Quote:
Originally Posted by Map Maker
Sounds logical and you may be correct.
I thought the same way about iron ore when the 3 biggest companies oversupplied the market to drive down price and weed out the smaller higher cost outfits.
That was 5 years ago and price is still at 5 year lows.
Smaller companies adapt and government bailed them out so it just kept the low price environment constant.
This is the new way to do war.
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Oil is a little different and most of that stems from the technical issue that a good portion of companies and countries are fighting terminal decline in their pools and their equipment. Oilsands mining is indeed different as it can maintain flat production through the life of the resource. But it makes up such a small part of the total its not key to market stability.
Take Alaska as a small scale example of terminal decline
Their oil pools peaked back in 1988 and have been declining ever since even when oil was +$100 they couldn't goose production much. If they could reasonably bring more on they would but everyone hits a point where you can't keep up on the treadmill. There are OPEC and Non-OPEC countries in the same boat and that matters.
Most people simply don't realize just how much money goes towards keeping production declines at bay. This will be interesting. Longer oil is down, the bigger the hole, the higher the rebound. As an investor best thing that can happen is low oil for another year. Then things will really be set up for a doozy snap back.