Goldielocks is dead !

What Michael says is basically correct.
The cause of the slump is that at the higher prices the economy could
not afford oil.
Demand fell and a glut appeared.

The highest price the economy can afford is lower than many producers
can afford to sell at.

The "Just Right Price" has gone.
The oscillation in the price was predicted by Campbell and others to
occur at peak oil, and it has just as they predicted.
This is the second cycle and maybe there will be a third cycle but
a fourth cycle is very much in doubt.
As the cost of extraction of conventional oil keeps rising, demand
will fall, but industries that are price flexible will continue
buying. The cost of extraction for both conventional and tight shale
sources will rise but may never meet at the "Just Right" point.

We are now at peak oil and the cheap oil is fast disappearing.
The Energy Return on Energy Invested for oil has now fallen to 10
and this is a low value and as it falls further will make it uneconomic.
We now have to take alternative energy sources very seriously.

One can only live and hope!?

Even so, if I were in charge of Australia's oil and gas resources, I would open up the Great Barrier Reef for it's possible massive reserve of vastly less costly hydrocarbons, than risk returning again and again to the same economy killing scenario, time after time!

If carbon is killing the reef and if our own sweet light crude produces 75% less carbon in common use.than the the fully imported current supply, what genius would advocate the current status quo, and the continuing expenditure of around 21 billions per, of increasingly rare export dollars?

Which could and should be retained here at home, and as such, allow our economy to do more than a hundred millions worth more of economic activity here, before actually exhausting!

Almost everything we produce has an energy component built in, in several places.

Time to replace this rank stupidity and foreign control, which has left us all but defenseless?

Genuine self sufficiency, and even more price moderating competition, would change that.

Doing what you've always done only ever gets you what you've always got! Which by the way, includes a reef almost half destroyed! Great result greenies!

Replacing coal fired power generation with (verboten)thorium power, will halve our carbon emissions.

Replacing fully imported oil, with local indigenous supplies, will lower our carbon output by a further 75%, and another 40% again, by replacing liquid fuel with our own copious gas.

And indeed, generate enough new revenue, to enable us to AFFORDABILY change over to alternatives, like endlessly sustainable oil rich algae; some of which are 60% oil; and one of which produces READY TO USE DIESEL AND ANOTHER, JET FUEL!

And also endlessly sustainable boigas, could herald household energy at more than quarter of today's price gouged prices!

Alternatively we could just wait while generous foreigners send themselves broke doing it for us!

Which seems to be the greens expectations? And as such, illuminates the old expressions, manure for brains/misery loves company?
Rhrosty.

Correction and apologies, 100 millions should be read as 100 billions!
Rhrosty.

Bazz What are you saying caused a demand for oil to fall.

579, the cost of oil was too high for the economy at over $100 a barrel.
The US economy was being held up by the tight shale oil but at a high cost.
The rest of the world was paying the Brent price and we are paying the
TAPS (Singapore) price which is higher again.
All this led to a reduction in demand, better car consumption, lower
European economic activity, etc etc.

The world economy as you have no doubt noticed has been sagging with
low growth rates. Even China's growth is believed to be much lower than
the official figures. Some economists say the official figures do not
jell with the electricity consumption figure. Some suggest China's
real growth is about 3 or 4 % based on electricity consumption.

As the tight shale producers close down the price will start rising
again, some say $80 by end of year and $100 sometime next year.

And round and round we go !

What will crash it is if the Wall St financiers pull the plug after
so much losses on US tight oil.
However the Masters of the Universe have proved themselves to be
stupid, so they may go again.

Well that is not just my take on it but it does seem to be a fairly
wide spread opinion by people who ought to know.

What it does tell us is that we need to get cracking on the new
energy regime or we will be up the well known creek in a wire net canoe.