Strome Business Minute With Dr. Jeff Tanner

How the heck did oil prices go below zero yesterday? Truthfully, it’s a quirk of the technology used to manage oil trades but at the same time, prices were so low that people stopped selling. Oil is a perfect commodity, meaning the law of supply and demand works efficiently. If demand falls, and it has during the COVID crisis, prices fall unless supply also falls. And the OPEC Plus agreement a week ago to reduce production ten percent doesn’t reduce supply until May. The problem is that too many US oil producers took on debt when times were good and now, at ten dollars a barrel or less, they can’t pay back the interest so they face bankruptcy. Economists fear similar consequences for other companies that relied on debt for expansion. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.