The Oil Glut
Why are oil prices so low and what does that mean for the economy? As you are probably aware, oil prices have continued to fall over the last two years. Some argue that this is due to manipulations of the commodities markets. Our opinion is that it is primarily a function of supply and demand. Over several decades, the U.S. continued to fall in its oil production, but in recent years, we moved to number 2 in production behind only Saudi Arabia. This noteworthy additional production has added a great deal to the world’s supply. Simultaneously, world wide demand for oil has stagnated. Together, these factors mean a significant fall in oil prices. The other considerations for these falling prices is what this means economically and for investment purposes. From an economic standpoint, the falling demand is concerning, but the falling prices should help boost economic growth. As for investment, we do not think that we have reached the bottom of oil prices yet, but this could create some unique opportunities for investing in the oil and gas marketplace.
For a more in depth look at how oil prices can affect the economy, visit Five States Energy Capital LLC
For more information on investing in oil, visit Eddleman Venture Capital