Oil prices have gyrated so violently in the past six months that the industry – from Texas wildcatters to Russian oligarchs – has held its breath, delaying investments and cancelling those it can no longer afford or justify.

Since July’s record of $147 a barrel, oil prices have fallen sharply, hitting a low of $32 in February before rebounding again to trade at about $60 today.

Companies try to strip out the day-to-day noise and concentrate on their long-term price forecasts. But executives admit that the volatility has made pricing deals or doing billion-dollar investments in oil, gas and alternative energies difficult.

Adding to the unknown is the concern that prices lately have been driven more by investors’ optimism about the world economy and equity markets than by the fundamental picture of oil supply and demand.

Opec, the producers’ cartel, said in its most recent monthly market report: “Considerable risks remain, as oil market fundamentals are far from balanced due to the persistent contraction in demand and growing supply overhang.”

In terms of the more distant future, the perceived wisdom is that oil demand will again pick up, as the world economy recovers and supply will be constrained as old fields decline and the messy geopolitics of oil keep companies from being able to tap the world’s vast reserves.

But can the industry hold on that long? Can companies manage to avoid another ride on the roller-coaster of cutbacks during lean times that result in capacity reductions and the inevitable price spikes when economies recover?

So far the big oil companies, especially those such as ExxonMobil that preserved cash accumulated when prices were high, have managed to refrain from massive lay-offs or budget cuts.

The same cannot be said for smaller companies and for oil service contractors, such as Schlumberger, which – less than a year after complaining it could not hire people fast enough – is cutting 10,000 jobs.

In the US, small oil – and especially natural gas – producers are laying down their equipment as they run out of funding.

US domestic natural gas prices have fallen from just over $13 per million British thermal units in July 2008 to less than $4 today. The number of rigs in use has fallen 50 per cent in recent months, as producers have been pushed to the edge of bankruptcy by low demand and high imports of liquefied natural gas that can find no home other than the storage tanks in the US.

But the problem of cancelled and delayed investment is a global one.

In Canada big and small oil companies, including Royal Dutch Shell and Suncor, are delaying investments because the giant oil-sand deposits – exceeded in size only by those in Saudi Arabia – are so costly to exploit that they need a minimum oil price of $40 to be economically viable.

Meanwhile, Opec has said it has delayed at least 35 of 150 drilling projects.

In total, the International Energy Agency, the consuming countries’ watchdog, says that projects of 4.2m barrels of oil a day (b/d) have been delayed and investments that would have added another 2m b/d have been cancelled altogether.

That is not such a big problem today as demand is shrinking, but it will begin to bite when the economy recovers and finds it lacks the fuel to do so, the IEA warns.

But there are bright spots on the horizon.

Prices oil companies must pay for contractors, rigs and basic commodities such as steel have fallen, reducing the threshold at which projects become viable. As input prices continue to fall, fewer projects are likely to be delayed.

Meanwhile, Iraq is on the brink of allowing international oil companies back after 40 years, creating the prospect that the country with the world’s third-largest reserves will slowly be able to increase its production to meet its huge potential.

And even Kurdistan’s oil may be exported soon, after Baghdad and the the regional government agreed to let DNO of Norway and Addax of Switzerland begin to use the Iraq-Turkey pipeline.

Meanwhile, Mol of Hungary and OMV of Austria this month bought into two large Kurdish gas fields that they hope will eventually supply Europe via the strategically-important Nabucco pipeline, which – if built – will reduce dependence on Russia.

And on the demand side, policy changes have been announced that make advocates of renewable energy optimistic about its future.

In 2008, the US and the European Union added more power capacity from renewable sources than from all fossil-fuel and nuclear sources.

Meanwhile globally, investors put $120bn into renewables, a fourfold increase in just five years, says Jeremy Leggett, executive chairman of Solarcentury, the solar energy company.

No country’s environmental and energy policy decisions have been watched and scrutinised more closely than those of the US, the world’s biggest per capita energy consumer.

Today, US use of oil and its products stands at a little more than 20m barrels a day, about a quarter of the world’s total. Even though the US is the world’s third-largest oil producer – pumping about 10 per cent of the world’s supply – imports still make up more than half of its requirements.

Barack Obama, the US President, says he intends to cut US oil demand by 4m b/d and has begun to set out the framework of how he wants to achieve this.

This month, the White House unveiled a national standard for cars and light trucks which means that vehicles sold in the US from 2016 will have to travel at least 35 miles to the gallon, a 30 per cent improvement.

The US economic stimulus package includes $56bn in grants and tax breaks for clean energy projects over the next 10 years and a budget of $15bn a year to fund renewable energy programmes.

And the energy bill introduced by Henry Waxman and Edward Markey, the powerful Democrats, envisions an emissions cap and trade system that will finally price carbon in the US.

The effects of all this will be so profound that some people believe they will outweigh the investment cutbacks by oil companies, heralding the arrival of “peak oil demand” rather than “peak oil supply”.

It is a notion from which oilmen recoil, pointing out that oil, gas and coal will for a long time yet represent the world’s main sources of energy, providing the fuel that will help keep the global economy turning and eventually lift billions of people out of poverty in countries such as China and India.

But even they – albeit privately – admit the world in 2050 and the energy that powers it will look very different from today’s picture.

That is, as long as the financial crisis and the fall in the oil price do not sweep aside governments’ environmental priorities.