money on investments with poor returns for shareholders and poor energy output for consumers. It has been a time of huge fear over stranded assets and diversification done badly: spreading capital far and wide on green optics and various clean technologies with little regard for economics.
And now we face a situation where energy return on investment (EROI)—the ratio of energy obtained to energy expended in extraction— has collapsed. Conventional oilfields discovered in the 1930s through 1960s delivered EROI ratios of 100:1. By the 1990s, this had declined to 30:1 for new conventional discoveries. Today, deepwater offshore now averages 10:1, while marginal US shale formations have collapsed to 5:1.
This risks an energy crisis, hobbling modern global economies should an increasing proportion of gross energy production be reinvested into the energy system itself, leaving less for the overall economy. At 3:1, oil extraction becomes energy-negative for non-transport applications—you use more energy extracting and refining than the barrel contains. Gross production may remain steady while net energy delivered to the economy plummets. The divergence highlights why capital expenditure has remained depressed despite seemingly adequate oil prices.
Global upstream oil and gas investment in 2024 reached about $590b, according to the IEA—which contrasts with the 2014 peak of $880b in real terms. The IEA also estimated that 90% of current investment merely offset natural field decline rates, with virtually zero capital boosting actual growth. It is a deficit that continues to gather momentum, with underinvestment over $60b a year over the past decade relative to the levels required to maintain spare capacity buffers and accommodate demand growth.
Private companies, responding rationally to shareholder demands for capital discipline and ESG compliance, have collectively underinvested, which could create stranded demand not stranded assets. The long-cycle investment required to solve the collective problem is found sparingly across Saudi Arabia and the UAE, while China has adopted an all-energy approach.
Indeed, debt-fuelled global economies and IOCs cannot easily replicate this joined up broad-based approach that China has trailblazed nor the pioneering efforts of the Middle East NOCs to maintain spare capacity and invest widely. While on the demand side, datacentres have meant the narrative of peak demand has become even more flawed as electrification will require an all-of-the-above stance to energy options depending on country and circumstance.
Against these supply and demand challenges stands the new geopolitical tension of tariffs, sanctions and shifting alliances, which put grit in the wheels of energy investment and hamper a collaborative approach to solving world energy needs in a sustainable way.
Environmental shindig the COP was a mere footnote in 2025, and global energy poverty an even smaller addendum. But how can the world solve the energy trilemma when experts, media and industry leaders have wrongly bifurcated into two camps: climate and energy. It is all energy. Security is energy. Economic development is energy. Sustainability is energy. Even metals and agriculture are energy. Life is energy and energy is life. For too long, the focus has been on energy as emissions, on fossil fuels as death, and oil and gas as evil. These messages have served nobody well.
The new narrative of ‘energy addition’ moves the conversation on but does not solve the antagonisms. It is time for a new language that puts energy first and that recognises that industrial growth is a genie that cannot be put back into the bottle, that global poverty and sustainability will be improved by many transitioning to cleaner fossil fuels, that greater efficiencies and emissions-mitigating technology and fuels are a solution not apologism, that electrification is not a magic pill, and that those drawing up battle lines over critical minerals should learn from oil’s past.
Time is running out. The mistakes of recent years around investment may already lead to a world of energy scarcity, higher prices and a greater geopolitical and geoeconomic fracturing. A better world awaits but only if we start talking the same language on energy. It is not life or death; it is more important than that. PE