Cort Hoffman
1/31/16
The main reason behind the drop in oil prices is the increase in supply. One countries that
has increased its oil production is the United States “United States domestic production has
nearly doubled over the last several years, pushing out oil imports that need to find another
home” (NYtimes.com). The other major oil companies are forced to sell to other markets,
decreasing the price of oil “Saudi, Nigerian and Algerian oil that once was sold in the
United States is suddenly competing for Asian markets, and the producers are forced to
drop prices” (Nytimes.com). Efficiency also plays a role in the supply “although only 5%
of global production, has had an outsized impact on the market by raising the prospects of
recovering vast amounts of resources formerly considered too hard to extract” (economist).
Because oil companies are able to extract oil faster it cuts to cost of production producing
cheaper oil.
As far as demand is concerned vehicles are becoming much more gas efficient “On the
demand side, the economies of Europe and developing countries are weak and vehicles are
becoming more energy-efficient. So demand for fuel is lagging a bit.” (Nytimes.com).
according to nytimes.com the rise in oil prices isn’t in the near future “Not anytime soon.
Oil production is not declining fast enough in the United States and other countries, though
that could begin to change this year.” Nytimes.com states that there simply isn’t enough
rising demand to justify oil increasing. “Demand for fuels is recovering in some countries,
and that could help crude prices recover in the next year or two. There is now little or no
