Demand was at record highs. And prices remained up. People thought it would last forever. In late 2008, the global financial markets collapsed. Oil prices fell 78% but quickly snapped back to new highs due to tensions in the Middle East. (Where have we heard this story before?) Like 1980, nobody expected oil would fall again. Prices were at all-time highs. Surely, the party was just getting start. But nobody ever learns from history. And soon enough, then came 2014… Bust. U.S. oil production was booming. Driven by new tight/shale oil fields in the Bakken, Eagle Ford, and Permian basin, U.S. production exceeded 4 million barrels per day… more than all the OPEC producers except for Saudi Arabia.
And as always happens in situations like that, supply outstripped demand. Prices fell to $50 per barrel .
For many companies, it cost more to drill a well than they earned from selling the oil. Production was no longer economic.
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