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(The Fuse) It seems fitting that oil prices fell back under $30 on the day that two major oil companies reported disastrous earnings results showing the damage of the past year and a half. The decline in prices that began in mid-2014 has wreaked havoc across all different types of companies—NOCs, IOCs, independents, oil majors, oilfield services—and there seems to be no respite in the short run. Companies are continuing to lay off staff, cut back on projects, and report eye-opening losses.

These cutbacks will eventually bite at some point, whether as early as the second half of this year or later on this decade. The current low price environment, and its fallout, will lead to a tighter market and possibly a shortage given that supply projects are capital intensive and typically involve significant lags before coming online. The industry’s capital spending will drop for two consecutive years in 2016, for the first time since the 1980s.

Both Exxon and Chevron will slice capex by around 25 percent this year, while BP is also scaling back. Some of the biggest U.S. independents, which have been instrumental in the shale boom, are slashing spending at even more dramatic levels. Both Exxon and Chevron will slice capex by around 25 percent this year, while BP is also scaling back after cutting spending by 25 percent in 2015. Some of the biggest U.S. independents, which have been instrumental in enabling the shale boom the first part of this decade, are slashing spending at even more dramatic levels. Continental, led by CEO Harold Hamm, announced that it would cut capex by an enormous 66 percent this year, with the company planning to reduce production by 10 percent. New York-based Hess, meanwhile, has said its capex would come it at $2.4 billion this year, down 40 percent from 2015. Independent Anadarko, which is active in U.S. shale and international markets, is slicing its capital spending in half for 2016, after a 40 percent decline last year.

Reuters reported , citing analysts at Bernstein, that U.S. oil companies as a whole are expected to cut capex by 38 percent this year. In a reflection of how dire the situation has become for oil companies, ratings agency S&P downgraded Shell, BP, Chevron, Repsol, and Total this week as a result of low oil price assumptions and weak debt coverage. The negative effects of the low price cannot be fully […]