We have been here before –  economic growth drives up demand which  raises prices when supply gets tight which  makes oil companies/countries rich which  makes everyone look for more oil which  they eventually discover and start to pump, at just the time when  high prices kill the economy, so  we get over-supply so  oil prices collapse.
It won’t last, of course – eventually  production slows as reserves get depleted, and  low prices restart growth so we start back at  all over again. This is an extreme case of the widespread phenomenon of industry cyclicality – see demo model. What might just be different this time is that [a] the very high oil price lasted so long that [b] very many players looked for new supplies, causing [c] an exceptional increase in availability which, with [d] prolonged slow economic growth, means [e] it could be many years before the over-supply gets absorbed.Share
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