Economists talk about "elasticity of supply" and "elasticity of demand". When supply is elastic, supply drops as the price drops. When demand is elastic, demand increases as the price decreases. First off, demand for petroleum is not perfectly elastic; there are only so many refineries and so many vehicles on the road. Secondly, we are in a situation where the WORLD supply of petroleum is somewhat INelastic because some countries are willing to produce oil at a very low price, while many US producers are unable to compete.
The other thing to consider is that the jobs which are disappearing are related not to oil PRODUCTION but rather oil EXPLORATION. This includes not only oilfield workers and services, but also related industries such as heavy equipment manufacturing. Oil exploration is a very risky business; it makes no sense for investors to risk their money when the potential rewards are low. Why would you drill a well that MIGHT be able to produce oil for fifty bucks a barrel when oil is selling for forty bucks a barrel?
Back when gas prices were around four bucks a gallon, a few folks here insisted that all the economy needed to take off was cheap gas. Guess they were wrong.
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Today's Featured Article - Restoration Story: Fordson Major - by Anthony West. George bought his Fordson Major from a an implement sale about 18 years ago for £200.00 (UK). There is no known history regarding its origins or what service it had done, but the following work was undertaken alone to bring it up to show standard. From the engine number, it was found that this Major was produced late 1946. It was almost complete but had various parts that would definitely need replacing.
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