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Lower oil prices and our current troubles
The 1986 collapse of the world oil price was a blessing, and a curse.
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Lower oil prices in 1986 and thereafter throughout the 1990s are an important cause of our current troubles.
First, the fact that oil prices did collapse continues to make investors skittish. Why invest in alternative technologies if OPEC can increase oil production — and send the price skidding — whenever it wants?
Second, the long period of lower oil prices lulled us — and the rest of the world — into greater dependence on oil. A lot greater dependence (see the black line in the chart below).
Finally, Saudi Arabia used the lower oil prices as an excuse for not investing in increases in its production capacity. This gives it a basis to argue that current supply restrictions are not artificial.
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http://zfacts.com/p/993.html | 01/18/12 07:25 GMT
Modified: Mon, 28 Apr 2008 19:09:14 GMT
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