By JAD MOUAWAD


FROM THE PLAINS of North Dakota to the deep waters of Brazil, dozens of major oil and gas projects have been postponed or canceled in recent weeks as companies scramble to adjust to the collapse in energy markets.

In the short run, falling oil prices are resulting in welcome relief for drivers. At the oil price peak this summer, gasoline in various European countries hovered around $9 a gallon and around $4 a gallon in the United States. Those prices are now around $6 in Europe and $2 in the United States.

But the project delays and cancellations are likely to reduce future energy supplies - and analysts believe they may set the stage for another surge in oil prices once the global economy recovers.

Oil markets have seen their sharpest-ever spikes and their steepest drops this year, all within a few months. Now, with a global recession at hand and oil consumption falling, the market’s extreme volatility is making it harder for energy executives to plan. As a result, exploration spending, which had risen to a record this year, is being slashed.

The precipitous drop in oil prices since the summer,coming on the heels of a steep sevenyear rise, was a reminder that oil, like most commodities, is a cyclical business. When demand drops and prices fall, companies curb their investments, leading to lower supplies. When demand recovers, prices rise again and companies start to invest in new production.

As familiar as the pattern may be, the changes this time are taking place at record speed. In June, some analysts forecast oil at $200 a barrel and companies were scouring the earth for new places to drill; now, no one knows how low prices might fall.

“It’s a classic - if extraordinarily dramatic - cycle,”said Daniel Yer gin, chairman of Cambridge Energy Research Associates.“Prices have come down so far and so fast, it’s become a shock to the supply system.”

The list of projects delayed is growing by the week. Wells are being shut down across the United States, new refineries have been postponed in Saudi Arabia, Kuwait and India, and ambitious offshore drilling plans are being reconsidered off the coast of Africa.

Alternative energy sources like biofuels that had flourished in recent years could see investment dry up if prices stay low for the next few years, analysts said. Banks have become reluctant lenders, especially to renewable energy projects that may prove unprofitable in an era of low oil and gas prices.

These delays could curb global fuel supplies by the equivalent of 4 million barrels a day within the next five years, according to Peter Jackson, an energy analyst at Cambridge Energy. That is equal to 5 percent of current oil supplies.

One reason projects are being shut down so fast is that costs throughout the industry, which had surged in recent years, are still elevated despite the drop in oil prices. Many companies are waiting for those costs to come down before deciding whether to go forward with new projects.

“The global market has been turned upside down since the summer,”the International Energy Agency, a leading forecaster, said in a recent report.

In this uncertain environment, a slowdown in spending is inevitable, according to energy executives who are devising their budgets for next year. Last year, spending on exploration and production amounted to $329 billion, according to PFC Energy, a consulting firm. That figure is certain to fall.

“We’re in remission right now,” said Marvin E.Odum, the vice president for exploration and production for Royal Dutch Shell in the Americas. But once the economy picks up, he said, “the energy challenge will come back with a vengeance.”

Growth in oil demand has weakened throughout the industrial world. The International Energy Agency projects that worldwide demand will actually fall this year, for the first time since 1983.

So much surplus oil is sloshing around the world right now that some companies, including Shell, are using oil tankers for storage.

Oil prices have declined by more than $100 a barrel since July, returning to levels last seen more than four years ago. The price could drop below $30, according to Merrill Lynch and other forecasters, if the Chinese economy slows dramatically next year, which looks increasingly likely.

Different companies have different price thresholds for going forward with drilling projects. But across the industry, a price drop this big has “a dampening effect,” Mr.Odum said.“The big uncertainty is how long this economic environment is going to last.”

The biggest cutbacks so far have been in Canada’s heavy oil projects, where some of the world’s most costly production is concentrated. Some operators there need oil prices above $90 a barrel to turn a profit. StatoilHydro, a large Norwegian company, recently pulled out of a $12 billion project in Canada because of falling prices. Shell, Nexen and Petro-Canada have all canceled or postponed new ventures in Alberta.

The drop in consumption could provide breathing room for producers who had been straining in recent years to match fast-rising demand.
But analysts warn that the world can ill afford a lengthy drop in investment in energy supplies. To meet the growth in global population and the rising affluence expected in the next few decades, the world will need to invest $12 trillion in order to boost its oil and natural gas supplies, according to the International Energy Agency.

“If we cut back dramatically on investments, we could end up in a situation where supply growth goes flat when the economy starts to recover,”said Mr.Jackson.“The steeper the decline, the steeper the response.”