Strome Business Minute With Dr. Jeff Tanner

When the global economy stops, the need for oil nearly ceases and when that happens, the strict laws of supply and demand kick in. The price for a barrel of oil plummeted to about thirty dollars. That price devastates American oil producers because they rely so heavily on debt to finance production, compared to the Middle East and Russia. If you can cut supply to match demand, prices should rise. At first, Russia seized the opportunity and refused to cut so as to put American operators out of business. But under US pressure, they gave in, only to see Mexico back out of the agreement. Again, the US applied pressure and Mexico came back. Now oil production is limited and prices should rise to a survivable level, though prices will rise at the pump too. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.