oil and gas jobs were lost in the U.S. since mid-2014. Companies are going broke, and many that aren’t broke are strangled with debt.
But we are nearing the end of that bust. In the coming years, we could see a boom bigger than most folks can imagine.
And you need to be in the game!
A History of Oil’s Boom and Bust Cycle
Investing in oil has always been about cycles.
Led by the fundamentals of supply and demand, prices rise and fall. But geopolitics has always played a role. Let’s explore the booms and busts throughout history to better understand how oil markets react…
Before the industrial revolution in the mid-1800s, people in Europe and the U.S. used wood or coal to heat their homes.
Lubricants were extracted from lard and whale oils. Solvents like alcohol and turpentine were made from wood.
And to a limited extent, oil was refined from coal, coal tars, and shales. The oil market was very small in the 19th century, but the value of these products was extraordinary. Prices for lubricants, solvents, and lighting oils was about $2 per gallon. That’s about $80 per barrel in 1850 ($1,900 per barrel in 2010 dollars). The industrial revolution brought new drilling technologies, and the surprising discovery of oil from wells drilled in Pennsylvania changed the world. We could now collect oil from wells drilled to depths of less than 100 feet. Oil supplies became abundant. Kerosene, refined from crude oil produced in Pennsylvania, began to replace whale oil as a lighting source. In the 1860s, the U.S. started shipping domestically refined oil to Great Britain. With an endless supply of oil, prices crashed to about $9 per barrel (about $230 per barrel in 2010 dollars) – an 88% drop.
18
Made with FlippingBook - Online Brochure Maker