On the is­sue of oil’s price swings, is it just sup­ply and de­mand?

Bloomberg Businessweek (North America) - - Companies/Industries -

At its sim­plest, it is. What’s not told is that de­mand rises rel­a­tively pre­dictably over time, but sup­ply comes on­line in big chunks. The in­dus­try does many long-lead projects. And if you get sup­ply and de­mand a lit­tle bit off as you’re build­ing that new ca­pac­ity, you can get big excursions up and down in price. And that’s what we saw re­cently. Over the last five years, we had pro­duc­tion that went off­line in the Mid­dle East. So prices went up. Then we got it a lit­tle bit off as the econ­omy slowed down and Saudi Ara­bia and Iran re­turned sup­plies to pro­duc­tion.

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