The industry is characterized by continuous cycles of spikes in demand, which precipitate an influx of actors, oversupply of oil, and eventual price collapse; the low prices discourage investment, leading to a supply shortage and again excess demand. Oil market actors – whether it is monopoly companies or cartels of countries – attempt to influence these cycles and shift the burden of price adjustment onto consumers, thereby maintaining their profit levels.
As the supply of oil grew in the pre- and post- World War II eras, vast reserves were found in developing countries and former colonies, which gave rise to an important dilemma over the ownership of the oil in the ground: Whom should own, and in turn, benefit, from the sale of the commodity – the entire population of the nation-state underneath which the reserves lie, or private enterprise and capitalists with the ability and skill to develop an oil sector for the domestic economy? As many former colonies gained independence in the period of the 1950s through the 1970s, and struggled to escape poverty, the governments chose the former option, and states took control of private. More than a century and a half after its discovery, oil continues to play an essential role in the global economy, despite fears that reliance on petroleum is fueling rapid climate change. Over the last decade, the price of oil has taken a roller coaster ride, rising steadily