the price of oil has tanked majorly
tanked four times in the past three
decades and each time it's been because
a glut of oil has flooded the market
it's pretty simple more supply than
demand expelled cheap now the reason for
the oversupply has been different each
time but the outcome has always been the
same it takes months sometimes years for
the oil market to correct itself back in
the mid 80s oil production surged in
Alaska and other parts of the US
Saudi Arabia confronted the threat by
opening its taps and prices plunged more
than 60% to $10 a barrel
about $20 today US producers suffered
Saudi Arabia regained control of the
market and it wasn't until four years
later in 1990 the prices went back to
pre 1986 levels a decade later OPEC
increased production because of
increased demand coming from Asia but
the timing couldn't have been worse a
financial crisis erupted across the
region demand plummeted and once again
prices collapsed too almost as low as
$10 a barrel
OPEC quickly reversed its decision and
slashed production and the next year
prices more than doubled the oil market
suffered the steepest crash in its
history in 2008 because of the global
recession when the economy tanked so too
the demand for oil and prices fell 78
percent to about $30 a barrel
OPEC stepped in and agreed to its
biggest ever production cuts which
helped the price recover through 2009
that brings us to the most recent oil
boom
American oil output has almost doubled
in the past five years because of shale
production but OPEC has refused to cut
back there's roughly enough oil and
storage to power the entire developed
world for two months prices dropped more
than 70 percent to less than $30 a
barrel and with both OPEC and the major
US producers not significantly cutting
back recovering from this slump might
take even longer than in the past